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Jan 18, 2017

Living There


INDIVIDUAL TAXATION

Canadian residents are subject to Canadian income tax on their worldwide income. Married couples are taxed separately and there is no option for joint taxation.

INCOME TAX

There are four categories of income: (1) business income, (2) employment income, (3) capital gains, and (4) property income (consists of passive income earned through investments such as rents, interest, royalties, and dividends).

Income is taxed at the federal level and at the provincial level. In all provinces, except Quebec, the Canadian Government collects taxes on behalf of the provincial or territorial government. The provincial rules for computing income are generally (but not always) consistent with the federal rules. The tax bands and rates are regularly adjusted annually.

FEDERAL INCOME TAX 2017

TAXABLE INCOME, CA$ (US$) TAX RATE
Up to 45,916 (US$34,012) 15%
45,916 91,831 (US$68,023) 20.50% on band over US$34,012
91,831 142,353 (US$105,447) 26% on band over US$68,023
142,353 202,800 (US$150,222) 29% on band over US$120,593
Over202,800 (US$150,222) 33% on all income over US$150,222
Source: Global Property Guide

FEDERAL INCOME TAX 2016

TAXABLE INCOME, CA$ (US$) TAX RATE
Up to 45,282 (US$33,542) 15%
45,282 90,563 (US$67,084) 20.50% on band over US$33,542
90,563 140,388 (US$103,991) 26% on band over US$67,084
140,388 200,000 (US$148,148) 29% on band over US$103,991
Over 200,000 (US$148,148) 33% on all income over US$148,148
Source: Global Property Guide

PROVINCIAL/ TERRITORIAL INCOME TAX 2014

ALBERTA INCOME TAX 2017

TAXABLE INCOME, CAD (US$) TAX RATE
Up to 125,000 (US$110,612) 10%
125,000 150,000 (US$132,743) 10.50% on band over US$110,612
150,000 200,000 (US$176,991) 10.75% on band over US$132,743
200,000 300,000 (US$265,487) 11% on band over US$176,991
Over 300,000 (US$265,487) 11.25% on all income over US$265,487
Source: Global Property Guide

ALBERTA INCOME TAX 2016

TAXABLE INCOME, CAD (US$) TAX RATE
Up to 126,625 (US$93,796) 10%
126,625 151,950 (US$112,556) 12% on band over US$93,796
151,950 202,600 (US$150,074) 13% on band over US$112,556
202,600 303,900 (US$225,111) 14% on band over US$150,074
Over 303,900 (US$225,111) 15% on all income over US$225,111
Source: Global Property Guide

BRITISH COLUMBIA INCOME TAX 2017

TAXABLE INCOME, CAD (US$) TAX RATE
Up to 38,898 (US$28,813) 5.06%
38,898 77,797 (US$57,627) 7.70% on band over US$28,813
77,797 89,320 (US$66,163) 10.50% on band over US$57,627
89,320 108,460 (US$80,341) 12.29% on band over US$66,163
Over 108,460 (US$80,341) 14.70% on all income over US$80,341
Source: Global Property Guide

MANITOBA INCOME TAX 2017

TAXABLE INCOME, CAD (US$) TAX RATE
Up to 31,465 (US$23,307) 10.80%
31,465 68,005 (US$50,374) 12.75% on band over US$23,307
Over 68,005 (US$50,374) 17.40% on all income over US$50,374
Source: Global Property Guide

NEW BRUNSWICK INCOME TAX 2017

TAXABLE INCOME, CAD (US$) TAX RATE
Up to 41,059 (US$30,414) 9.68%
41,059 79,946 (US$70,749) 14.82% on band over US$30,414
79,946 129,975 (US$115,022) 16.52% on band over US$70,749
129,975 150,000 (US$132,743) 17.84% on band over US$115,022
Over 250,000 (US$221,239) 20.30% on all income over US$221,239
Source: Global Property Guide

NEWFOUNDLAND AND LABRADOR INCOME TAX 2017

TAXABLE INCOME, CAD (US$) TAX RATE
Up to 35,008 (US$30,980) 7.70%
35,00882,119 (US$60,829) 12.50% on band over US$30,980
82,119 133,507 (US$98,894) 13.30% on band over US$60,829
133,507 152,100 (US$112,667) 13.80% on band over US$98,894
Over 152,100(US$112,667) 14.30% on all income over US$112,667
Source: Global Property Guide

NORTHWEST TERRITORIES INCOME TAX 2017

TAXABLE INCOME, CAD (US$) TAX RATE
Up to 41,585 (US$30,804) 5.90%
41,585 83,172 (US$61,609) 8.60% on band over US$30,804
83,172 135,219 (US$100,162) 12.20% on band over US$61,609
Over 135,219(US$100,162) 14.05% on all income over US$100,162
Source: Global Property Guide

