• Federal Tax Canada

    Federal Tax Canada

    Canadian federal income tax is calculated based on a person's net taxable income. For the calendar year 2013, basic personal amount is $11,038 which is $10822 in 2012. A person can easily calculate his/her basic tax credit by multiplying the tax rate for the lowest tax bracket by the basic personal amount. 

    Following is the table in which Basic personal amount and some other amounts mentioned in Federal tax Credit

    Federal Tax CreditJuly 2012   ($)January 2013   ($)
    Basic personal amount1082211038
    Pension income amount20002000
    Age amount67206854

     Federal Tax Rate

     A person can find his/her tax bracket easily as shown in the following chart

    Tax bracket (annual taxable income)2013

    Tax rate (2013)

    0 43,561


    43,561 87,123


    87,123 135,054


    135,054 and over


    In Canada high income residents pay a higher percentage than the low income residents as anyone can see from above chart percentage increases as income increases.

      Taxes in Canada

    Taxes in Canada constitute the giant majority of the annual revenues of the Government of Canada and of the governments of the Provinces of Canada. Tax collection agreements enable different governments to levy taxes through a single administration which is Canada Revenue Agency (CRA).

    Personal Income Taxes

    The Federal government collects personal income taxes on behalf of all provinces & territories except Quebec and collects corporate income taxes on behalf of all provinces and territories except Alberta and Quebec. Canada's federal income tax process is run by the Canada Revenue Agency (CRA).

     Income Tax Canada

    The amount of income tax that an individual has to pay is based on the amount of their taxable income for the tax year. It depends on which tax bracket person's net taxable income fall and then accordingly income tax will be calculated. So, personal income tax may be collected through various means:

    • Deduction at source - where income tax is deducted directly from an individual's pay and sent to  CRA.
    • Instalment payments - where an individual has to pay his or her estimated taxes for that year.
    • Payment on filing - payments made with the income tax return filing
    • Other payments - payments made after the return is filed also called areas payments

    Canadian Income which is not Taxed

    In Canada Following type of income(s) are not taxed

    •  Inheritance.
    •  Lottery winnings from a legal source.
    •  Winnings from betting or gambling for enjoyment.
    •  Government paid compensation to a victim of motor vehicle accident.
    •  Civil or military service pensions.
    •  Income from international organizations of which Canada is a member, such as UN.
    •  Pensions to persons who have been disabled in war.
    •  Pensions or compensation paid in respect of those which are injured, disable, or died.
    •  Provincial child tax credits or benefits and Quebec family allowances. etc. 

    For more information