Federal and Provincial tax rates

Federal-tax
  • by admin
  • December 8, 2021

Looking beyond boundaries! Which province has the lowest corporate tax rate? Is HST the same in all provinces?

The rapid growth of information technology suggests that we can easily investigate opportunities beyond boundaries. Having knowledge of tax rates in all provinces will help us to set up and implement our business decisions with confidence in other provinces and territories. You took the challenge to start your business, faced obstacles to establish, now it’s time to grow beyond boundaries. 

 

INCOME TAX RATES

Income tax is a direct tax that is collected from the taxpayer directly by the federal and provincial government/tax administrators.

Corporate income tax is one of the major sources of revenue for the Federal and Provincial governments of Canada. Canada and its provinces encourage small, incorporated businesses by providing small business deductions and a lower tax rate. This helps small businesses to reinvest saved taxes into their business.

Small business deduction rate varies from province to province. The conditions to qualify for the small business deduction are also different from one province to another. This gives an opportunity to small, incorporated businesses to plan their tax strategies and make an informed decision.

 

Corporate income tax rates in Canada

January 01, 2021 Corporate Income Tax Rates

   

Active Business Income

 
 

General Rate

SBD Rate

CCPC Rate

SBD Limit

Federal CA 15.0% 6.0% 9.0% $500,000
Alberta AB 8.0% 6.0% 2.0% $500,000
BC BC 12.0% 10.0% 2.0% $500,000
Manitoba MB 12.0% 12.0% 0.0% $500,000
New Brunswick NB 14.0% 11.5% 2.5% $500,000
Newfoundland & Labrador NL 15.0% 12.0% 3.0% $500,000
Nova Scotia NS 14.0% 11.5% 2.5% $500,000
Northwest Territories NT 11.5% 9.5% 2.0% $500,000
Nunavut NU 12.0% 9.0% 3.0% $500,000
Ontario ON 11.5% 8.3% 3.2% $500,000
Prince Edward Island PE 16.0% 14.0% 2.0% $500,000
Quebec QC 11.5% 7.5% 4.0% $500,000
Saskatchewan SK 12.0% 12.0% 0.0% $600,000
Yukon YT 12.0% 12.0% 0.0% $500,000

 

Active business income

Active business income excludes, income from property or investment or income from personal service business.

CCPC (Canadian controlled private corporation)

A private corporation, resident in Canada which is not controlled by a public corporation or a non-resident of Canada.

SBD (Small business deductions)

A small business deduction reduces the general corporate income tax rate in Canada on federal and provincial levels. A qualifying CCPC gets these deductions based on certain conditions and within the SBD limit.

SBD Limit

SBD limit limits the amount of active business income which qualifies for a small business deduction.

 

January 01, 2021 Personal Income Tax Rates
For federal, Ontario, and Quebec rates and respective tax brackets, please visit our LATEST NEWS.

 

SALES TAX RATES

Sales tax is an indirect tax that is collected from the taxpayer indirectly by the federal and provincial government/tax administrators. The taxpayer pays the tax to the seller of goods and services. The seller collects from taxpayers and pays to federal and provincial government/tax administrators.

In Canada, sales tax is known by GST/HST. GST is the federal sales tax or goods and services tax while HST is the Harmonized sales tax. Before the HST was introduced in Canada in 1997, the sales tax in Canada was divided into two parts. One part was federal sales tax, and the second part was provincial sales tax. HST was introduced to combine the two parts together. However, not all provinces have so far adopted this concept.

Sales tax is another major source of revenue for the Federal and Provincial governments of Canada.

 

Sales tax rates in Canada

January 01, 2021 Sales Tax Rates

    GST/HST PST
Alberta AB 5.0% N/A1
British Columbia BC 5.0% 7.0%
Manitoba MB 5.0% 7.0%
New Brunswick NB 15.0% N/A
Newfoundland & Labrador NL 15.0% N/A
Nova Scotia NS 15.0% N/A
Northwest Territories NT 5.0% N/A
Nunavut NU 5.0% N/A
Ontario2 ON 13.0% N/A
Prince Edward Island PE 15.0% N/A
Quebec QC 5.0% 9.975%
Saskatchewan SK 5.0% 6.0%
Yukon YT 5.0% N/A
  1. N/A – Not applicable
  2. Ontario also charges RST (Retail sales tax) 8% insurance and benefits plans and 13% on private sales of a used motor vehicle.

 

GST/HST on Inter-Provincial Sales

For goods and tangible properties

As a general rule, a seller charge GST/HST based on the place of delivery/supply. If your business is located in Vancouver, British Columbia (BC) but you are selling and delivering your product to Toronto, you should charge Ontario 13% HST to the buyer.

Special rules –

  1. When a lessor leases (including a license to use) his products for less than three months, the seller should charge GST/HST based on the place of delivery/supply.
  2. When a lessor leases (including a license to use) his products excluding a specified motor vehicle for more than three months, the seller should charge GST/HST based on the place of delivery/supply. However, if the lessee moves the product with the lessor’s permission, the lessor should charge the provincial rate based on the place of move.
  3. When a lessor leases (including a license to use) his products with an option to buy, when the buyer exercises his option to buy, the lessor should charge the provincial rate at which the lessee exercises his option to buy.

When you are selling your services, generally the followings rules apply

The seller charges GST/HST based on the billing address. So, if you are in Quebec and designing a website for a company in Ontario and you are billing your customer address in Ontario, you should charge Ontario 13% HST on your invoice.

 

The above taxes are collected by the different levels of government authorities. Did you know where your money goes?

All this money comes back to us in the form of services and facilities managed by the government agencies through tax revenues. These include police, ambulance, and fire services, health care and hospitals, education and schools, garbage and recycling collection, national defense, libraries, parks and playgrounds, arenas and swimming pools, roads and bridges, economic development, and wildlife conservation.

Tax revenue collected from us also funds social programs such as employment insurance. Canada child benefit, Old Age Security, social assistance.

Disclaimer: Information in the blog/post/article has been presented for a broad and simple understanding. This is not legal advice. RKB Accounting & Tax Services does not accept any liability for its application in any real situations. You need to contact your accountant or us for further information

error: Content is protected !!