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Tax Facts

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Executive Summary

The federal Minister of Finance revises premium rates of employment insurance and Canada Pension Plan, the federal base amount (i.e. the maximum amount of tax free income one could earn in a year), automobile deduction limits and reasonable expense rates of passenger vehicles for tax purposes every year. This web page summarizes vital tax related information in business decision making.

Information presented herein is current as of the last revised date indicated at the bottom of this page. Please note that post-publication changes in legislation, government policies, or the interpretation of the law could affect the validity of the information contained herein. If there is a discrepancy between the information presented in this article and the information released by Canada Revenue Agency (CRA) and the tax courts, the latter always prevails.

History of Canadian Income Tax


  1. Payroll Costs

    Employment Insurance
    All employees are subject to EI premium regardless of age except when ...
    All employees are subject to EI premium regardless of age except when the employee controls more than 40% of the corporation´s voting shares or when the employee and the employer have a non-arm´s length relationship (depending on other circumstances), or some other cases. Furthermore, some types of income are not subject to employment insurance.

    Since 2006, EI premium rate in Quebec is different from that in the rest of Canada.

    Canada Pension Plan
    (applicable to employees who are 18 to 70 years old, except for employees collecting CPP retirement or disability pension)
    When an employee turns 18, employer must start deducting Canada Pension Plan (CPP) contributions.

    Start deducting CPP contributions in the first pay dated in the month after the employee turns 18. When prorate, use the number of months after the month the employee turns 18. For example, an employee who turns 18 in October will have CPP deductions withheld from the first pay in November.

    Do not deduct CPP if the employee is 65 to 70 years old, and gives his or her employer Form CPT30, Election to Stop Contributing to the Canada Pension Plan, or Revocation of a Prior Election with parts A, B and C completed.

    Max. Wage Max. Employee Max. Wage Max. Employee
     Year  EI rate Insurable Premium E/E ratio CPP rate Pensionable exemption CPP Contribution E/E ratio
    1997 2.90% $39,000 $1,131 1.4 2.925% $35,800 $3,500 $944.78 1.0
    1998 2.70% $39,000 $1,053 1.4 3.2% $36,900 $3,500 $1,068.80 1.0
    1999 2.55% $39,000 $994.50 1.4 3.5% $37,400 $3,500 $1,186.50 1.0
    2000 2.40% $39,000 $994.50 1.4 3.9% $37,400 $3,500 $1,329.90 1.0
    2001 2.25% $39,000 $877.50 1.4 4.3% $38,300 $3,500 $1,496.40 1.0
    2002 2.20% $39,000 $858 1.4 4.7% $39,100 $3,500 $1,673.20 1.0
    2003 2.10% $39,000 $819 1.4 4.95% $39,900 $3,500 $1,801.80 1.0
    2004 1.98% $39,000 $772.20 1.4 4.95% $40,500 $3,500 $1,831.50 1.0
    2005 1.95% $39,000 $760.50 1.4 4.95% $41,100 $3,500 $1,861.20 1.0
    2006 1.87% $39,000 $729.30 1.4 4.95% $42,100 $3,500 $1,910.70 1.0
    2007 1.80% $40,000 $720 1.4 4.95% $43,700 $3,500 $1,989.90 1.0
    2008 1.73% $41,100 $711.03 1.4 4.95% $44,900 $3,500 $2,049.30 1.0
    2009 1.73% $42,300 $731.79 1.4 4.95% $46,300 $3,500 $2,118.60 1.0
    2010 1.73% $43,200 $747.36 1.4 4.95% $47,200 $3,500 $2,163.15 1.0
    2011 1.78% $44,200 $786.76 1.4 4.95% $48,300 $3,500 $2,217.60 1.0
    2012 1.83% $45,900 $839.97 1.4 4.95% $50,100 $3,500 $2,306.70 1.0
    2013 1.88% $47,400 $891.12 1.4 4.95% $51,100 $3,500 $2,356.20 1.0
    2014 1.88% $48,600 $913.68 1.4 4.95% $52,500 $3,500 $2,425.50 1.0
    2015 1.88% $49,500 $930.60 1.4 4.95% $53,600 $3,500 $2,479.95 1.0
    2016 1.88% $50,800 $955.04 1.4 4.95% $54,900 $3,500 $2,544.30 1.0
    2017 1.63% $51,300 $836.19 1.4 4.95% $55,300 $3,500 $2,564.10 1.0
    2018 % $ $ 1.4 % $ $3,500 $ 1.0


