How to Pay Taxes in Canada - Types, Deadlines, Rules

If you are living, working, or investing in Canada, there's something that you're inevitably going to grapple with: paying taxes. This part of living here is not the most exhilarating--but it is a crucial part. Your taxes fund the nation, from school and hospital systems all the way down through public transportation and social programs. And though the Canadian system of taxes and taxes-related administration can feel byzantine on the surface, it really is as straightforward as determining where you fit in and what are the applicable rules.

The good news? You don't have to be a professional in order to do it correctly. You're an international student trying to figure out if you have to file, a professional establishing your career, a business owner establishing your business, or perhaps merely someone who owns property in the great white North, there is a system in place for you. Let's take a look at considering the various kinds of expats and how the situations vary.

Types of Expats in Canada

Canada is a land of opportunities—it is big in size and diverse in nature. Individuals from everywhere in the world flock here for various reasons: study, work, business, or property investment. But with every route there is a different method of managing taxes. Having an idea as to which type you are in makes it a lot simpler to manage your liability and no surprises in store later.

1. Individuals

When it boils down to individuals, all are not the same in front of the Canadian tax system. Your taxes are based on how you are a resident and how you earn money. These are a few among the major groups that you will encounter

International Students - Many students think they don't have to bother with taxes—but that's seldom the case. Work part-time, or receive a research grant or a scholarship, and some or all of it may be taxable. And filing a return can give you access to credits like GST/HST and, in certain situations, even a refund. The perk? Getting a head start on taxes allows you to establish a record for later immigration applications.

Foreign Workers - When you are in Canada on a work permit, you'll generally be taxable on Canadian income. Your employers typically withhold on a withholding basis income tax, Employment Insurance (EI), and Canada Pension Plan (CPP) contributions from your wages. Foreign workers, though, must be aware of their status as a resident—it decides whether you are taxable on Canadian income or on a worldwide basis.

Immigrants - You are a Canadian tax resident as soon as you become a permanent resident. That gives you a right to reporting worldwide income, and not just income accruing within Canada. The bright side is that you are also granted access to deduction, credit, and tax treaties, aimed at preventing double taxation.

Temporary Residents - People here on brief work, family, or otherwise visas usually only pay taxes on income they receive in Canada. But if you're in Canada part of the time and elsewhere during the rest, it gets complicated. Special rules and tie-breaker conventions (through tax treaties) come into play in a case like that.

Being specific as to whether you belong in a particular group is the first thing you need to do before you contemplate tax forms or dates.

2. Businesses

Businessmen and business organizations also pay taxes, depending on size and type of organization structure:

Business Owners - Start-ups - You'll be required to pay corporate income tax and, if you're selling at a certain level or above, GST/HST registration.

Incorporated Companies - Larger or more established businesses deal with additional corporate tax rates, payroll deductions, and sometimes inter-provincial filing.

Foreign Enterprises - Moving to Canada? You'll be taxable on Canadian profits and be subject to federal and provincial business taxes.

3. Property Owners

Property is a favorite among expats, but it does have its own fair dose of taxes too:

Householders - You'll pay a yearly property tax to the municipality or city - it covers local facilities like schools and transport.

Landlords - Rental income from tenancies is needed to be disclosed, and if you are a non-resident landlord, the tenant could well be required to withhold part of the rent in taxes. 

Investors & Sellers - The sale of property can be subject to capital gains tax. Non-residents need to lodge clearance certificates and verify taxes are paid before finalizing the sale.

Taxes for Foreign Individuals in Canada 

If you are a foreigner living, working, or earning in Canada, taxes come with the package. The most significant in which you'll be involved is income tax, and it applies on money earned through employment, business, or investments. If you are a student working part-time, a professional on a work permit, or an immigrant getting into Canadian life, the knowledge of income tax makes you compliant and helps in financial planning as well.

Income Tax in Canada for Foreigners

Income tax is the money you give the government on the money you make. In Canada, foreigners are typically taxed on the money that they are receiving in the country. That is, if you are working here, have a business, or are a tenant, you'll be paying taxes in Canada.

Why does it matter? Because taxes pay for basic services such as healthcare, schools, and infrastructure and as someone who enjoys having a property and a job in Canada, you're accountable too.

Here is a straightforward example: As a foreign worker in Toronto, working a job that pays out CAD 50,000 every year. At the federal level, (2025 rates)

• The first 55,867 falls within the 15% bracket, so all your income falls within the 15% bracket.
• That means you would owe roughly $7,500 in federal income tax (before deductions or credits).

