Things To Know About Canadian Income Tax Rates!

If you are new to Canada and want to file Income tax, be informed that the task is exhausting at times. The taxation system of Canada is comprehensive and there are several different taxes to be paid, across the whole country. That said, the amount of tax you pay and the kind of tax paid, depends on the place you stay. Furthermore, Canadians are also required to pay for the publicly funded social and health services enjoyed across the country by people.

You will often hear that Canadians have to pay more taxes as compared to Americans. Despite this, the country is positioned below average in a study of tax conducted by OECD countries. However, comparing it with other counterparts like New Zealand, French, the UK, etc. the taxes paid by Canadians is less. Income tax is one of the charges types paid in Canada besides the other types.

You should know the fact that Income Tax in Canada forms the largest portion of revenue for the Federal Government of Canada. That said, almost half of the budget of the federal government of Canada is funded by Income Tax alone. This gives you an overview of the collection amount the country receives.

Income Tax System

We are going to discuss the details of this system in Canada to help our readers decide better. Depending on the residency of each candidate, the income charges in Canada is implied. The accounting year here starts on January 1 and ends on December 31st. After the cycle is completed, the candidate is required to file the return by April 30th of next month.

The catch while filing a return in Canada is that you will have to disclose all your income, whether earned inside Canada or outside. When living out of Quebec, you are required to file a return that should include all provincial and federal taxes. For both types of taxes, two different returns are filed. Just as the system of any other country, the system of Canada is progressive.

It simply means the more the income of a resident, the more taxes they are liable to pay. To find out the amount of tax to be paid, you can use the Canada tax calc.

Identifying Canadian Tax

As stated above, the amount of charges paid in Canada depends on the income earned and the place you live. The disclosed income should account for the income from all sources. When it comes to determining the provincial rate, it depends on the province you are living in on the 31st of December for that particular year.

For instance, if you have been staying in Ontario till July, and then from August, you moved to Nova Scotia. If you are in Nova Scotia until 31st December and on 31st December as well, you will fall under the provincial rate of Nova Scotia.

Canadian Tax Brackets

The bracket under which a candidate falls depends on the “taxable income” that is the gross income earned, from all sources. All qualified tdeductions for your portfolio should be subtracted. After claiming the deductions, you are left with the amount of Net Salary. Once you know the amount of taxable income, apply the federal and provincial rates respectively to find out the amount of taxes to be paid.

You are required to calculate the amount of federal first, and then the amount of provincial tax. The two separate amounts are to be added to find the total amount of tax to be paid. All taxes paid on the income earned from all sources is known as the marginal charges. The rate of charges is not fixed and it depends on the amount of income you choose to declare at the end of the year.

The best part about paying provincial taxes is that the province you stay in on 31st December will be applicable. Having said that, you can move to a province with lower rates before December 31st. You can ask a professional for the applicable rates, or can also gather information from the official income tax website of Canada.

Tax Deductions And Credits

The credits and deductions are extra benefits added for Canadian taxpayers. Such provisions help reduce either the amount of taxable income or the amount of charges that you will otherwise have to pay.

Tax Credits

When it comes to credits for income tax, both provincial and territorial credits exist. These credits are a great way of saving taxes, and you will have to pay less than you are liable to. Tax credits are further classified into refundable and nonrefundable credits.

  • Refundable Tax Credits: Refundable credits are paid to people who qualify for the same, irrespective of whether they have had income or not. This credit is usually from the past year which the taxpayer paid over the past year.


  • Non-Refundable: A non-refundable credit on the other hand is deducted from the amount payable as taxes. In short, you must have had enough income in the year for which you are filing your return. That said, you must have earned income to an extent that you owe some tax to the country. Some of these include medical expenses, tuition fees, interest paid on student loans, etc.

Tax Deductions

Tax deductions in Canada work differently. Instead of reducing the amount of charges to be paid, the deductions reduce the amount calculated as gross income. This way you will be put in a lower charges bracket and the amount you owe as  also reduces.


When in Canada, you will have to understand the structure and other terms to understand the details better. There are several other provisions for Canadian taxpayers and the Revenue Agency in Canada works out an easy payment plan. This way you will be able to pay the taxes in easy installments instead of paying them all at once. You can take expert help to understand things better. They will gauge the situation better and consider all major factors while helping you pay income charges.

Ricardo is a freelance writer specialized in politics. He is with from the beginning and helps it grow. Email: richardorland4[at]