    Starting in January 2012, if you are between the ages of 60 to 70 and work while receiving a CPP retirement pension, the changes in CPP are as follows:

    • those under age 65 and you work in Canada while receiving CPP retirement pension, you and your employer will have to make CPP contributions;
    • those between the ages of 65 to 70, you can either choose to make CPP contributions or opt out;
    • CPP contributions will increase your CPP retirement benefit through the new Post-Retirement Benefit.

    For more information, please read Changes in Canada Pension Plan (CPP).


    Cost per $100 wage (EI & CPP)
    subject to the max. EI & CPP contribution above
    Cost per $100 wage (CPP only)
    subject to the max. CPP contribution above
    Cost per $100 wage (EI only)
    subject to the max. EI contribution above
    Max WCB
    insurable
    income/head
     Year  Employer Employee Employer Employee Employer Employee
    1997 $6.99 $5.83 $2.93 $2.93 $4.06 $2.90
    1998 $6.98 $5.90 $3.20 $3.20 $3.78 $2.70
    1999 $7.07 $6.05 $3.50 $3.50 $3.57 $2.55
    2000 $7.26 $6.30 $3.90 $3.90 $3.36 $2.40
    2001 $7.45 $6.55 $4.30 $4.30 $3.15 $2.25
    2002 $7.78 $6.90 $4.70 $4.70 $3.08 $2.20
    2003 $7.89 $7.05 $4.95 $4.95 $2.94 $2.10 $60,100
    2004 $7.72 $6.93 $4.95 $4.95 $2.77 $1.98 $60,700
    2005 $7.68 $6.90 $4.95 $4.95 $2.73 $1.95 $61,300
    2006 $7.57 $6.82 $4.95 $4.95 $2.62 $1.87 $61,984
    2007 $7.47 $6.75 $4.95 $4.95 $2.52 $1.80 $64,400
    2008 $7.37 $6.68 $4.95 $4.95 $2.42 $1.73 $66,500
    2009 $7.37 $6.68 $4.95 $4.95 $2.42 $1.73 $68,500
    2010 $7.37 $6.68 $4.95 $4.95 $2.42 $1.73 $71,200
    2011 $7.44 $6.73 $4.95 $4.95 $2.49 $1.78 $71,700
    2012 $7.51 $6.78 $4.95 $4.95 $2.56 $1.83 $73,700
    2013 $7.58 $6.83 $4.95 $4.95 $2.63 $1.88 $75,700
    2014 $7.58 $6.83 $4.95 $4.95 $2.63 $1.88 $77,900
    2015 $7.58 $6.83 $4.95 $4.95 $2.63 $1.88 $78,600
    2016 $7.58 $6.83 $4.95 $4.95 $2.63 $1.88 $80,600
    2017 $7.23 $6.58 $4.95 $4.95 $2.28 $1.63 $81,900
    2018 $ $ $ $ $ $ $

  2. Payroll Remittance Due Dates

    Generally, payroll remittance due on or before the 15th of the following month after wages are paid except the following two accelerated payroll remitters:

    1. Threshold 1

      Employers, including those with associated companies and multiple payroll accounts, who had a total average monthly withholding amount of $15,000 to $49,999.99 two calendar years ago must remit payroll remittance by the following dates:

      • for remuneration paid before the 16th day of the month, by the 25th day of the same month.
      • for remuneration paid after the 15th day of the month but before the first day of the following month, by the 10th day of the following month.
    2. Threshold 2

      Employers, including those with associated companies and multiple payroll accounts, who had a total average monthly withholding amount of $50,000 over more two calendar years ago must remit payroll remittance to a Canadian financial institution no later than the 3rd working day (excluding Saturdays, Sundays and public holidays) after the end of the following periods:

      • from the 1st through the 7th day of the month;
      • from the 8st through the 14th day of the month;
      • from the 15th through the 21st day of the month;
      • from the 22nd through the last day of the month.
  3. Federal/British Columbia Base Amount and Maximum RRSP Contribution Limit