But it does not end at Canada - you are also paying provincial tax, and that is why it varies by address.

Income Tax Rate in Ontario, Canada

Ontario is home to major cities like Ottawa, Toronto, and Waterloo—and when it comes to income tax, it has its own system in addition to the federal rules. As of 2025, the tax brackets  Ontario are structured as follows

• 5.05% in the first $51,446 in taxable income
• 9.15% on amount more than $51,446 up to $102,894
• 11.16% on the amount over $102,894 up to $150,000
• 12.16% on amount over $150,000 up to and including $220000,
• 13.16% on the portion over $220,000

Back to our example with an income of $50,000 in Ontario:

Federal tax: around $7,500, Ontario tax: about $2,525 (at 5.05%), Total before credits: approximately $10,025

GST in Canada

When we speak about the sales taxes in Canada, the first phrase that comes up is GST, which is an acronym used for Goods and Services Tax. GST is a value added tax in Canada, which is imposed on most goods and services consumed in the nation. The federal government taxes it at a fixed 5% on all provinces and territories.

Everything is not taxed in GST—that is, staple food items, a few medicines, and medicines on prescription are exempted. But GST is paid on most everyday expenses—electronics, attire, meal in restaurants, or professional fees.

Example - You purchase a coat that costs $200. GST tacks on an additional $10, bringing the total to $210. Easy, yes? But keep in mind depending on what province you reside in, you could also be paying provincial sales tax or a bundled HST (below), too.

What is the HST in Canada?

The Harmonized Sales Tax, or HST, is a bit more compelling. Instead of paying two taxes, GST (federal) and PST (provincial sales tax), some provinces chose to integrate the two into a single payment, and that is the HST. This is less confusing as a cost both to consumers and companies since it is paid as a combined amount.

These days, the provinces of Prince Edward Island, New Brunswick, Nova Scotia, Newfoundland and Labrador, and Ontario are implementing the HST strategy. The provincial share differs but is usually in the 13% to 15% bracket.

Example - The HST in Ontario is 13%. Therefore, if you are buying a laptop with a price value of $1,000, you pay an additional amount totaling $130 in HST, thereby amounting to $1,130. While in provinces like Manitoba, Saskatchewan, and British Columbia, GST continues to apply alongside an additional provincial sales tax. And in Alberta, there is no provincial sales tax at all, so it is a straightforward 5% GST paid.

What is Capital Gains Tax in Canada?

In Canada, if you are selling something like stocks, real estate, or a business, the money that you are getting is a capital gain. The government taxes a portion of it as a capital gains tax. You are not paying on every dollar that you gained in profits it is on a portion. Up through 2025, 50% of what you gained on in a capital gain is taxable, so you add half a profit to the rest of the income, and you pay a tax on it at your individual rate.

Canada Capital Gains Tax Rate

You are not in "Capital Gains Tax Brackets," as in a few foreign countries. The taxable part of your capital gain appears on your income, and you're taxed through the typical federal and provincial income tax brackets. That means the more money you make (including half-your gain), the greater amount you're taxed.

Capital Gains Tax Rate in Canada

The effective capital gain tax rate in Canada varies by province and by income level. Example - You sell stocks and make a gain of $20,000. You are taxable on only $10,000 (50%) of the gain. If you pay 30% combined federal and provincial tax, you will pay approximately $3,000 in capital gains taxes.

Canada Payroll Tax

When paid by salary in Canada, you are not paid the entire wage by the company itself—they withhold amounts as payroll taxes. These withholdings are part of the larger Payroll taxes system in Canada, and they are paid into plans such as the Canada Pension Plan and Employment Insurance, and federal and provincial income taxes.

Your employers withhold amounts on your wages and send them straight to the government. They normally pay an equal amount themselves as well. This means employers and employees both share in paying Canada's social safety net.

Example - If you make $60,000 per year in Ontario. Every payday, your employer will withhold:

CPP contributions - around 5.95% in the wage within the wage limit per annum (roughly $3,800 in a year)

EE premiums - approximately 1.66% on insurable wages (approximately $1,000 annually)

Income taxes - Federal and provincial, depending on the level of taxes

Thus, if you generate a gross income amounting to $60,000, then after deduction and payroll taxes, your take-home pay or net income decreases.

