Taxes in Canada 2016
Last partial update, February 2016.The Canadian federal corporate tax in 2016 is 15%.
In the province of Ontario the corporate minimum tax regime applies.
The provincial corporate income tax rates for 2016 are 10%-16%.
For individuals the 2016 federal tax rates are progressive, from 15% to 33%.
The maximum provincial tax rates for individuals are 10%- 25.75%.
Canada Individual's Federal Income Tax Rates 2016
| Income (CAD) | % |
|---|---|
| 1-45,282 | 15 |
| 45,283-90,563 | 20.5 |
| 90,564-140,388 | 26 |
| 140,389-200,00 | 29 |
| 200,001 and over | 33 |
Canadian Capital Gains
Capital gains for companies and individuals are taxed at the general rates 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 1.5:1 ratio.Canada Consolidated Returns
Consolidated returns are not allowed in Canada.Each company has to file separately.Canadian Personal Tax Credits
There is a basic personal tax credit of CAD 1,721.There are additional tax 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- up to 15% of the fees.
- First home buyers – a credit of CAD 5,000.
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
Note: The information in this site is for general guidance only. Users of this site are advised to take professional advice before taking practical tax decisions.
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