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?
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:
- Pay through online banking. Simply set-up up the CRA as a bill payee through your bank
- Pay directly at the CRA with a debit card through “My Payment”
- 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.