     Year  Base Amount (Fed) Base Amount (BC) Spouse/Dep. (Fed) Spouse/Dep. (BC) Spouse/Dep. threshold (Fed) Spouse/Dep. threshold (BC) Max RRSP
    Contribution Limit
    1997 $6,456
    1998 $6,456
    1999 $6,794
    2000 $7,231
    2001 $7,412 $6,293
    2002 $7,634 $8,168 $6,482 $6,994 $13,500
    2003 $7,756 $8,307 $6,586 $14,500
    2004 $8,012 $8,523 $6,803 $7,298 $681/$7,484 $730/$8,028 $15,500
    2005 $8,148 $8,676 $6,919 $7,429 $692/$7,611 $743/$8,172 $16,500
    2006 $9,039 $8,858 $7,675 $7,585 $768/$8,443 $759/$8,344 $18,000
    2007 $8,929 $9,027 $8,340 $7,729 $759/$8,340 $773/$8,502 $19,000
    2008 $9,600 $9,189 $9,600 $7,868 $9,600 $787/$8,655 $20,000
    2009 $10,375 $9,373 $10,375 $8,026 $10,375 $803/$8,829 $21,000
    2010 $10,382 $11,000 $10,382 $9,653 $10,382 $965/$9,653 $22,000
    2011 $10,527 $11,088 $10,527 $9,730 $10,527 $973/$9,730 $22,450
    2012 $10,822 $11,354 $10,822 ($12,822 if infirmed) $9,964 $10,822 $996/$9,964 $22,970
    2013 $11,038 $10,276 $11,038 ($13,078 if infirmed) $8,860 $11,038 $886/$9,746 $23,820
    2014 $11,138 $9,869 $11,138 ($13,196 if infirmed) $8,450 $11,138 $845/$9,295 $24,270
    2015 $11,327 $9,938 $11,327 ($13,420 if infirmed) $8,509 $11,327 $851/$9,360 $24,930
    2016 $11,474 $10,027 $11,474 ($13,595 if infirmed) $8,586 $11,474 $859/$9,445 $25,370
    2017 $11,635 $10,208 $11,635 ($13,785 if infirmed) $8,740 $11,635 $874/$9,614 $26,010
    2018 $ $ $ ($ if infirmed) $ $ $ /$ $26,230

    The threshold column above contains a lower limit and a upper limit (separated by a slash "/"). Within the range defined by these limits, the amount of spouse amount will be reduced by the amount of income the spouse or the dependent earned. Under the lower limit, there is no reduction of spouse amount, whereas the spouse amount ceases to exist once the upper limit is exceeded.

    The maximum RRSP contribution limit is created by 18% of the earned income. At the point of writing, there is no limit restricting the deduction of accrued unused RRSP limit from taxable income in a year.

  4. Federal and B.C. Corporate Income Tax Rates, Filing and Payment Due Date

    Both federal and provincial/territorial governments levy tax on worldwide income earned by individuals and corporations at different marginal tax rates for various taxable income level. In this progressive tax regime, marginal income tax rates and taxable income brackets could change each year after the budgets are announced. Starting from 2009, these rates (British Columbia's only) are summarized in the following table.

    Personal Income Tax

    Corporate Income Tax

    Tax Rates

    Federal and provincial income taxes are subject to exemption of the base amounts indicated in the table under the heading "Federal/British Columbia Base Amount and Maximum RRSP Contribution Limit".

    Please click the year in blue text to view the rates in the corresponding year.

    2009   2010   2011   2012   2013  
    2015

    Federal tax rates

    • 15% on the first $44,701 of taxable income, +
    • 22% on the next $44,700 of taxable income (on the portion of taxable income over $44,701 up to $89,401), +
    • 26% on the next $49,185 of taxable income (on the portion of taxable income over $89,401 up to $138,586), +
    • 29% of taxable income over $138,586.

    British Columbia

    • 5.06% on the first $37,869 of taxable income, +
    • 7.7% on the next $37,871, +
    • 10.5% on the next $11,218, +
    • 12.29% on the next $18,634, +
    • 14.7% on the next $45,458, +
    • 16.8% on the amount over $151,050

    Federal rates

    The basic rate of Part I tax is 38% of your taxable income, 28% after federal tax abatement.

