Everyone who works in Canada must pay income taxes. You will need a Social Insurance Number to report your income to Revenue Canada. Information on specific tax obligations you have as a Canadian resident are at http://www.cra-arc.gc.ca/tx/nnrsdnts/ndvdls/nwcmr-eng.html.
Canada’s income tax rates break down 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.
Most Canadians who are employed by a company will have their taxes deducted for them at each pay period. At the end of the fiscal year, they will receive a form known as a T4 slip, informing them of how much tax they paid. After completing their tax assessment, if the amount they owe is less than the amount they paid, they are eligible for a tax return. If, however, they paid less than the amount they owe, they must pay Revenue Canada the difference. Payment terms vary, depending on the amount of tax owed and other criteria.
Federal taxes are handled by Revenue Canada, which is a federal department of the Canadian government. It is important to make sure your income tax is registered with Revenue Canada on time. The deadline for employed, tax-paying Canadians is April 30. Self-employed Canadians must have their forms in by June 15.
Tax in Canada is only owed on the amount of money earned in Canada, and there are many treaties in place with other countries to prevent double taxation. For a list of the many countries with whom Canada maintains double taxation agreements, click here.
The Canadian income tax system is fairly complicated with both provincial and federal income taxes, plus multiple rebates and exceptions. Your tax rate varies according to your income level. To visit Revenue Canada’s website, click here.