NOVA SCOTIA INCOME TAX 2017

TAXABLE INCOME, CAD (US$) TAX RATE
Up to 29,590 (US$21,919) 8.79%
29,590 59,180 (US$43,837) 14.95% on band over US$21,919
59,180 93,000 (US$68,889) 16.67% on band over US$43,837
93,000 - 150,000 (US$111,111) 17.50% on band over US$68,889
Over 150,000 (US$111,111) 21% on all income over US$111,111
Source: Global Property Guide

NUNAVUT INCOME TAX 2017

TAXABLE INCOME, CAD (US$) TAX RATE
Up to 43,780 (US$32,429) 4%
43,780 87,560 (US$64,859) 7% on band over US$32,429
87,560 142,353 (US$105,447) 9% on band over US$64,859
Over 142,353 (US$105,447) 11.50% on all income US$105,447
Source: Global Property Guide

ONTARIO INCOME TAX 2017

TAXABLE INCOME, CAD (US$) TAX RATE
Up 42,201 (US$31,260) 5.05%
42,201 81,404 (US$62,521) 9.15% on band over US$31,260
81,404 150,000 (US$111,111) 11.16% on band over US$62,521
150,000 220,000 (US$162,963) 12.16% on band over US$111,111
Over 220,000 (US$162,963) 13.16% on all income over US$162,963
Source: Global Property Guide

PRINCE EDWARD ISLAND INCOME TAX 2017

TAXABLE INCOME, CAD (US$) TAX RATE
Up to 31,984 (US$23,692) 9.80%
31,984 63,969 (US$47,384) 13.80% on band over US$23,692
Over 63,969 (US$47,384) 16.70% on all income over US$47,384
Source: Global Property Guide

QUEBEC INCOME TAX 2017

TAXABLE INCOME, CAD (US$) TAX RATE
Up to 42,705 (US$31,633) 16%
42,705 85,405 (US$63,263)42,705 85,405 (US$63,263) 20% on band over US$31,633
85,405 103,915 (US$76,974) 24% on band over US$63,263
Over 103,915 (US$76,974) 25.75% on all income US$76,974
Source: Global Property Guide

SASKATCHEWAN INCOME TAX 2017

TAXABLE INCOME, CAD (US$) TAX RATE
Up to 45,225 (US$33,500) 11%
45,225 129,214 (US$95,714) 13% on band over US$33,500
Over 129,214 (US$95,714) 15% on all income over US$95,714
Source: Global Property Guide

YUKON INCOME TAX 2017

TAXABLE INCOME, CAD (US$) TAX RATE
Up to 45,916 (US$34,012) 6.40%
45,916 91,831 (US$68,023) 9% on band over US$34,012
91,831 142,353(US$105,447) 10.90% on band over US$68,023
142,353 500,000 (US$370,370) 12.80% on band over US$105,447
Over 500,000 (US$370,370) 15% on all income over US$370,370
Source: Global Property Guide

Residents are entitled to claim certain deductions, non-refundable tax credits, and refundable federal, provincial or territorial credits.

Canada luxury lakeside residential houses

RENTAL INCOME
Deductible expenses include Capital Cost Allowance, advertising, insurance, interest, maintenance and repair costs, management, administration and legal fees, office expenses, property taxes, travel, utilities and others.

The depreciation allowance is called Capital Cost Allowance (CCA). Only 50% of the cost of the property is depreciable for the year of acquisition. The maximum CCA that can be taken is the amount that reduces the net income to nil.

Rental buildings may belong to different classes depending on the structure and the acquisition date. Most buildings acquired after 1987 belong to class 1 and are depreciated at 4%. Furniture and equipment are depreciated at 20%.

CAPITAL GAINS
Only half of the final capital gains are taxed as part of income. Capital gains are computed by deducting the costs incurred in selling and purchasing the property, capital expenditures, and such costs as additions and improvements in the property.

Proceed of Disposition
Less: Adjusted Cost basis
Less: Outlays and Expenses on Disposition
= Capital Gains
Capital Gains 2 = Taxable capital gains

Proceeds from the disposal of property used as a principal residence are exempt from taxation.

PROPERTY TAX


Real Property Tax

Property taxes are levied by local governments. The rates depend on the city or municipality where the property is located, and the assessed value of the property. Property taxes can be deducted from rental income when paying taxes.

For comparison, we show the effective residential tax rate as percent of market value for a detached bungalow and a standard condo apartment for different cities.

EFFECTIVE PROPERTY TAX RATES
(as % of Market Value)

MUNICIPALITY
DETACHED BUNGALOW
STANDARD CONDO APARTMENT
Calgary
0.84
0.88
Edmonton
1.24
0.94
Halifax
1.18
1.18
Montreal
1.78
1.39
Ottawa
1.34
1.08
Regina
1.99
1.98
Saskatoon
1.57
1.83
St. Catherines
1.93
1.17
St. John
1.29
1.20
Toronto
1.15
1.05
Vancouver
0.72
0.57
Victoria
0.61
0.61
Winnipeg
1.96
2.56
Source: Frontier Centre for Public Policy 2002





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