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What is the taxation system in Canada?

In Canada, the federal, provincial and municipal governments collect money from individuals and companies to help pay for government programs and services, such as roads, public utilities, schools, health care, economic development and cultural activities.

Common types of taxes are income taxes, sales taxes, property taxes, and business taxes (if you own a business).

Income Tax

The Canada Revenue Agency (CRA) collects income taxes.

Each year, people who are Canadian residents for tax purposes complete an income tax return. On this return you list your taxable income, deductions and tax credits to calculate how much tax you owe.

Find out more in How much income tax do I have to pay?

Sales Tax

In Ontario, there is a Harmonized Sales Tax (HST) of 13%. Usually, HST is added at the cash register so the amount on the price tag may not be the final price.

8% of the HST goes to the provincial government and 5% goes to the federal government.

You pay HST on many goods and services but there are a few exceptions, such as basic food products, child care services, and prescription drugs.

Individuals and families with low and modest incomes may be eligible for an HST credit. Find out more in What is the HST credit? Am I eligible?

For More Information

• Newcomers to Canada - This guide is for first time tax filers in Canada. It will help you determine if you are a resident for tax purposes, which is not the same as residency for immigration purposes. From the CRA.
• Canada Revenue Agency (CRA) - The federal agency responsible for administering tax, benefits and related programs across the country. Their website provides detailed information about tax-related issues.
• Frequently Asked Questions about Individual Taxation - Information and answers about tax rates and how to file your return. From the CRA.
• General Income Tax and Benefit Package - A collection of forms and information sheets which you need to file your income tax return. From the CRA.
• Ontario Tax Credits and Benefits - Learn about the different tax credits and benefits you can get to help you with living costs when you file your income tax return. From the Ministry of Finance.