The Canadian Tax System
Taxes are collected by the federal government, by each of the provinces
and territories, and by thousands of cities and towns. Here is a brief guide
to the most important taxes in Canada.
Personal Income Taxes
Personal income taxes are paid directly to the government by individuals.
The amount of tax any individual pays is the result of a fairly complicated
set of calculations. All types of income are included in what is called total
income, although certain types of income qualify for total or partial
exemption. Then a number of allowable deductions are subtracted from
total income to determine taxable income. The most important deduction
is called the “basic personal amount,” which in 2018 was equal to $11
- Once taxable income is calculated, the amount of tax payable is then
computed by applying different tax rates to different levels of income.
There are five federal personal income tax rates, each applying within
what is called a tax bracket. In 2018, the five tax brackets and marginal
tax rates within each bracket were as follows:
$0–$46 605: marginal tax percent
$46 606–$93 208: marginal tax percent
$93 209–$144 489: marginal tax percent
$144 490–$205 842: marginal tax percentrate= 15
rate=20.5
rate= 26
rate= 29