Taxes in Ontario support varying different programs of the province such as: education, health care, transportation infrastructure, child care etc. The Canadian tax system is known as a "progressive tax system," meaning, the more income you have, the more you will pay in income taxes. The system is based on income brackets, based on how much you earn, you are placed into an income bracket. You will pay the same percentage of tax as the others in your tax bracket.

Individual Taxes in Ontario

Individuals in Ontario must pay both federal and provincial tax based on the income earned for the previous year. Income includes: employment income, dividends, interest, taxable capital gains and business or professional gains. You will be expected (required) to report all income to the Canada Revenue Agency (CRA) annually. 

To find out current rates for each tax bracket, please visit this page of the Government of Canada's website.

In Canada, you may be eligible for tax deductions or tax credits. A tax deduction will reduce your total amount of income you need to report to the CRA. Deductions can be union dues, childcare expenses, education, and disability.

A tax credit is a deduction on the amount of tax you will owe. There are two different types of tax credits available.

1. Non-refundable tax credits – this reduces the amount of taxes you will owe at the end of the year
2. Refundable tax credits- this is a tax credit that will be refunded back to you by the government after you have already paid taxes  

To find out more on Canada's tax deductions and credits, please visit the Government of Canada's website.

Reporting on Taxes in Ontario

Individuals who reside in Canada usually file one income tax return for the tax year (January 1st-December 31st).

On an income tax return, you must list your income and deductions, calculate federal and provincial/territorial tax, and determine if you have a balance owing for the year, or whether you are entitled to a refund for some or all of the tax that was deducted from your income by your employer during the year. Income tax returns in Canada must be filed on or before April 30th of the year after the tax year. Balances of taxes owing must be paid on or before April 30th of the year after the tax year, regardless of the due date of your tax return.

You should keep all supporting documents and income tax records for six years. Receipts and supporting documentation should be ready to support your claims in case you are selected for tax review or audit.

VAT in Ontario

In the province of Ontario, the VAT system is called the Harmonized Sales Tax (HST). The HST tax is 13% . This is a combination of the previously separated taxes on federal goods (5%) and retail sales tax (8%). This tax is added to your bill for hotel, restaurant, and store transactions. There is no HST added to your grocery bill.

Recommended Partners