Canada: Living There - Tax Issues
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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: business income, employment income, capital gains, and 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 2008 |
|
| TAXABLE INCOME, CA$ (US$) | |
| Up to 37,885 (US$29,687) | 15% |
| 37,885 – 75,769 (US$59,372) | 22% on band over US$29,687 |
| 75,769 – 123,184 (US$96,526) | 26% on band over US$59,372 |
| Over 123,184 (US$96,526) | 29% on all income over US$96,526 |
| Source: Global Property Guide | |
PROVINCIAL/ TERRITORIAL INCOME TAX 2008 |
|
| PROVINCES / TERRITORIES | |
| Newfoundland and Labrador | 8.2% on the first 30,215 (US$23,617) of taxable income, 13.3% on the next 30,214 (US$23,676), 16% on the amount over 60,429 (US$47,352) |
| Prince Edward Island | 9.8% on the first 31,984 (US$25,063) of taxable income, 13.8% on the next 31,985 (US$25,063), 16.7% on the amount over 63,969 (US$50,126) |
| Nova Scotia | 8.79% on the first 29,590 (US$23,187) of taxable income, 14.95% on the next 29,590 (US$23,187), 16.67% on the next 33,820 (US$26,501), 17.50% on the amount over 93,000 (US$72,874) |
| New Brunswick | 10.12% on the first 34,836 (US$27,297) of taxable income, 15.48% on the next 34,837 (US$27,298), 16.80% on the next 43,600 (US$,34,165) 17.95% on the amount over 113,273 (US$88,760) |
| Ontario | 6.05% on the first 36,020 (US$28,225) of taxable income, 9.15% on the next $36,021 (US$28,226), 11.16% on the amount over $72,041 (US$56,451) |
| Manitoba | 10.90% on the first 30,544 (US$23,934) of taxable income, 12.75% on the next 35,456 (US$27,783), 17.40% on the amount over 66,000 (US$51,717) |
| Saskatchewan | 11% on the first 39,135 (US$30,666) of taxable income, 13% on the next 72,679 (US$56,951), 15% on the amount over 111,814 (US$87,617) |
| Alberta | 10% of taxable income |
| British Columbia | 5.06% on the first 35,016 (US$27,438) of taxable income, 7.70% on the next 35,017 (US$27,439), 10.50% on the next 10,373 (US$8,128), 12.29% on the next 17,230 (US$13,501), 14.70% on the amount over 97,636 (US$76,507) |
| Yukon | 7.04% on the first 37,885 (US$29,687) of taxable income, 9.68% on the next 37,884 (US$29,686), 11.44% on the next 47,415 (US$37,154), 12.76% on the amount over $123,184 (US$96,868) |
| Northwest Territories | 5.90% on the first 35,986 (US$28,198) of taxable income, 8.60% on the next 35,987 (US$28,119), 12.20% on the next 45,038 (US$35,292), 14.05% on the amount over $117,011 (US$91,689) |
| Nunavut | 4% on the first 37,885 (US$29,687) of taxable income, 7% on the next 37,85 (US$29,687), 9% on the next 47,414 (US$37,513), 11.5% on the amount over 123,184 (US$96,526) |
Residents are entitled to claim certain deductions, non-refundable tax credits, and refundable federal, provincial or territorial credits.
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 |
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 |
||
| Calgary | ||
| Edmonton | ||
| Halifax | ||
| Montreal | ||
| Ottawa | ||
| Regina | ||
| Saskatoon | ||
| St. Catherines | ||
| St. John | ||
| Toronto | ||
| Vancouver | ||
| Victoria | ||
| Winnipeg | ||
| Source: Frontier Centre for Public Policy 2002 | ||
Canada - more data and information
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posted by chele | 2008-02-23
yes, Vancouver
The first $9600 of income is tax free. Common deductions for residents include public transit passes, education expenses, retirement savings, and dependents.