Double-Entry Bookkeeping

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.

The basic personal amount is a non-refundable credit that shelters a base level of income from federal tax, so income below it carries no federal tax. The amount is indexed every year, and the enhanced portion is phased out across the second-highest federal bracket, so taxpayers in the top bracket receive only the base amount. Each province and territory sets its own version. On Form TD1 you claim it so your employer withholds less; claim it with one employer only, or too little tax is withheld.

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.

Yes. In Canada the tax on land and buildings is called property tax and is levied by the municipality; real estate tax is the American term for the same charge, so results using that wording often describe a US system. Property tax is not income tax and the CRA does not administer it. On a rental or business property it is a deductible operating expense, while on a personal residence it is not deductible.