Canada: Worked Example of Tax on Rent
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Tax Example: Rent
| Non-resident couple's joint monthly rental income1 | US$1,500 | US$6,000 | US$12,000 | |
| Annual Rental Income | US$18,000 | US$72,000 | US$144,000 | |
| Less: Standard Costs2 | (2,170) | (9,600) | (20,800) | |
| Less: Property/ Municipal Taxes3 | (1,578)4 | (10,234)5 | (27,290)6 | |
| Less: Capital Cost Allowance (Depreciation)7 | (2,590) | (16,800) | (16,800) | |
| = Taxable Income | US$11,662 | US$35,366 | US$51,110 | |
| Income Tax Rates8 | ||||
| Up to CAD37,178 | 15.50% | 1,808 | 5,482 | 7,922 |
| CAD37,179 – CAD74,357 | 22.00% | - | - | - |
| CAD74,358 – CAD120,887 | 26.00% | - | - | - |
| Over CAD120,888 | 29.00% | - | - | - |
| Income Tax Due | US$1,808 | US$5,482 | US$7,922 | |
| Income Tax Rates2 | ||||
| Non-Resident Surtax (48% of Federal Tax) | 868 | 2,631 | 3,803 | |
| Annual Income Tax Due | US$2,676 | US$8,113 | US$11,724 | |
| Tax Due as % of Gross Income | 14.87% | 11.27% | 8.14% | |
Thanks to: |
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DISCLAIMER: The information contained above is marketing material only and is not written tax advice directed at the particular facts and circumstances of any person and should not be relied upon. We encourage you to discuss your particular situation with us or an independent tax advisor. This information was last updated on September 3, 2007.
Notes
1 The property is jointly owned by husband and wife, but then taxed separately (50% upon each partner). Exchange rate used: 1 US$ = 1.05351 CAD.
2 Estimated values. Costs include insurance, repairs and maintenance. Only actually incurred income-generating expenses are deductible.
3 Residential property tax is calculated as a percentage of the assessed value of the property. The residential (single-unit) rate for Toronto is 0.8528434% for 2007.
4 The property cost is (CAD194,900) US$185,000.
5 The property cost is (CAD1,264,212) US$1,200,000.
6 The property cost is (CAD3,371,232) US$3,200,000.
7 Calculated capital allowance is calculated on the declining balance and only 50% of the cost of property is depreciable for the year of acquisition. It is only deducted on the building portion of the property (not the land). For computation purposes, the building portion is 70% of the cost of the property.
8 Federal income tax rates for 2007.
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Your Comments
posted by Marc Valin | 2008-07-07
Real estate owner, Montreal
You forgot the provincial income tax.For the sake of world wide comparizon, the Capital cost allowance should not be taken into consideration. Defered income tax is a debt.
posted by our Editor: Matthew Pollock | 2008-07-07
Aha. Let us look into this.