In Canada, your tax level will depend on which province you live in as well as your income level. Taxes bring many benefits to Canadian citizens and many of them are enjoyed on a regular basis. Likely, the most renowned program supplied by the Canadian government via taxation revenue is healthcare. The healthcare system in Canada is an interesting case, as it technically falls under the jurisdiction of the provincial governments. For this reason, when you become a Canadian citizen your health card will be issued by the province. Generally, these health cards from Ontario or Saskatchewan for example , will allow you access to universal healthcare across the county. The exception is Quebec, where citizens with Quebec health cards must pay upfront in other provinces and manually file to be reimbursed by the provincial government; the opposite is also true for Canadian citizens from other provinces receiving health care services in Quebec.
Many new Canadian citizens are interested in bring their family members to the country; this often includes elderly parents or grandparents. Many governments are strict with this policy, as older individuals may need access to health care services. However, in a country like Canada with universal health programs the issue gets even more complicated; these older individuals have not been paying tax over the long-term to support the Canadian healthcare system. The government does allow super-visa programs where newcomers can have their parents and grandparents come to Canada, but they must prove a certain level of financial stability in order to cover their parent’s health expenses.
Income Tax
Besides healthcare, the government uses tax dollars to fund many projects, including: public schools, infrastructure, job development and transfer payments from financially better off provinces to others. Tax revenues are used to decrease the divide between the rich and poor by evening out the playing field. The level of income tax may surprise newcomers planning to become Canadian citizens. For example, individuals from Saudi Arabia may be surprised by income tax, as it does not exist in their home country. Income tax also does not exist in Qatar, the United Arab Emirates, Kuwait, Bahrain or Brunei Darussalam.
International Taxation Rates 2013*
| Canada (federal only) | 29% |
| China | 45% |
| France | 45% |
| Hong Kong | 15% |
| India | 33.99% |
| Israel | 50% |
| Japan | 50.84% |
| Russia | 13% |
| Sweden | 56.6% |
| U.K. | 45% |
| U.S. | 39.6% |
| Argentina | 35% |
Source KPMG, *note that all rates are the top margin rates and do not include state or provincial taxes.
It is important to note that Canada has an incremental income tax formula. This means that the citizens with the highest level of income will not lose %29 of income on all of their income.
As of 2014:
- Canadians are taxed 15% on the first $43,954 of taxable income;
- 22% on taxable income over $45,954 up to $87,907;
- 26% on the portion of taxable income between $87,907 and $136,270;
- And 29% on taxable income over $136,270.
Source: Canada Revenue Agency , also use this source to calculate your tax level.
Additionally, provincial tax rates are different from province to province. All of the provinces and territories have incremental systems for income tax; you can find these tax levels here. For this reason, it is important to choose where to settle in Canada wisely. Other factors to consider include: cost of living, job availability, etc. For more information on Canadian provincial immigration programs click here.
Canadian-US Dual Citizens
An important aspect for Canadian-US dual citizens is that individuals will likely have to file tax returns in both countries. Usually, dual citizens living and working in Canada do not have to pay income tax to the US, as their level of taxation is higher in Canada. However, it is important for individuals to research and ask questions on this topic if it relates to them. For example, US citizens are required to file an FBAR form if they have assets worth higher than $10,000 outside of the country. Failure to complete these forms can result in financial penalties. These American regulations can affect many dual citizens living and working in Canada.
Corporate Tax Rates
The federal government has been trying to make Canada an appealing country for businesses to start and operate. For this reason, corporate tax rates have been lowered and foreign direct investment has been encouraged. Many will argue that governments should tax corporation higher as they have much more money to spare than individual citizens. However, this view can sometimes harm economies more than help them. For example, if there is a low corporate tax rate in Canada many businesses will perceive it as a good place to do business. As a result factories, research facilities and offices will be created across the country supplying jobs, training and financial security to many Canadian citizens.
Benefits
Generally, Canadians are accepting of tax rates because we can see the direct benefits of our tax dollars. Especially through health services and public schools. Obviously, it can be discouraging when scandals occur with government officials mismanaging their spending at the expense of the taxpayers. Fortunately, in terms of internal corruption Canada scores very well on the Corruption Perceptions Index. In general Canadians trust their government. Canada is a great and safe place to live, start a business and raise a family, no matter your opinion on the tax system.
