Economical Accounting Services for Startups

File a T1 return for the year, sending it electronically with CRA-certified software or mailing a paper return. Gather your slips and receipts first and check them against the ones listed in My Account. For the 2025 tax year the filing and payment deadline was 30 April 2026, or 15 June 2026 to file if you or your spouse were self-employed, with payment still due 30 April 2026. CRA online filing for 2025 returns closes 29 January 2027.

Canadian income tax is built up in layers. You total your income for the year, subtract the deductions you qualify for to arrive at taxable income, then apply the federal brackets and your province's brackets to that figure. Each bracket rate applies only to the income sitting inside it, so earning more never retaxes the dollars below. Non-refundable credits, starting with the basic personal amount, come off the tax afterwards. Look up the CRA bracket table for the tax year you are filing.

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.

Rent on your home is not deductible on a Canadian return. Two situations change that. Self-employed people, and employees who meet the work-space-in-the-home conditions, may claim the share of rent tied to the area used for work. Several provinces also run a property tax or rent based credit, applied for on the provincial schedule filed with your T1, where rent paid affects the amount. Keep receipts and your landlord's details either way.

Rental income is added to your other income and taxed at your marginal rate. You report gross rent and deduct reasonable expenses such as mortgage interest, property tax, insurance, utilities, repairs, condo fees, advertising and management on the rental schedule of your T1. Improvements are capitalised and claimed through capital cost allowance rather than deducted at once. A rental loss can usually offset other income, and when you sell, half the gain is taxable for 2025 and 2026.

Divide the total by one plus the tax rate, then subtract that result from the total to get the tax. In Ontario at 13% HST divide by 1.13; in Nova Scotia at 14% from 1 April 2025 divide by 1.14; where only 5% GST applies divide by 1.05. Quebec is layered, because QST of 9.975% applies to the pre-GST price, giving a combined 14.975%, so divide by 1.14975 to reach the pre-tax amount.

Call the individual or business tax enquiries line listed on the CRA's Contact us page, then work through the automated menu to reach an agent. Have your social insurance number or business number, your date of birth and a line amount from your last assessed return ready, because the agent cannot discuss your file without them. Wait times are longest right after the filing deadline. My Account answers many questions without a call.

No. Tips are added to your other income and taxed at your normal graduated rates, so there is no separate tip rate. What differs is how the tax reaches the CRA. Controlled tips the employer distributes go through payroll, with CPP, EI and income tax withheld, and show up on your T4. Direct tips are not withheld at source, so nothing comes off during the year and you can face a balance owing when you file.

Divide income tax expense by profit before tax to get the effective rate. It differs from the statutory rate because of permanently non-deductible items, credits and timing differences between accounting and tax treatment. Income tax payable is a current liability and income tax receivable a current asset, so a refund is recorded against that receivable rather than as revenue. Internet is normally an operating expense under utilities or office costs, and property taxes are expensed unless properly capitalised to a project under construction.

Part I tax is the main income tax the Income Tax Act imposes on individuals, corporations and trusts on their taxable income, so when a corporate return shows Part I tax, that is its ordinary federal income tax. For 2026, a Canadian-controlled private corporation pays the 9% federal small business rate on the first $500,000 of active business income and the 15% general net rate above that. Other Parts of the Act carry separate levies, including tax on a private corporation's investment income.

Federal personal income tax arrived in 1917, when the Income War Tax Act was passed as a temporary measure to help finance the First World War. It reached only a small number of high earners at first, and although it was passed as a temporary wartime measure the tax was never withdrawn: the Income War Tax Act was replaced by a new Income Tax Act after the Second World War, and today's Act descends from that line. A federal tax on business profits had been introduced the year before, and the personal system broadened steadily over the following decades as rates, credits and withholding were added.

Compare the tax withheld shown on your T4 slips with the tax your T1 return actually calculates. A large refund means too much was withheld; a balance owing means too little. Withholding follows the credit declaration your employer holds on file, so it can be wrong if you have two jobs, changed jobs mid-year, or never claimed credits such as tuition or support amounts. Filing the T1 settles the difference either way.