Burn Rate

Property tax is an annual municipal levy on real estate, charged by the city or town where the property sits rather than by the CRA. The bill is the assessed value of the property multiplied by the tax rate the municipality sets each year, and it funds local services such as roads, waste collection, policing and the education portion the province adds. Assessed value is set by a provincial assessment authority, so it is not the price you paid.

Canada uses a progressive system, so only the income falling inside a bracket is taxed at that bracket's rate. Moving into a higher bracket never raises the tax on the income below it. You face a federal set of brackets plus a provincial or territorial set, and both are indexed most years. Credits, starting with the basic personal amount, then reduce the calculated tax. Look up the brackets for the specific tax year before planning around them.

Federal taxation is the part of the system Parliament sets and the CRA administers: personal and corporate income tax, GST, excise duty and customs. Each province levies its own income tax as well, and the CRA collects provincial personal tax alongside the federal amount on one return everywhere except Quebec, which administers a separate provincial return. That is why your total rate has two components even though most people file only once.

Deductions reduce taxable income; credits reduce the tax calculated on it. The usual deductions are RRSP contributions, child care expenses, union and professional dues, employment expenses your employer certifies, eligible moving expenses, deductible spousal support payments (child support is not deductible), and losses from a business or rental. If the same large deductions repeat each year, Form T1213 asks the CRA to reduce the tax withheld from your pay; the CRA publishes no processing standard for it, so file well before the year it applies to.