    For Canadian-controlled private corporations claiming the small business deduction, the net tax rate is 11%.

    For the other corporations, the net tax rate is decreased as follows:

    • 19% effective January 1, 2009
    • 18% effective January 1, 2010
    • 16.5% effective January 1, 2011
    • 15% effective January 1, 2012
    Provincial or territorial rates

    Generally, provinces and territories have two rates of income tax - a lower rate and a higher rate.

    The lower rate applies to the income eligible for the federal small business deduction. One component of the small business deduction is the business limit. Some provinces or territories choose to use the federal business limit. Others establish their own business limit.

    The higher rate applies to all other income.

    In British Columbia, the lower rate is 2.5%. The income eligible for the lower rate is determined using the British Columbia business limit of $500,000. Before January 1, 2010, this limit was $400,000.

    The higher rate of British Columbia income tax is:

    • 11% effective July 1, 2008;
    • 10.5% effective January 1, 2010; and
    • 10% effective January 1, 2011.

    The higher rate applies to all income not eligible for the lower rate.

    The tax is prorated based on the number of days in the year when the tax year straddles these dates.

    Income Tax Return Filing Due Date

    [Note that Income Tax Return Filing Due Date and Tax Balance Due Date are different.]

    Personal income tax returns are generally due on the 30th of April each year.

    For self-employed persons, if the taxpayer or his/her spouse or common-law partner carried on a business in the following year (other than a business whose expenditures are primarily in connection with a tax shelter), personal tax return has to be filed on or before 15 June the following year. However, if you have a balance owing, you still have to pay it on or before 30 April the following year.

    Final Return for Deceased Persons

    Generally, the final return is due on or before the following dates:

    Period when death occurred Due date for the final return
    January 1 to October 31 April 30 of the following year
    November 1 to December 31 Six months after the date of death

    Note

    The due date for filing the T1 return of a surviving spouse or common law partner who was living with the deceased is the same as the due date for the deceased's final return indicated in the chart above. However, any balance owing on the surviving spouse's or common law partner's return still has to be paid on or before April 30 of the next year to avoid interest charges.

    If the deceased or the deceased's spouse or common-law partner was carrying on a business in 2012 (unless the expenditures made in the course of carrying on the business were mainly the cost or capital cost of tax shelter investments), the following due dates apply:

    Period when death occurred Due date for the final return if a business is being carried on
    January 1 to December 15 June 15 of the following year
    December 16 to December 31 Six months after the date of death

    Corporate tax return due for filing 6 months after the fiscal year end each fiscal period.

    When the corporation's tax year ends on the last day of a month, file the return by the last day of the sixth month after the end of the tax year.

    When the last day of the tax year is not the last day of a month, file the return by the same day of the sixth month after the end of the tax year.

    When the T2 filing deadline falls on a Saturday, Sunday, or statutory holiday, CRA will consider the return filed on time if it is sent on the first business day after the filing deadline.

    Note

    Corporations with no business activities, including newly incorporated companies which never operate, are required to file a corporate income tax return each year.

    Income Tax Balance Due Date

    Personal income tax balance due are due on the 30th of April each year.

    The due date for a balance owing on a final return depends on the date of death.

    Period when death occurred Due date for the amount owing
    January 1 to October 31 April 30 of the following year
    November 1 to December 31 Six months after the date of death

    In some cases, the legal representative of the deceased taxpayer may make an election to delay paying part of the amount due. For instance, paying part of the amount owing from rights or things and the deemed disposition of capital property may be delayed.

    Generally, all corporation taxes (with the exception of Part III and Part XII.6) are due two months after the end of the tax year. However, the tax is due three months after the end of the tax year if the following conditions apply:

    • the corporation is a CCPC throughout the tax year;
    • the corporation is claiming the small business deduction for the tax year, or was allowed the small business deduction in the previous tax year; and either
    • the corporation's taxable income for the previous tax year does not exceed its business limit for that tax year (if the corporation is not associated with any other corporation during the tax year); or
    • the total of the taxable incomes of all the associated corporations for their last tax year ending in the previous calendar year does not exceed the total of their business limits for those tax years (if the corporation is associated with any other corporation during the tax year).

