The tax system differs in Canada in that income tax is paid and due both Federally and Provincially. In general, income tax is paid at different rates on an incremental income scale in both instances. Tax relief is given to individuals on both Federal and Provincial income.

Income tax in Canada is based on residency (rather than the US where it is based on Citizenship).

The Income tax year is January – December and must usually be filed by April 30th (or interest may be due)

Canada’s federal income tax system is administered by the Canada Revenue Agency (CRA).

Canadian Federal and Provincial Income tax rates

Canada operates a Self-Assessment system whereby taxpayers assess their own tax through a tax return. This is assessed by the CRA against information from the employer. A taxpayer can appeal an assessment.

The following income is not taxed

  • Inheritance and death benefits
  • Capital Gains on main residence
  • GST and HST credits
  • Child Tax credits
  • Gifts

Income from abroad (pensions, income, rental income etc) will be taxed in Canada but can be applied for zero tax rating from the UK.