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Nov 23, 2016

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 2015

TAXABLE INCOME, CA$ (US$) TAX RATE
Up to 44,701 (US$39,558) 15%
44,701 89,401 (US$79,116) 22% on band over US$39,558
89,401 138,586 (US$122,643) 26% on band over US$79,116
Over 138,586(US$122,643) 29% on all income over US$122,643
Source: Global Property Guide

FEDERAL INCOME TAX 2014

TAXABLE INCOME, CA$ (US$) TAX RATE
Up to 43,953 (US$38,897) 15%
43,953 87,907 (US$77,794) 22% on band over US$38,897
87,907 136,270 (US$120,593) 26% on band over US$77,794
Over 136,270 (US$120,593) 29% on all income over US$120,593
Source: Global Property Guide

PROVINCIAL/ TERRITORIAL INCOME TAX 2014

ALBERTA INCOME TAX 2015

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 125,000 (US$110,612) 10%
125,000 150,000 (US$132,743) 12% on band over US$110,612
150,000 200,000 (US$176,991) 13% on band over US$132,743
200,000 300,000 (US$265,487) 14% on band over US$176,991
Over 300,000 (US$265,487) 15% on all income over US$265,487
Source: Global Property Guide

BRITISH COLUMBIA INCOME TAX 2015

TAXABLE INCOME, CAD (US$) TAX RATE
Up to 37,869 (US$33,512) 5.06%
37,869 75,740 (US$67,027) 7.70% on band over US$33,512
75,740 86,958 (US$76,954) 10.50% on band over US$67,027
86,958 105,592 (US$93,444) 12.29% on band over US$76,954
105,592 151,050 (US$133,673) 14.70% on band over US$93,444
Over 151,050 (US$133,673) 16.80% on all income over US$133,673
Source: Global Property Guide

MANITOBA INCOME TAX 2015

TAXABLE INCOME, CAD (US$) TAX RATE
Up to 31,000 (US$27,434) 10.80%
31,000 67,000 (US$59,292) 12.75% on band over US$27,434
Over 67,000 (US$59,292) 17.40% on all income over US$59,292
Source: Global Property Guide

NEW BRUNSWICK INCOME TAX 2015

TAXABLE INCOME, CAD (US$) TAX RATE
Up to 39,973 (US$35,374) 9.68%
39,973 79,946 (US$70,749) 14.82% on band over US$35,374
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
150,000 250,000 (US$221,239) 21% on band over US$132,743
Over 250,000 (US$221,239) 25.75% on all income over US$221,239
Source: Global Property Guide

NEWFOUNDLAND AND LABRADOR INCOME TAX 2015

TAXABLE INCOME, CAD (US$) TAX RATE
Up to 35,008 (US$30,980) 7.70%
35,00870,015 (US$61,960) 12.50% on band over US$30,980
70,015 125,000 (US$110,612) 13.30% on band over US$61,960
125,000 175,000 (US$154,867) 13.80% on band over US$110,612
Over 175,000 (US$154,867) 14.30% on all income over US$154,867
Source: Global Property Guide

NEWFOUNDLAND AND LABRADOR INCOME TAX 2016

TAXABLE INCOME, CAD (US$) TAX RATE
Up to 35,008 (US$30,980) 7.70%
35,008 70,015 (US$61,960) 12.50% on band over US$30,980
70,015 125,000 (US$110,612) 13.30% on band over US$61,960
125,000 175,000 (US$154,867) 14.30% on band over US$110,612
Over 175,000 (US$154,867) 15.30% on all income over US$154,867
Source: Global Property Guide

NORTHWEST TERRITORIES INCOME TAX 2015

TAXABLE INCOME, CAD (US$) TAX RATE
Up to 40,484 (US$35,827) 5.90%
40,484 80,971 (US$71,656) 8.60% on band over US$35,827
80,971 131,641 (US$116,497) 12.20% on band over US$71,656
Over 131,641(US$116,497) 14.05% on all income over US$116,497
Source: Global Property Guide

NOVA SCOTIA INCOME TAX 2015

TAXABLE INCOME, CAD (US$) TAX RATE
Up to 29,590 (US$26,186) 8.79%
29,590 59,180 (US$52,372) 14.95% on band over US$26,186
59,180 93,000 (US$82,301) 16.67% on band over US$52,372
93,000 - 150,000 (US$132,743) 17.50% on band over US$82,301
Over 150,000 (US$132,743) 21% on all income over US$132,743
Source: Global Property Guide

NUNAVUT INCOME TAX 2015

TAXABLE INCOME, CAD (US$) TAX RATE
Up to 42,622 (US$37,719) 4%
42,622 85,243 (US$75,436) 7% on band over US$37,719
85,243 138,586 (US$122,643) 9% on band over US$75,436
Over 138,586 (US$122,643) 11.50% on all income US$122,643
Source: Global Property Guide

ONTARIO INCOME TAX 2015

TAXABLE INCOME, CAD (US$) TAX RATE
Up 40,922 (US$36,214) 5.05%
40,922 81,847 (US$72,431) 9.15% on band over US$36,214
81,847 150,000 (US$132,743) 11.16% on band over US$72,431
150,000 220,000 (US$194,690) 12.16% on band over US$132,743
Over 220,000 (US$194,690) 13.16% on all income over US$194,690
Source: Global Property Guide

PRINCE EDWARD ISLAND INCOME TAX 2015

TAXABLE INCOME, CAD (US$) TAX RATE
Up to 31,984 (US$28,304) 9.80%
31,984 63,969 (US$56,610) 13.80% on band over US$28,304
Over 63,969 (US$56,610) 16.70% on all income over US$56,610
Source: Global Property Guide

QUEBEC INCOME TAX 2015

TAXABLE INCOME, CAD (US$) TAX RATE
Up to 41,935 (US$37,111) 16%
41,935 83,865 (US$74,217) 20% on band over US$37,111
83,865 102,040 (US$90,301) 24% on band over US$74,217
Over 102,040 (US$90,301) 25.75% on all income US$90,301
Source: Global Property Guide

SASKATCHEWAN INCOME TAX 2015

TAXABLE INCOME, CAD (US$) TAX RATE
Up to 44,028 (US$38,963) 11%
44,028 125,795 (US$111,323) 13% on band over US$38,963
Over 125,795 (US$111,323) 15% on all income over US$111,323
Source: Global Property Guide

YUKON INCOME TAX 2015

TAXABLE INCOME, CAD (US$) TAX RATE
Up to 44,701 (US$39,558) 6.40%
44,701 89,401 (US$79,116) 9% on band over US$39,558
89,401 138,586(US$122,643) 10.90% on band over US$79,116
138,586 500,000 (US$442,478) 12.80% on band over US$122,643
Over 500,000 (US$442,478) 15% on all income over US$442,478
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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