 

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Taxes for Legal Persons or Companies in Canada

In Canada, corporations pay federal and provincial corporate income taxes, which typically add up to 25–31% depending on the province. Corporations also have the potential to pay GST/HST along with payroll taxes on workers. Lower rates apply to smaller firms and larger firms pay the entire corporate rate. Foreign corporations in Canada also pay on Canadian-source income. Remaining in compliance gives access to credits, deduction, and uninterrupted business continuance.

Corporation Tax in Canada

Corporation tax in Canada, or Canada Business Income Tax, or corporate tax in Canada, is paid on the profits made by corporations within the nation. The general federal corporate tax stands at 15%, and provincial taxes range, making the overall percentage approximately 25–31%, depending on the province. The small business could be allowed a lower rate on the first amount of taxable income. Corporations are required to file annually a corporate tax return to comply.

Dividend Tax Rate in Canada

When a company distributes profits to its shareholders, the distributions are in the form of dividends and are taxable on Canada dividend tax. The Canada Dividend Tax is either eligible or non-eligible, depending on whether it arises on general or small business-rated income. The dividends are less taxable than normal income as the company has already paid corporate taxes, and there is therefore no double tax.

Example - The eligible dividend of $10,000 may generate a tax of around $1,500–$2,500, depending on the shareholder income level.

Property Tax in Canada

Real estate companies are also required, in Canada, to pay a property tax, and it is different by province and city.

Property taxes in Toronto Canada - Annual rates are fixed, for business properties, it usually stands at 1% or so in terms of assessed value.

Vancouver property taxes in Canada - Commercial taxes are higher than residential, generally 2.5% of assessment value.

Property taxes in Ontario, Canada - The provinces allow municipalities to set rates; business rates are usually higher than residential rates.

Local amenities are paid for by property taxes, and business is obligated to account for them in operating costs.

Tax Breaks in Canada and Canadian US Tax Treaty

Canada provides a range of tax breaks to lighten the load on individuals and business. Taking a basic personal amount in 2025, for instance, allows Canadians to earn approximately $15,000 exempted from taxes, and charitable donations qualify for a 15–33% tax credit, depending on income. Businesses are helped by the small business deduction, cutting the federal business income tax from 15% all the way down to 9% on a first $500,000 of active business income, and R&D tax credits applicable towards up to 35% of eligible costs.

In cross-border situations, the Canadian US Tax Treaty also prevents double taxation. As an example, if a Canadian citizen earns $50,000 in the U.S., they would potentially pay $7,500 in U.S. federal tax. With the treaty, the individual can claim a foreign tax credit in Canada against the paid $7,500, thereby limiting Canadian taxes payable. This prevents the same income from being taxed twice, and it makes international work or investments fairer and more doable.

Tax Benefits for Expats in Canada

Expatriates in Canada are also able to lower their taxes by individual tax credits, including the basic personal amount (roughly $15,000 in 2025), spousal/dependent credits, tuition credits, and charitable gifts credits. They are also allowed foreign tax credits to prevent double taxes. A Canadian working in the U.S., earning $50,000 and paying $7,500 in U.S. taxes, could avail themselves of the Canadian US Tax Treaty to lower Canadian taxes payable. Some more advantages are in deduction in relation to move and work costs and contributions in a Registered Retirement Savings Plan (RRSP).

Tax Benefits for Companies in Canada

The small business deduction is available to Canadian firms, which results in a 9% federal tax on the first $500,000 in income. R&D tax credits are also available, up to 35% in eligible expenses, as are accelerated capital cost allowance on assets. The provinces usually offer additional incentives in the form of innovation, green, or manufacturing incentives, and firms can recover GST/HST on business acquisitions in the form of input tax credits.

FAQ’s

Q: How do you file taxes in Canada?
A: Taxes can be filed online, by mail, or through a tax professional using forms from the Canada Revenue Agency (CRA).

Q: Are taxes high in Canada?
A: Tax rates vary by income and province. While they can be higher than in some countries, various credits and deductions help reduce the overall burden.

Q: Does Canada have property tax?
A: Yes, municipalities levy property taxes on residential and commercial properties, and rates differ by city and province.

Conclusion

Taxation in Canada is complex, but understanding the type, due dates, and rules simplifies it. As an individual, business, or property owner, understanding what you owe can avert penalties and enjoy benefits. Taking advantage of credits, deduction, and treaties can significantly reduce how much you pay. Staying ahead and up-to-date allows you to comply with the law and enjoy all the incentives.