Canada is a desirable destination for many immigrants due to its high standard of living, strong economy and welcoming culture. However, before making the move to immigrate here, it’s important to understand the country’s tax system. Here’s an overview of Canada’s tax system, including the types of taxes that are imposed and the tax rates and the tax brackets.
Types of Taxes
In Canada, there are three main types of taxes: federal, provincial, and municipal. The Canada Revenue Agency (CRA) is responsible for federal taxes. Federal taxes fund national programs and services such as health care, social services and defence. Each individual province collects its own tax to fund programs and services specific to that province. These can include education and welfare. Cities and towns collect municipal taxes individually to fund local services such as waste management and parks.
The federal tax rate in Canada is progressive, and you will be put in different brackets based on your income. Meaning that the more income you make, the higher your tax rate will be. For example, in 2021, the federal tax rate for income up to $49,020 was 15%, and for income over $216,511, the rate was 33%. Provincial tax rates vary depending on the province and the income level.
Benefits and Credits
As an immigrant to Canada, you may be eligible for certain benefits and credits that can help to reduce your taxes. These benefits and credits can include things like the Canada Child Benefit (CCB), the GST/HST credit, and the Working Income Tax Benefit (WITB). It is important to research and apply for any benefits or credits that you may be eligible for.
Tax Planning and Preparation
It is important to plan and prepare for your taxes in advance, especially as a newcomer to Canada. This can include things like keeping accurate records of your income and expenses and consulting with a tax professional or accountant who is familiar with the Canadian tax system. Proper planning and preparation can help you to minimize your tax liability and maximize your benefits and credits.
At mana immigration, we are ready to help with any questions you might have about taxes and life in Canada. Schedule a free consultation with us and ask any questions about the immigration process or about life in Canada.