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Basic Facts You Need to Know About Canadian Income Tax

Author: Ken Donaldson
by Ken Donaldson
Posted: Oct 09, 2013

There are various types of income tax systems with varying degrees of tax incidence in Canada. The level of Canadian income tax is average among Organization for Economic Co-operation and Development (OECD) countries and approximately 70% of the Canadian government's income comes from taxation.

Tax collection agreements enable different governments to levy taxes through a single administration and collection agency. The federal government collects personal income taxes on behalf of all provinces and territories except Quebec and collects corporate income taxes on behalf of all provinces and territories except Alberta and Quebec. Canada's federal income tax system is administered by the Canada Revenue Agency (CRA).

The Canadian income tax system is a self-assessment regime. Taxpayers assess their tax liability by filing a return with the CRA by the required filing deadline. CRA will then assess the return based on the return filed and on information it has obtained from employers and financial companies, correcting it for obvious errors.

Canada levies personal income tax on the worldwide income of individual’s resident in Canada and on certain types of Canadian-source income earned by non-resident individuals. An individual taxpayer must report his or her total income for the year. Certain deductions are allowed in determining "net income", such as deductions for contributions to Registered Retirement Savings Plans, union and professional dues, child care expenses, and business investment losses.

Canadian taxation of non-resident rules apply to you if you are living and working in Canada and you are not a Canadian resident. If you are living or working in Canada as a nonresident, it is ideal that you should be aware of such taxation rules. However, a non-resident individual who stays temporarily in Canada for 183 days or longer in a calendar year is deemed to be a resident of Canada for the entire year, unless he or she is determined to have non-resident status under a tax treaty. This provision applies only to an individual who would otherwise be considered a non-resident, and not to an individual who purposely takes up residence in Canada or to an existing resident who ceases to be a resident after moving away from Canada. These latter individuals may be treated as part-year residents.

In certain situations, an individual may move from Canada to another country and retain enough ties to continue to be considered a Canadian resident for domestic tax purposes. At the same time, this individual may be considered a non-resident of Canada for tax treaty purposes. Individuals who become treaty non-residents of Canada after 24 February 1998 are deemed to be non-resident in Canada for domestic tax purposes as well.

It is a good option to seek the services of a tax expert who has specialized in dealing with non-resident taxation issues if you are facing any problems with the Canadian taxation of non-residents. Such tax experts will have very good knowledge of the various problems that arise due to Canadian non-resident taxation and also the options available to you to get over the issue you are facing currently.

About Author:

Ken Donaldson is a Toronto tax specialist, who practices as an independent tax consultant. He is providing lots of information about how to manage canadian income tax. In this article you can find details information about canadian taxation of non-resident . For more information visit

About the Author

Ken Donaldson is a chartered accountant who practices as an independent tax consultant. He also author of international tax, in this article he provides t

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Author: Ken Donaldson

Ken Donaldson

United States Minor Outlying Islands

Member since: Mar 07, 2013
Published articles: 34

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