Economical Inventory and COGS Analysis for Canadian Businesses

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.

Most people pay through online or telephone banking, adding the CRA as a payee and choosing the exact account and year, such as a personal balance owing or an instalment. The alternatives are CRA My Payment with a debit card, pre-authorised debit scheduled in My Account, a credit card or e-transfer through a third-party provider that charges its own fee, or paying at your bank with a remittance voucher. For the 2025 tax year the balance was due 30 April 2026.

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.

As the rules stand for the 2025 tax year filed in 2026, the late-filing penalty is 5% of the balance owing plus 1% of that balance for each full month the return is late, to a maximum of 12 months, so 17% at worst. It rises to 10% plus 2% per month for up to 20 months, a 50% maximum, but only where the CRA formally demanded the return and had already charged a late-filing penalty for any of the three preceding tax years. Interest compounds daily.

Multiply the pre-tax price by the rate for the province of supply. On a $100 purchase in 2026 that is $13.00 in Ontario (13%), $14.00 in Nova Scotia (14%), and $15.00 in New Brunswick, Newfoundland and Labrador or Prince Edward Island (15%). In the non-participating provinces and the three territories only the 5% GST applies, so $5.00, plus any provincial sales tax billed separately.

Income up to the basic personal amount is effectively untaxed, because that credit offsets the federal tax on it, and each province and territory has its own equivalent amount. Both figures change every year with indexation, so look up the amount for the tax year in question. Other credits, such as the age amount, tuition, or the disability amount, lift the point where tax actually starts. Tax withheld at source below that point comes back as a refund.

Pay through your bank's online banking by adding the CRA as a payee and choosing the right account and year, through My Payment with a debit card, by pre-authorised debit scheduled in My Account, by credit card through a third-party provider that charges its own fee, or at a bank counter with a remittance voucher. For 2025 personal returns the payment deadline was 30 April 2026, including for the self-employed, and interest runs daily on anything unpaid after that.

The business number is the single identifier the CRA uses for your business, with a separate programme account opened under it for each obligation: GST/HST, payroll deductions, corporate income tax, import and export. Register through Business Registration Online, by phone or by mail, or receive one automatically when you incorporate federally. You need it before you can remit payroll or file GST/HST. Provincial registration is separate in some provinces, notably Quebec, where Revenu Québec administers its own accounts.

Not on a voluntary tip. A gratuity the customer chooses to add sits outside the GST/HST base, which is why the tax on a bill is worked out on the food and drink alone. A mandatory service charge the business imposes is treated as part of the price and is taxable. Whether you calculate your tip on the pre-tax or after-tax total is personal preference; the tax charged does not change either way.

Most online returns are assessed in about two weeks, so a longer wait usually means the return was pulled for review. Common causes are a mismatch with slips the CRA already holds, a first-time filing, a claim needing supporting documents, a name or address change, an amount under pre-assessment review, or a non-resident return, which can take up to 16 weeks. Check CRA My Account for a status or a letter requesting information.

Yes. Property tax is a municipal charge on the property rather than an income tax, and it does not stop at any age. Relief does exist in places: several provinces and municipalities run deferral programs that let older or lower-income owners postpone payment until the property is sold, usually with interest, and some offer a grant or rebate. These are applied for each year through the province or municipality, not on your T1. Check your municipality's tax page for what is offered.

Proceeds for damage to a personal vehicle are not taxable, since the payment restores a loss rather than producing income. Where the car was a business asset, the payout counts as proceeds of disposition: it reduces the capital cost allowance pool and can create a recapture, or a capital gain if it exceeds the original cost. Interest the insurer pays on a delayed settlement is taxable, and replacement property rules may defer a gain if you reinvest.