Basic Taxation in Canada

There are different levels of government in Canada. It starts with, municipal, territorial, provincial, and then federal. The role of the government is usual which is to provide support to the citizens of the country.

basic taxation canada

The government will gather the taxes and then assign it to the different departments to fund projects. Some of the projects that are spread out to the various sectors are the following:

  • Road construction and repairs
  • Healthcare projects
  • Education
  • Social welfare

Taxes are imposed by all levels of government. It includes various types of taxes such as income taxes, sales taxes, etc.

Types of Taxes

As we talked about a while ago, there are different types of taxes present here in Canada. We will have a quick rundown of those taxes to help you familiarize them.

Consumption Tax

The tax that is imposed through sales is known as a consumption tax. From the word itself, the tax is applicable as long as the goods are consumables. However, there are products that are not covered by sales taxes. The rate of sales tax on these items are bound to 0 percent.

Moreover, when you buy something, ready some extra funds due to the tax added on top of the price. If you want to be aware of the tax of each item, it is indicated on the sales tag.

A 5 percent GST is implemented by the federal government. There are provinces that implement PST. The amount differs depending on the province and it ranges from 6 to almost 10 percent. Instead of a single tax, they mix two taxes into a cohesive form of tax known as HST. There is no PST implementation in Alberta and has a 5 percent GST.

Income Tax

It is mandatory to file an income tax return for Canadians yearly. But prior to filing an ITR, you must know if you are a resident or non-resident. As per the Canada Revenue Agency, you can be tagged as a Canadian resident if you have made strong ties in Canada just like staying for good in Canada. This is applicable not only to you but also to your immediate family.

Documentations issued in Canada such as driver’s license, social insurance number, or even a health card. As long as the identification card shows a valid Canadian address.

You can be tagged as a resident by the CRA if you stayed for 183 days or more in the country in the span of 365 days. Moreover, each household member that has a source of income must be able to file their ITR. This is also applicable to teenage workers. It only entails that all of the individuals who earn something from their jobs are required to file an ITR.

Tax Treaties

Tax treaties are present to ensure that you will not experience paying taxes repeatedly. The good thing about our country is that it has tax treaties with almost 100 countries.

Every country has its own tax rules. If you are residing here in Canada, it is only fair if you will follow those rules diligently. This is regardless if you earned it within Canadian premises or even abroad and it is done every year.

This type of tax can come in various forms such as income from a job, investment, retirement, or even commission. Nevertheless, you will need to shoulder those taxes at both provincial, territorial and federal levels.

Moreover, it is only expected that if you earn more, the tax that you will pay also increases accordingly. This is organized in a bracket system that puts classification on the earning capacity of each individual. Aside from that, you’ll also need to shoulder your provincial/territorial income taxes. The basis of the tax rates is on the place where you are residing on December 31 of that tax year.

Is It Complicated To File An Income Tax Return?

The task of every taxpayer is to file an ITR every April 30 each year. The T1 general tax return concludes every last day of the year along with its forms. You can find those forms on the CRA website.

Taxpayers are required to pay the taxes prior to April 30 as long as there are no circumstances present during that time. Yes, a tax return has its complexities, and not every citizen is aware of them. This gave rise to tax consultants to help the taxpayers to prepare and file their taxes.

Aside from that, automation became the norm in the tax industry. The best example is a software called U-File. This software makes filing much easier than done manually.

It is always advisable to ask for help from a certified tax professional. This will take away the worries that you have by handing out the best strategies that will speed up the process and at the same time lower the taxes that you have to pay.


It is best if you are aware of the taxes that you will have to pay.  Being updated on your tax returns make you a responsible and law-abiding Canadian citizen. You will also avoid fines that come along with not filing your taxes.

So it is important to get the services of a certified tax consultant to make things easier. This will speed up the process and avoid hassles on the part of the taxpayer.




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