As you take out plans on migrating to live and work in Canada, having knowledge about the taxation system in Canada will help you effectively plan your expenditures especially when you get to Canada. So get ready, and know what to expect so that your immigration experience will begin with a positive first step when you land.
What is the taxation system in Canada?
In Canada, the federal, provincial and municipal governments get money from individuals and companies so as to fund for government programs and services, like health care, schools, roads, public utilities, economic development and cultural activities.
The common types of taxes are income taxes, property taxes, sales taxes, and business taxes (for business owners).
The Canada Revenue Agency (CRA) retrieves income taxes. Every year, persons who are Canadian residents complete an income tax return. On this tax return, you list your taxable income, deductions and tax credits so as to calculate how much tax you owe or how much income tax you have to pay.
There is a Harmonized Sales Tax (HST) of 13% in Ontario. Generally, HST is included at the cash register so that it is summed up with the amount on the price tag to be the final price. About 8% of the HST is claimed by the provincial government and 5% is collected by the federal government.
You pay HST on many goods and services, however, there are a few exemptions, such as childcare services, basic food products, and prescription drugs.
Families and Individuals who have low and modest incomes can become eligible for an HST credit. You may like to find out more about What is the HST credit? and Am I eligible?