Taxation in Canada

Unlike many other countries, the tax system in Canada is a fairly new set up. Before the First World War the country did not have income tax. This was to try and attract immigrants to the county and fuel its economy. A temporary tax was put in place throughout the war period and has remained in place ever since.

Taxation in CanadaCanada has a universal system which applies to all its citizens, with the exception in Quebec which comes under a different regulatory body. Personal taxation is where the majority of tax comes from in Canada, with the government collecting almost four times more in personal tax then from business tax. This is understandable given that Canada does not have the huge financial industries such as New York and London. Tax collection is administered by the Canada Revenue Agency.

Unlike other countries which operate as pay as you earn system, where the tax authorities take money out of your wages each month (provided that you are not working freelance), Canada has a self-assessment process. At the end of each tax year you will be required to file your taxes. The revenue agency will then cross reference this with the records which it has on file and flag up any discrepancies that it finds. You are entitled to appeal the decisions which are made by the financial body.

Taxes are always liable to change, but as of 2015 the taxes are in Canada are as follows. All numbers are in Canadian Dollars. You are allowed $11,327 as a personal allowance, which means that this amount is not taxed. The lowest rate goes up to $44,701 at a rate of 15%. 25.5% is taxed on earnings up to $90,563. Given that the average earning in Canada are $49,000 a year. Most people working will fall into these two categories.