Canada: Personal Taxation
Rates of Income Tax
The federal tax rates for the 2012 tax year are as follows:
- On the first C$42,707: 15%
- Over C$42,707 and up to C$85,414: 22%
- Over C$85,414 and up to C$132,406: 26%
- Over C$132,406: 29%
In terms of capital gains, 50% of the gain realised is taxed at the relevant federal income tax rate. Certain exemptions apply, for example to gains realised on the sale of an individual’s principal home.
In addition, taxpayers are subject to provincial/territorial income taxes, most with their own tax bands. Top rates alone, for example, (for 2010) range from 10% (flat tax in Alberta) to 21% (in Nova Scotia, on income over C$150,000).
Provinces and territories further apply their own tax rates to capital gains and dividends.
Individuals and families on low and modest incomes can benefit from tax-free quarterly credits that offset all or part of the goods and services tax/harmonised sales tax that they pay. There are also various child and family tax credits available at provincial/territorial level.
There are pension income tax credits at federal and provincial/territorial level, which are available for certain pension income. If the credit is not fully utilised by the taxpayer, it can be transferred to a spouse or common-law partner.