    The business limits are provided at Line 410 - Business limit. For more information about allocating the business limit among associated corporations, see Schedule 23.

    Note

    For determining balance due dates, the taxable income for the previous year of corporations and associated, subsidiary, and predecessor corporations means taxable income before applying loss carrybacks.

    Special rules apply to determine the balance due date of a new corporation formed after an amalgamation or of a parent corporation after it receives the assets of a subsidiary corporation that is winding-up. For more information, go to Payments or see Guide T7B-Corp, Corporation Instalment Guide.

    References

    Sections 125 and 157 of the Income Tax Act


  5. Tax Instalment Payment Thresholds

    Taxpayers, corporate and individual alike, are not required to pay instalment tax on the following taxes if their tax payable is below the following thresholds:

    • Corporate Income Tax (Parts I, VI, VI.1, and XIII.1 tax): net tax owed $3,000 or less

      Corporations with tax payable exceeding this threshold must pay corporate income tax instalments according to the following:

      1. Quarterly instalment payments for eligible small Canadian-controlled private corporations (CCPC);
      2. Monthly instalment payments for corporations other than eligible small CCPC.

      using one of the options below:

      • Option 1 - One-quarter (or one-twelfth) of the estimated tax payable for the current tax year is due each quarter (month) of the tax year.
      • Option 2 - One-quarter (or one-twelfth) of the tax payable from the previous tax year is due each quarter (month) of the current tax year.
      • Option 3 - One-quarter (or one-twelfth) of the tax payable from the year before the previous tax year is due the first quarter (month) of the current tax year. One-third of the difference between the tax for the previous tax year and the first payment is due in each of the remaining three (eleven) quarters (months) of the current tax year.

      New Corporations

      Except for Part XII.I tax, you do not have to make instalment payments for a new corporation until you have started your second year of operation. However, for your first year of operation, you have to pay any tax you owe on or before your balance due date for that tax year.

    • GST/HST return: net tax owed $3,000 or less (for annual filers)

      If your business is located in either Ontario or British Columbia and you have an annual reporting period that begins in 2010 with an HST payable exceeding the threshold, there are proposed changes for calculating the amount of your HST instalment payments for that reporting period. Your instalment payments that become payable after the first fiscal quarter beginning on or after July 1, 2010, will be equal to the lesser of ¼ of the amount of net tax for the current year and ¼ of 240% of the amount of the net tax for the previous year.

      Quarterly HST/GST installment payments are due one month after the end of each of your fiscal quarters and are usually equal to a quarter (¼) of your net tax from the previous year. You may also choose to base your quarterly installment payments on an estimate of your net tax for the current year if you expect that it will be less than it was for the previous year.

      If your GST/HST payment is $50,000 or more, you must pay it electronically or at your financial institution, not by mail or in person to CRA, on or before the due date.

  6. GST/HST Filing Frequency

    GST/HST filing frequency is determined by the amount of annual gross income of a taxpayer:

    • if annual gross income is $1.5 million or less, may file annually (default election), quarterly or monthly at the discretion of taxpayers;
    • if annual gross income is between $1.5 million to $6 million, may file quarterly (default election) or monthly at the discretion of taxpayers;
    • if annual gross income is larger than $6 million, must file monthly.

  7. Automobile Allowance Rates and Passenger Vehicle Tax Related Limits

    Automobile Allowance Rates in Most of Canada
    An automobile allowance is any payment that employees receive from an employer for using their own vehicle in connection with or in the course of their employment without having to account for its use. This payment is in addition to their salary or wages and is deductible against the taxable income of the employer. An allowance is taxable in the hands of employees unless it is based on a reasonable per-kilometre allowance below.

    In the Northwest Territories, Yukon, and Nunavut, there is an additional 4¢ per kilometre for travel.

    general prescribed
    rate for taxable
    operating car benefit
    General prescribed rate is used to determine the taxable benefit relating to the personal portion of automobile operating expenses paid by employers.

