Taxes Payable By A Resident Person In Canada


Two things are said to be certain in life: taxes and death. The later comes at its own time and can be quite unpredictable depending on circumstances, but taxes have their appointed time. In most civil jurisdiction world over, taxes are paid on a per-monthly basis and everyone earning a salary or wage is eligible for tax payment, either directly or indirectly.

For tax purpose, citizenship and the domicile of a tax payer matter less. What really matters is their residency state. A resident person is one that has a continuing relationship with the country and is earning an income within its borders or engagingin activities that are related to Canada – even when overseas.

If a person who normally would not be termed as a resident of Canada is in the country for 183 days or more, they are considered for tax purposes as residents and their income will be taxed locally. In case of double taxation, tax treaties with the other nation involved will prevail.

These are some of the tax classes you will pay as a Canadian resident.

  • IncomeTax – Federal Tax

Canadians are taxed on their Canadian worldwide income, and any double taxation is remedied as per international tax treaties with other nations. Any income earned outside of the country or unrelated to Canada may be exempted from tax as per the Tax Act, especially noting thatit has already been subjected to tax in the other jurisdiction. The graduated scale rate starts from 15% for the first CAD 45,916 to 33% charged on annual incomes in excess of CAD 202,800.

  • Provincial/territorial income taxes

Residents residing in a territory or province of Canada is subject to territorial taxes on top of federal taxes. All provinces but Qubec base theirterritorial and provincial tax on federal returns and they also leave the collection of the same to the feds. Bitcoin taxation Canada could be left to the feds too if it was earned within any of the territories and provinces of the country. Since Qubec has its tax system separate from that of the federal government, the fed income tax is reduced by 16.5% for its residents.

Other taxes

  • Inheritance Tax

While neither the federal government nor territories tax property of a deceased person, an estate is deemed to have been sold before the death of its owner. As such, the amounts accrued from the sale – or the value of the estate – is subject to capital gains tax. Administrative and probate fees involved will be allowed expenses.

  • Property Tax

It is collected by municipalities for real estate property based in municipalities. Taxes on land not within municipalities is collected by territories and provinces. Tax in residential property is based on the current market value of the said property and a separate tax may be charged if the premises is used for business.

A land transfer tax, expressed as a percentage of the sale price, is charged on property before the title changes hands.

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