Canada Tax Guide

Canada

Currency: Canadian Dollar

Foreign Exchange Control: None

Accounting Principles: Canadian GAAP requires a Publically Accountable Enterprise to use IFRS. Others may use IFRS or Accounting Standards for Private Enterprises. Financial statements prepared annually.

Business Entities: Principally, corporation, unlimited liability company, sole proprietorship, partnership, joint venture, trust and branch of foreign corporation.

Corporate Taxation

Residence: If incorporated in Canada or if central management and control is in Canada.

Basis: Residents are taxed on worldwide income, non-residents are taxed on certain types of Canadian-source income.

Rate: Federal rate 15%. Provincial rates from 10% – 16%

Foreign Tax: Foreign non-business and business income tax paid can be credited against Canadian tax on the same profits limited to the amount of Canadian tax payable. Excess foreign business tax can be carried back/forward and offset.

Other: Deductions available for scientific research and development and labour on films for eligible corporations.

Tax Year: Accounting year. May not exceed 53 weeks.

Personal Taxation

Residence: Residents taxed at federal and provincial level on worldwide income. Non-resident individuals are taxed only on their Canadian-source income and gains (resident if spend > 183 days in a calendar year. Domestic residency may be overridden by a tax treaty).

Rate: Federal tax progressive up to 29%. Provincial tax rates progressive with range of 10% – 25.75%. Ontario imposes a surtax of up to 56%.

Capital Gains: 50% of capital gains less allowable capital losses are included in income for income tax purposes.

Other: Real property tax: Municipal authorities levy taxes on the occupation of real property.

Inheritance tax: No formal inheritance tax.

Social Security: Employees and employers make contributions based on employee earnings.

VAT: Federal rate 5%. Provinces also apply levy charges.

Member Firm: Numeris LLP

Email:
Carol Sadler: csadler@numerisllp.ca