Canada has more taxes than many other countries, as the government utilizes these taxes to provide high-quality healthcare, education, and other services free to Canadian residents and citizens. While as an expatriate you may be exempt from some taxes, you will be responsible of keeping track of applying for any tax rebates.
Taxation in Canada generally happens in 2 ways:
Many of the goods and services in Toronto have a sales tax added to them upon purchase. This is known as the HST or Harmonized Sales Tax. The current rate of the HST is 13% of all goods and services that you buy in Ontario. It is automatically added to your purchases at the register, but it is generally not included on price tags, so be prepared to do a bit of math before buying.
The dividends of the HST are shared between the Provincial Government of Ontario and the Canadian Federal Government. The Feds take 5% of this tax, while the Province pockets 8%. These, in turn, help to pay for many of the services enjoyed by citizens of Ontario Canada.
All income in Toronto is taxable, with the responsibility on the the earner to apply for tax rebates.
Federal income tax in Canada breaks down in the following way:
- 15% on the first $40,726 of taxable income, plus…
- 22% on the next $40,726 of taxable income (on the portion of taxable income between $40,726 and $81,452), +
- 26% on the next $44,812 of taxable income (on the portion of taxable income between $81,452 and $126,264), +
- 29% of taxable income over $126,264.