Affordable Accounting Advisory for Canadian Businesses

Income tax is tax charged on the income you earn in a year, levied by both the federal government and your province or territory. Rates are graduated, so successive slices of taxable income are taxed at higher rates, and credits such as the basic personal amount reduce the tax calculated. Employment income is taxed through payroll withholding and settled on your T1 return. Quebec residents also file a separate provincial return with Revenu Quebec.

For the 2026 tax year, federal rates are 14% on the first $58,523 of taxable income, 20.5% from there to $117,045, 26% to $181,440, 29% to $258,482, and 33% above that. Each rate applies only to the income inside its own band, so moving into a higher bracket does not raise the tax on the income below it. Provincial or territorial tax is added on top.

Not everyone. The GST/HST credit is an income-tested quarterly payment for residents with lower or modest incomes. You must be resident in Canada for tax purposes and at least nineteen, or have a spouse, common-law partner or child. There is no separate application: file your T1 and the CRA calculates entitlement from family net income, marital status and the number of children. Miss a filing year and the payments stop until the return goes in.

Commonly a tax preparer, tax accountant or tax specialist. Titles are not standardised in Canada: some preparers hold an accounting designation, others are bookkeepers, tax technicians or lawyers who focus on tax. What matters more than the label is that the person is registered with the CRA to file electronically for clients, carries a business number, quotes the fee in writing, and signs the return as preparer where required.

Yes, and it is usually worth doing. Filing with little or no income is how you claim the GST/HST credit, provincial and territorial credits and, if you have children, the Canada child benefit - these are based on an assessed return each year. Filing also carries forward tuition and other unused amounts, creates RRSP room from any earned income, and keeps your CRA record current for later years.

The CRA charges compound daily interest on any balance still unpaid after the payment deadline, and it keeps accruing until the balance is cleared. Where the return itself was filed on time there is no separate late-payment penalty, only interest. For the 2025 personal tax year the payment deadline was 30 April 2026, including for self-employed filers who had until 15 June 2026 to file. Municipal property tax is a different system, with charges set by your municipality.

Payroll tax withheld from a Canadian salary depends on your gross pay, your province of employment and the credits you claim on the federal and provincial TD1 forms. Your employer also withholds CPP or QPP contributions and EI premiums, which sit outside income tax. Because the brackets are graduated, a raise increases the withholding rate only on the extra income. Run your own figures through the CRA payroll deductions online calculator for an exact amount.

The buyer pays land transfer tax, and the lawyer or notary collects it on closing and remits it when the transfer is registered. The tax and its rates vary by province, some cities add a municipal charge on top, and Alberta and Saskatchewan charge land title registration fees instead of a transfer tax. First-time buyer rebates exist in several provinces. Budget for it as a cash closing cost, since in most cases it cannot be rolled into the mortgage.

Tax liability is the total tax you owe for a period, worked out before any payments are credited against it. Subtract tax withheld at source and any instalments paid and you are left with the balance owing or the refund. In accounting terms it is a liability on the balance sheet until it is paid, which is why a corporation carries income tax payable, GST/HST collected and payroll source deductions as amounts held for the government.

From 1 October 2026, British Columbia applies 7% PST to several services that were previously untaxed: accounting and bookkeeping, architectural, engineering and geoscience, security and private investigation, and non-residential real estate services. Architectural, engineering and geoscience fees are taxed on 30% of the purchase price rather than the full amount. Providers not already collecting PST must register online, and can do so up to six months before their first taxable sale.

Not automatically. Rates and brackets are the same whether you are single or coupled, so marriage on its own does not reduce the tax on your own income. A refund grows where one partner has little income and the other claims the spouse or common-law partner amount, where unused credits are transferred, or where eligible pension income is split. It can also shrink, because income-tested payments such as the GST/HST credit are based on family income.

Taxable income is what remains after deductions. A personal return moves through stages: total income from all sources, then net income after deductions such as registered retirement savings plan contributions, child care costs and union dues, then taxable income after any further deductions. Tax is calculated on that taxable income using the federal and provincial brackets, and non-refundable credits are applied afterwards, which is why a credit and a deduction are not worth the same amount.