Canada Tax Law

The power to impose and collect taxes is shared in Canada at the provincial, municipal and federal levels.

Tax Rates

Business Tax in Canada

Most business decisions have a tax implication in Canada. Therefore, as a business owner you must be aware of all the important details of your business. In order to reduce the payable tax, take the services of the best tax professionals. Start the process of business tax planning as soon as you kick-start your business. Some of the factors that you need to take into consideration are :

• Business structure (i.e. limited liability company, sole proprietorship or partnership).
• Shareholders
• Involvement of family members.
• Mergers
• Allowable business deductions
• Sale of the business

Personal Tax in Canada

Similar to business taxation, personal taxation in Canada also has number of tax implications. The taxation procedure is quite straightforward for individuals who have a limited source of monthly income with few investments. The taxation procedure is quite complex for individuals in Canada who are self-employed and have extensive investments.

Both the federal and provincial governments impose income taxes in Canada. As compared to the provincial government, federal government in Canada charges much higher percentage. If you have earned income in the form of a capital gain, only half of the gain is included for income tax purposes according to Canada tax law. Visit the website of the Canada Revenue Agency if you are not aware of the federal and provincial income tax rates. In a Registered Retirement Savings Plan, you have the option of deferring the personal income tax in Canada.

Sales Tax in Canada

You need to pay a multi-stage sales tax of 5% to the federal government in Canada, this is commonly known as the Goods and Services Tax. In some provinces of Canada, you also need to pay the Harmonized Sales Tax. Both the Goods and Services Tax and Harmonized Sales Tax are considered value-added taxes.

Canada Revenue Agency

It is the responsibility of the Canada Revenue Agency to collect federal taxes in Canada. According to "Tax Collection Agreements", the Canada Revenue Agency collects and remits provincial personal income taxes, corporate taxes and provincial sales taxes to the provinces. Provincial personal income taxes are not applicable in the province of Quebec.