Canadian Tax System

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Canadian Tax System

Canadian Tax System The tax system of Canada, like the systems of Russia and the United States, has a three-level structure: federal, provincial (territorial entities) and the level of municipalities. As in the United States, most tax revenues are credited to the federal budget of the country — about 60–65%. Direct taxes predominate to a large extent. But with indirect taxes in Canada has developed a very interesting situation.

In addition to the federal-level VAT, many provinces charge additional sales tax. In addition, among developed countries, Canada is a leader in high excise rates. Such a situation with excisable goods is not accidental. Canada’s territory is literally flooded with tobacco products that are smuggled.

We list several major taxes adopted in Canada:

  • personal income tax;
  • excise taxes; VAT;
  • sales tax;
  • corporate profit tax;
  • real property tax of legal entities and individuals.

The income tax has a progressive tax rate and is paid once per whole calendar year. It is charged twice – at the federal and provincial level. The situation is the same with the income tax of commercial structures. Filing a tax return is always a whole story for an individual. It is attended by all organizations and institutions that are even the slightest relation to the income of the taxpayer. Companies annually prepare for their employees documents on their income in the prescribed form. Banking and other financial institutions send customers information about the interest earned by them.

The most difficult thing for a taxpayer is to put together a lot of these certificates. In Canada, a large number of tax consultants work, who mostly have an economic education. For a fee, they will help the client to legally optimize (that is, reduce) the tax burden.

The trading system of Canada has one feature that usually becomes not a very pleasant surprise for tourists and guests of the country. The fact is that the prices of goods in stores, dishes in the menu of restaurants and cafes are always listed without sales tax. Therefore, tourists are unpleasantly surprised to see a sum of 11–13% more in the bill of a catering establishment than they expected. Locals take it very calmly and can calculate the final amount to pay on their own.


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