Canadian Tax

Taxes in Canada 2010

Last partial update, September 2010

The Canadian federal corporate tax in 2010 is 18%. The corporate tax rate will go down to 16.5% in 2011 and to 15% in 2012.
For small Canadian controlled private corporations claiming the small business reduction, the rate is 11%.
The provincial corporate income tax rates for 2010 are 10%-16%.
For individuals the 2010 federal tax rates are progressive, from 15% to 29%.
The maximum provincial tax rates for individuals are 10% -24%.

Canada Individual's Federal Income Tax Rates 2010

Income (CAD)	%
1-40,970	15
40,971-81,941	22
81,942-127,021	26
127,022 and over	29

Canadian Capital Gains

Capital gains for companies and individuals are taxed on 50% of the gain.

Canadian Residence

A company is resident if incorporated in Canada or when having its management in Canada
. Individuals are regarded as Canadian residents if residing in Canada in general.
For nonresidents, when staying in Canada at least for 183 days in a calendar year.
Resident companies and individuals pay Canadian federal and provincial income tax for their worldwide income too.

Canadian Business Deductions

Losses

A business loss can be carried forward for 20 years and back for three years.

Canada Depreciation

Fixed assets are generally depreciated on the declining balance method.
Rates are 10% for certain buildings, 30% for heavy construction equipment and 20% for cars and machinery.

Canada Transfer Pricing

Transfer between a non arm's length nonresident should be at the same price as when dealing with arm's length side. Companies must keep documents and file reports regarding such transactions.

Canada Thin Capitalisation

Interest paid for a loan from a related nonresident to a Canadian company is deductible only if the loan to equity ratio does not exceed 2:1 ratio.

Canada Consolidated Returns

Consolidated returns are not allowed in Canada.Each company has to file seperately.

Canadian Personal Tax Credits

There is a basic personal tax credit of CAD 1,557.
There are additionaltax credits for disabled people, children under 18 and taxpayers aged 65 and over.

Donation- a credit of 15%/29% subject to terms.
Medical Expenses- a credit of 15% subject to terms.
Tuition Fees- a credit of 15%.

Canada Deduction at Source

Tax withholding rates for payments to nonresidents are:
Dividends - 25%.
Interest - 25%.
Royalties - 25%.
Note : Rates may be reduced by double taxation treaties .

For more info please see www.cra-arc.gc.ca

Taxes in Canada 2010

You can read a new version of Canada tax guide 2010 by Dayarayan Management & Cunsulting (LTD) www.dayarayan.ca

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