Canadian Tax Basics

In Canada, taxes, tariffs, and duties are collected by different levels of government to fund their programs and services. The three levels of taxation are:

  • Federal, through the Canada Revenue Agency;
  • Provincial / Territorial, through respective provincial/territorial finance or revenue departments; and
  • Municipal, through local government.

There are different types of tax applied by these levels of government on consumers, wage earners, and businesses. The basic types of taxes include:

  • Income tax derived from an individual’s employment or a corporation’s business revenues;
  • Consumer (retail or sales taxes) and Excise taxes, levied on the production, sale, or consumption of goods and services;
  • Property taxes, derived from the sale and transfer of property.
  • Import / Export, based on the movement of goods across borders.

The amount of tax each Canadian pays depends on a number of factors including:

  • Your employment income (how much you earn)
  • Where you live (your province, city, and whether you own or rent)
  • What deductions you are eligible to declare (amounts you can subtract from your income to reduce your taxable income); and
  • The products you consume and the consumption taxes associated with those products.

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