What are the various tax systems in Canada?
Every country has its own system of tax collection from the citizens. Many countries levy taxes on some products, exempt some, and even offer subsidies on a few. The tax system in Canada is extremely simple and easy to understand. This not only helps the citizens and businesses of the country but other stakeholders as well to understand the entire tax structure.
In Canada, taxation is prerogatively divided between the federal government and different provincial and other local legislatures. These various levels of government bodies collect a number of taxes from several bodies and use them to fund government programs and services.
Types of taxes in Canada
Just like most of the other nations of the world, Canada too has common types of taxes divided broadly into direct and indirect taxes. The direct tax primarily includes income tax, while the indirect tax is composed of sales taxes, property tax, etc. The income tax, in turn, is further classified into personal income taxes, corporate taxes, international taxation, and payroll taxes. Canadian residents and enterprises pay their share of taxes on the basis of their total income including the part earned from abroad. The government has made a system to protect taxpayers from double taxation.
The government also levies a 5% value-added tax (VAT), called the Goods and Services Tax (GST). On the other hand, there is special taxation called the Harmonized Sales Tax (HST), which is there only in five specific provinces. Moreover, there are other peculiarities as well. For example, some provinces such as British Columbia and Saskatchewan levy retail sales tax on the residents, while some like Alberta do not has a tax system of its own.
There is yet another category of taxes called wealth taxes. This contains property taxes, gift taxes, estate taxes, etc.
Tax Collection
The tax system in Canada is based on self-assessment of the taxpayers. Individuals and corporates have to calculate their income and report the same. Additionally, whether they are liable for any refund or they owe any amount tax, it is their responsibility only to maintain all these in records. A resident can take assistance from any Canadian Tax Consulting Service for better understanding and adopting tax-saving measures.
The tax is collected by the Canada Revenue Agency, which also administers the tax laws of the federal government as well as most of the provinces. Not only this but the same agency is responsible for delivering several credit programs and tax benefits to the residents through the tax system.
Canadians can complete a return via four ways- online, on the phone, on paper or by taking the help of a Tax consultant in Toronto (or in any other city). Overall, the government has made it easier for the residents to file returns and disclose all sources of income without any hassle.
