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Canadian Tax Rate: How Much Do You Have to Pay in 2022?

October 10, 2022 Andrew AdolphAudits

 

So, you want to know about the tax rate in Canada?  

  Canadian Tax Rate How Much Do You Have to Pay in 2022

Whether you already live in Canada or are considering moving to Canada, you might wonder just how much tax you will have to pay to live in a country with free healthcare.  

A History of Canadian Taxes 

Canada used to be a bit of a tax haven until 1917, as a temporary measure to fund the nation’s participation in World War I. Until then, the young fledgling nation relied on excise taxes and duties to fund government operations.  

The duties and excise taxes remain and are hidden in the price of certain goods. There is also a sales tax system so the price you see is never the final price. 

And that temporary income tax? It is permanent now, and what used to be reported on a postcard now takes several pages of form to fill out, every year. 

Always on the hunt for new things to tax, in 1972 the Income Tax Act was majorly amended to bring in capital gains taxation. In addition to tax on income, anything you sell that has gone up in value is also taxable on 50% of the gain. 

Basic Rules 

Unlike the USA which taxes by citizenship, Canada taxes by residency. If you are here over six months, Canada may require a tax return from you.  

You generally do not have to file an income tax return if you have no tax to pay.. Even if you do not, there may be benefits to filing in order to receive certain government benefits such as: 

Canadian Tax Rate – Federal 

The first level you have to figure out is Federal (Canada-wide) tax, applicable in all provinces and territories: 

Canada  Tax Rate 
Federal Tax Rate      15% on the first $49,020 of taxable income 
  20.5% on the next $49,020 up to $98,040 
  26% on the next $53,938 up to $151,978 
  29% on the next $64,533 up to $216,511 
  33% on anything over $216,511 

Canadian Tax Rate by Province 

Added to the Federal rate is the rate according to which province you resided in as of Dec 31. 

Province  Tax Rate 
British Columbia  5.06% on the first $42,184 of taxable income 
  7.7% on the next $42,184 up to $84,369 
  10.5% on the next $84,369 up to $96,866 
  12.29% on the next $96,866 up to $117,623 
  14.7% on the next $117,623 up to $159,483 
  16.8% on the amount over $159,483 up to $222,420 
Alberta  10% on the first $131,220 of taxable income 
  12% on the next $131,221-$157,464 
  13% on the next $157,465-$209,952 
  14% on the next $209,953-$314,928 
  15% on the amount over $314,928 
Saskatchewan  10.5% on the first $45,677 of taxable income 
  12.5% on $45,677 up to $130,506 
  14.5% on the amount over $130,506 
Manitoba  10.8% on the first $33,723 of taxable income 
  12.75% on the next $33,723 up to $72,885 
  17.4% on the amount over $72,885 
Ontario  5.05% on the first $45,142 of taxable income 
  9.15% on the next $45,142 up to $90,287 
  11.16% on the next $90,287 up to $150,000 
  12.16% on the next $150,001-$220,000 
  13.16 % on the amount over $220,000 
Quebec  15% on the first $45,105 of taxable income 
  20% on the next $45,105 up to $90,200 
  24% on the next $90,200 up to $109,755 
  25.75% on the amount over $109,755 
New Brunswick  9.68% on the first $43,835 of taxable income 
  14.82% on the next $43,835 up to $87,671 
  16.52% on the next $87,671 up to $142,534 
  17.84% on the next $142,534 up to $162,383 
  20.3% on the amount over $162,383 
Nova Scotia  8.79% on the first $29,590 of taxable income 
  14.95% on the next $29,591-$59,180 
  16.67% on the next $59,181-$93,000 
  17.5% on the next $93,001-$150,000 
  21% on the amount over $150,000 
Prince Edward Island  9.8% on the first $31,984 of taxable income 
  13.8% on the next 31,985 – $63,969 
  16.7% on the amount over $63,969 
Newfoundland and Labrador  8.7% on the first $38,081 of taxable income 
  14.5% on the next $38,081 up to $76,161 
  15.8% on the next $76,161 up to $135,973 
  17.3% on the next $135,973 up to $190,363 
  18.3% on the amount over $190,363 
Nunavut  4% on the first $46,740 of taxable income 
  7% on the next $46,740 up to $93,480 
  9% on the next $93,480 up to $151,978 
  11.5% on the amount over $151,978 
Yukon  6.4% on the first $49,020 of taxable income 
  9% on the next $49,020 up to $98,040 
  10.9% on the next $98,040 up to $151,978 
  12.8% on the next $151,978 – $500,000 
  15% on the amount over $500,000 
Northwest Territories  5.9% on the first $44,396 of taxable income 
  8.6% on the next $44,396 up to $88,796 
  12.2% on the next $88,796 up to $144,362 
  14.05% on the amount over $144,362 

 

 

These figures get adjusted every year for inflation and/or whenever the politicians decide to change the rates.  

How to pay income tax online 

The problem with paying your taxes sometimes is figuring out how to do it right. Some people do it themselves using apps like Ufile. However, most Canadians (especially small business owners) opt to hire a tax accountant so they can get more money back come refund season. 

If you prefer to pay online, you have three options: 

  1. Pay through online banking. Simply set-up up the CRA as a bill payee through your bank 
  1. Pay directly at the CRA with a debit card through “My Payment” 
  1. You can still mail in a cheque. We advise against this though. 

Bottom Line 

Hiring a tax audit accountant or CPA bookkeeper can help you get additional money back from the CRA. Knowing your numbers allows you to maximize savings and profitable opportunities and avoid costly mistakes long term. 

Are you a small business owner or freelancer looking to grow and sustain your business? 

To book a free meeting, call 604-240-6173 or email me at andrew@gatewaytax.ca. I can answer any financial or tax-related questions you might have. You can also visit the Blog for additional tax-related resources. 

 

 

 

 

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Andrew Adolph

Andrew Adolph is a CPA and former CRA auditor with 25 Years of experience. He helps businesses to not par any more in sales taxs than the law says they must and acts as an advocate for you if you are being audited, so you can fous on your business.