Taxes in Canada
Canadians enjoy many government-funded benefits, such
as healthcare, education systems, interconnecting highways,
clean drinking water and sanitation systems. To support
these services, Canadians pay a variety of taxes to
the federal and provincial governments.
Income Tax
Every Canadian who earns more than about $9,000 a year
(in 2007) pays a portion of his or her income to the
government. If you are employed, your employer will
deduct income tax from your paycheque and send the tax collected to the government on your behalf.
By April 30 of every year, all adult residents
of Canada must file a personal income tax return
with the Canada Revenue Agency (CRA) to report their
earnings for the previous year and the tax already paid.
If you paid too much, you will receive a refund. If
you paid too little, you will have to pay more.
You must file a return in order to qualify for certain
government benefits, such as the Canada Child Tax Benefit
and the Goods and Services Tax/Harmonized Sales Tax
(GST/HST) Credit.
You can pick up a General Income Tax and Benefit Package
from any post office or download one from the CRA
website.
Sales Taxes
When you purchase an item or a service, the advertised
price or the price on the tag is usually not the final
amount you will pay. One or more types of tax may be
added:
- Goods and Services Tax (GST) —
A 6% federal tax applies to most goods and services
sold in Canada.
- Provincial Sales Tax (PST) —
With the exception of Alberta, the provinces also
tax many new and used items (but not services). The
rate varies by province.
- Harmonized Sales Tax (HST) —
In Nova Scotia, New Brunswick, and Newfoundland and
Labrador, the GST and PST are combined into a single
tax — the HST. The HST is 14% (6% GST plus 8%
PST) and is added to the cost of the goods or services
for the final total price.
Other Taxes
There are a few other types of taxes that are less
frequently encountered, or that may not be as obvious
as PST, GST and HST.
Hidden taxes — Some goods, such
as alcohol, tobacco products and gasoline, already include
some additional types of tax (such as import duties,
gas taxes and excise taxes) in the purchase price.
Liquor tax — In some provinces,
when you order alcoholic beverages at a restaurant or
bar, a liquor tax may be added to the bill in addition
to PST.
Hotel room tax — In some provinces,
hotels charge an additional tax.
Airport taxes — When you buy
an airline ticket, an airport improvement or security
tax may be added.
Property taxes — Homeowners
pay an annual tax, based on the value of their property,
to cover the cost of city-supplied services and schools
in their area.
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Canada Revenue Agency (CRA) has several publications
for newcomers. |
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They also have volunteers who will help you fill out
your tax forms under the free Community
Volunteer Income Tax Program. |
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Visit the CRA’s page for international
and non-resident individuals. |
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