What Things are Taxed in Canada?

In Canada, various types of taxes are levied by federal, provincial, and municipal governments. Below is a detailed breakdown of key taxes:

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1. Income Taxes

• Personal Income Tax
  • Federal: Progressive rates (15% to 33% in 2023) on taxable income. Brackets adjust annually.
  • Provincial: Each province sets its own rates (e.g., Ontario: 5.05% to 13.16%).
  • Taxable Income: Employment income, business income, rental income, pensions, and investment income (except TFSA/RRSP withdrawals).
• Corporate Income Tax
  • Federal Rate: 15% general rate (9% for small businesses on the first $500,000 of active income).
  • Provincial Rates: Vary (e.g., 11.5% in Ontario for general corps; lower small business rates).

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2. Consumption Taxes

• Goods and Services Tax (GST)/Harmonized Sales Tax (HST)
  • GST: 5% federally in Alberta, Northwest Territories, Nunavut, and Yukon.
  • HST: Combined federal-provincial rates (e.g., 15% in Nova Scotia, 13% in Ontario).
  • Exemptions: Basic groceries, prescription drugs, medical devices, and exports.
• Provincial Sales Tax (PST)
  • Levied in British Columbia (7%), Saskatchewan (6%), and Manitoba (7%). Quebec’s QST (9.975%) is similar.
• Excise Taxes
  • Alcohol/Tobacco: Specific rates (e.g., ~7per200cigarettes;7per200cigarettes;0.30–$1.75 per liter of alcohol).
  • Cannabis: $1 per gram or 10% of product price.
  • Fuel: Gasoline (~0.14–0.14–0.38 per liter), diesel (~0.17–0.17–0.39 per liter).

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3. Property Taxes

• Residential/Commercial Taxes
  • Calculated based on municipal assessed property value × mill rate (varies by city).
  • Funds local services (e.g., schools, roads).
• Property Transfer Taxes
  • Levied on home purchases (e.g., BC: 1–3% on value over $200k; Ontario: 0.5–2.5%).
  • First-time buyers may qualify for exemptions.

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4. Capital Gains Tax

• Inclusion Rate: 50% of gains are taxable (e.g., 100kgain→100kgain→50k taxed at income rates).
• Exemptions: Principal residence sales are generally tax-free.

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5. Dividend Tax

• Eligible Dividends: Grossed-up (e.g., 115%) with tax credits (from corporations taxed at higher rates).
• Non-Eligible Dividends: Lower gross-up (e.g., 110%) and credits.

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6. Carbon Pricing

• Federal Backstop: $65/tonne in 2023 (rising annually). Levied on fuel producers, with rebates to households.
• Provincial Systems: Quebec (cap-and-trade), BC (carbon tax).

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7. Payroll Taxes

• Canada Pension Plan (CPP): 5.95% each from employer/employee (2023) on income up to $66,600.
• Employment Insurance (EI): 1.63% from employees (up to $61,500 income).

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8. Luxury Taxes

• Vehicles/Aircraft/Boats: 10% on cars/planes over 100k;20100k;20250k (federal, introduced 2022).

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9. Import Duties and Tariffs

• Customs Duties: Applied to imported goods (rates vary by product and trade agreements, e.g., USMCA).

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10. Health Premiums (Provincial)

• Ontario: Up to $900 annually based on income.
• Alberta: Monthly health care insurance premiums (up to $528/year).

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11. Estate Taxes

• Deemed Disposition: Assets (except principal residence) are taxed as if sold at fair market value upon death.

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12. Municipal Taxes

• Hotel/Airbnb Taxes: Some cities charge tourism levies (e.g., Toronto: 6% Municipal Accommodation Tax).
• Business Taxes: Additional levies on commercial properties.

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13. Other Taxes

• Insurance Premiums: Provincial taxes (e.g., Ontario: 8% on auto insurance).
• Fuel Excise Tax: Federal levy of 0.10perliter(temporarilyreducedto0.10perliter(temporarilyreducedto0.06 in 2023).

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Key Exemptions/Notes

• TFSA/RRSP: Investment growth and withdrawals are tax-free (TFSA) or deferred (RRSP).
• GST/HST Credits: Rebates for low-to-middle-income households.

This multi-layered tax system funds public services while incorporating progressive elements and incentives. Provincial variations are significant, so location-specific advice is often necessary.

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