Canadian Income Tax
Our tax guide for freelance contractors working in Canada
An individual is considered tax resident if he resides in Canada or is ordinarily resident in Canada or if he stays in Canada for an aggregate period of 183 days in a calendar year. Resident individuals are taxable on their worldwide income, non-residents only on certain types of Canadian-sourced income.
Canada is a federation of ten provinces and three territories and there are federal taxes and provincial taxes, all of which are administered by the federal government, except in the province of Quebec. Individuals are subject to federal income and capital gains tax, to tax on federal goods and services, and social security contributions as well as provincial income and capital gains tax together with provincial sales and commodity taxes.
Individuals may deduct a maximum of CAD7,000 for each child under 7 years of age and CAD4,000 for each other eligible child. There are also numerous small tax-deductible credits according to personal and family circumstances. As of July 1 2007, federal income tax is graduated as follows: 15.5% on income up to CAD37,178; 22% on income from 37,179 to CAT74,357; 26% on income from CAD74,358 to CAD120,887 and 20% on income over CAD120,887. Combined federal and provincial income tax rates (including surtaxes and flat taxes) effective in 2007, ranged as a percentage of taxable income from 39% in the province of Alberta to 53% in the province of Quebec.
Tax returns must be filed by 30 April in the year following the end of the tax year. Family members may not file joint tax returns and each individual must compute tax according to employment income, business income, property income and capital gains. There are no inheritance or gift taxes.