    The amount of the benefit reflects the costs of operating an automobile. The additional benefit of having an employer-provided vehicle available for personal use (i.e., the automobile standby charge, which is not affected by this rate) is calculated separately and is also included in the employee’s income.

    max car purchase
    price (before
    sales taxes)
    This is the ceiling on the capital cost of passenger vehicles for capital cost allowance (CCA) purposes (applicable federal and provincial sales taxes are excluded in this limit). This ceiling restricts the cost of a vehicle on which CCA may be claimed for business purposes.
    limit on deductible
    leasing costs

    (before sales taxes) per month
    max deductible
    car loan interest
    per month
    This is the maximum allowable interest deduction for loans borrowed to purchase an automobile for income tax purposes.
    first 5,000 km each additional
    km thereafter
     Year 
    1998 $25,000 $550
    1999 $0.35 $0.29 $26,000 $650 $250
    2000 $0.37 $0.31 $27,000 $700 $250
    2001 $0.41 $0.35 $30,000 $800 $300
    2002 $0.41 $0.35 $0.16 $30,000 $800 $300
    2003 $0.42 $0.36 $0.17 $30,000 $800 $300
    2004 $0.42 $0.36 $0.17 $30,000 $800 $300
    2005 $0.45 $0.39 $0.20 $30,000 $800 $300
    2006 $0.50 $0.44 $0.22 $30,000 $800 $300
    2007 $0.50 $0.44 $0.22 $30,000 $800 $300
    2008 $0.52 $0.46 $0.24 $30,000 $800 $300
    2009 $0.52 $0.46 $0.24 $30,000 $800 $300
    2010 $0.52 $0.46 $0.24 $30,000 $800 $300
    2011 $0.52 $0.46 $0.24 $30,000 $800 $300
    2012 $0.53 $0.47 $0.26 $30,000 $800 $300
    2013 $0.54 $0.48 $0.27 $30,000 $800 $300
    2014 $0.54 $0.48 $0.27 $30,000 $800 $300
    2015 $0.55 $0.49 $0.27 $30,000 $800 $300
    2016 $0.54 $0.48 $0.26 $30,000 $800 $300
    2017 $0.54 $0.48 $0.25 $30,000 $800 $300

    Yukon, Northwest Territories & Nunavut have a slightly higher automobile allowance rates than those for the rest of Canada. Please contact Taxwiz Accounting if you need these rates.

    In addition to the operating cost portion calculated on a per kilometer basis, the taxable automobile benefits also include a standby charge. Automobile benefits are not insurable (hence no EI premium is required) but subject to CPP and income tax withheld.

  8. Exchange Rates

    For tax purposes, CRA accepts the average exchange rates published by the Bank of Canada in converting foreign currencies to Canadian dollar. The following table contains some major exchange rates (rounded to the 4th decimal) extracted from data published by the Bank of Canada since 1999.

    HK$ Chinese
    Renminbi
    Taiwan $ US$ UKP Australian
    $
    EURO Japanese
    Yen
    1999 0.1915 0.1795 0.0461 1.4858
    2000 0.1906 0.1794 0.0476 1.4852
    2001 0.1985 0.1871 0.0459 1.5484 2.2298
    2002 0.2013 0.1897 0.0455 1.5704 2.3582
    2003 0.1800 0.1693 0.0408 1.4015 2.2883 0.9105 1.5826 0.0121
    2004 0.1671 0.1573 0.0390 1.3015 2.3842 0.9582 1.6169 0.0120
    2005 0.1558 0.1479 0.0378 1.2116 2.2067 0.9243 1.5090 0.0110
    2006 0.1460 0.1422 0.0349 1.1341 2.0886 0.8543 1.4237 0.0098
    2007 0.1377 0.1412 0.0327 1.0748 2.1487 0.8982 1.4691 0.0091
    2008 0.1369 0.1536 0.0338 1.0660 1.9617 0.9002 1.5603 0.0104
    2009 0.1473 0.1672 0.0345 1.1420 1.7804 0.8969 1.5855 0.0122
    2011 0.1271 0.1531 0.0337 0.9893 1.5859 1.0206 1.3761 0.0124
  9. CRA Prescribed Interest Rates

    CRA uses prescribed interest rates to compute interest charged on amounts owed and interest paid to taxpayers on amounts the CRA owes to individuals and corporations. These rates are revised every quarter. They apply to the time periods indicated below.


[This page was added on 7 April 2009 and last updated on 14 January 2017.]