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Taxes

Income Tax

Residents of Ontario, including temporary residents and recent newcomers, must pay federal and provincial income tax on their earnings. Both taxes are calculated separately and the money is used to finance government programs and services. The rate of taxation is higher for people who earn more money. For example, a person earning under $40,000 a year is taxed at a lower rate than a person who earns more than $125,000 (see links in For More Information below for more detail on income tax percentages).

Most people have their income tax automatically deducted from their paycheque by their employer as part of their payroll deductions. Others may need to pay the government in installments. Both methods are only estimations of the final income tax owed for that year.

The government of Canada requires all adult residents to file an annual income tax return to the Canada Revenue Agency (CRA) by April 30. An income tax return is a statement of an individual's earnings and the amount of income tax that was deducted. Some people may have paid too much tax and will receive a refund; others may not have paid enough tax and must pay the amount owed to the CRA.

Some individuals may not have any income to report but may qualify for certain tax credits that will provide them with a refund. The income tax paid by an individual is based on their taxable income or the portion of their earnings which is taxable. Taxable income is the amount of money a person earns minus certain eligible deductions such as child-care expenses or retirement plan contributions.

Harmonized Sales Tax (HST)

Ontario residents pay a Harmonized Sales Tax (HST) of 13% on most goods and services they purchase. Some items, such as prescription drugs, municipal transit, and basic groceries, are exempt from the HST. For some goods and services, the HST is only 5% (see links in For More Information below for details on the HST and a listing of goods and services). The HST is added to the price of an item at the cash register.

Tax Credits

People on low or moderate incomes may qualify for federal and provincial tax credits that will reduce their overall income tax or provide them with a regular cash refund from the government. There are two types of tax credits: non-refundable and refundable.

Non-refundable tax credits are used to reduce an individual's income tax but can't be used for a refund. An example of a non-refundable tax credit is:

  • The Children's Fitness Tax Credit, which allows parents to claim up to $500 per year for certain fitness expenses for children under the age of 16.

Refundable tax credits provide individuals with regular cash refunds even if they pay no income tax. An example of a refundable tax credits is:

  • The Goods and Services/Harmonized Sales Tax (HST/GST) credit, a tax-free payment given four times a year to individuals aged 19 or over and families living on low or modest incomes.

For More Information

What is the taxation system in Canada?
An introduction to Canada’s tax system, what taxes are used for, tax credits, types of income tax, filing a tax return, municipal property taxes, and business taxes.

Canadian Sales Tax
An explanation of the Goods and Services Tax (GST), Provincial Sales Tax (PST) and Harmonized Sales Tax (HST).

Goods and services tax/harmonized sales tax (GST/HST) — for businesses
General and specific information for businesses about the Goods and Services Tax (GST), Harmonized Sales Tax (HST), rebates, and important dates. Includes a variety of information and tools, including a calculations table for GST/HST, a list of e-services (online service options) and a series of videos for small businesses that explain about GST/HST, payroll, and preparing T4 and T4A information slips.

Taxes and Charges
A list of taxes and charges under the Ontario tax system, including personal income tax, harmonized sales tax and provincial sales tax.

How much income tax do I have to pay?
Information about filing a tax return in Canada: who has to file a return, important dates, determining residency for tax purposes and what to do if you live outside of Canada.

Income tax rates in Canada
The federal government income tax rates. Includes a chart that can be used to manually calculate the amount of income tax.

What is the Canada Child Tax Benefit?
The Canada Child Tax Benefit helps families on low incomes with children under the age of 18. The amount of the credit is based on a family’s income, number and age of children and where the family lives. Available in Arabic, Chinese (Simplified), French, Gujarati, Pilipino (Tagalog), Punjabi, Russian, Spanish, Tamil, and Urdu.

Personal Income Tax
Information about how to reduce the amount of income tax you pay using Ontario tax credits.

GST/HST credit: Application and Eligibility — for individuals
Who is eligible and how to apply for the GST/HST tax credit.

Ontario Tax System: Credits, Benefits and Incentives
A guide to understanding Ontario tax credits, who can claim them, and the difference between refundable and non-refundable credits. Includes an online tax credit calculator tool.

Child and Family Benefits
Links to federal and provincial programs and benefits for families with children, such as the Canada Child Tax Benefit, Child Disability Benefit, Universal Child Care Benefit, Children’s Special Allowances, and other credit and tax information. Also includes a link to the Automated Benefits Application service that allows for newborns to be automatically signed up to receive all benefits for which they are eligible. Other tools and information include benefits calculators to determine the entitled amount and various application forms and informational publications.

Newcomers to Canada (immigrants)
Canada Revenue Agency information on the income tax rules that apply to newcomers to Canada (immigrants) during their first tax year. Includes a series of videos for newcomers about the Canadian Tax System and the process of filing that first income tax and benefit return.

International and Non-resident Taxes
Information on international and non-resident taxes for individuals, businesses and trusts. Includes residency determinations, tax treaty information (i.e. Canada’s tax agreements with other nations), average exchange rates for converting income or deductions to Canadian dollars, and other general information. There is also an online non-resident tax calculator online tool.

Public Transit Tax Credit
Public transit users with monthly passes (or longer) that allow for unlimited rides are eligible for a federal government tax credit. Includes information about who can claim and what types of passes are eligible, how to calculate the amount and submit your tax claim, and what information and receipts you need to support your claim. There is also a video explaining requirements and process.

Service Location Finder — ServiceOntario
Searchable directory with information on how and where to access many Ontario government services. Covers health, social assistance, business, employment, education, driver and vehicle, taxes, and others.

Children’s Fitness Tax Credit (Canada Revenue Agency)
Information about a federal non-refundable tax credit for parents who enrol their children in physical activity programs. A video explaining this credit is also available.

Government of Canada Job Bank
Overview about working in Canada. Includes links to information on government, wages, taxes, important documents, challenges, and rights as well as videos and guides. Also features a number of useful tools for researching the demand and outlook for different occupations in locations across Canada as well as listing existing job opportunities.

Savings and Investments
Information on saving and investing for the individual. Includes details on common types of investments, government saving and investing plans, setting saving and investing goals, costs and fees, working with a financial advisor or planner and protecting yourself from fraud. Also includes a set of tools and links to publications on Tax-free Saving Accounts (TFSAs) and saving for your child’s education with a Registered Education Saving Plan (RESP).

QUIC: Taxes
Queen’s University International Centre (QUIC) information on filing income tax returns for international students and staff. Details on whether you need to file and what tax return benefits are available. Available as a list of frequently asked questions (FAQ).

Children’s Arts Tax Credit (Canada Revenue Agency)
Information about a federal non-refundable tax credit for parents who enrol their children in artistic, cultural, recreational, or developmental activity programs. A video explaining this credit is also available.

Healthy Homes Renovation Tax Credit (Ontario)
Information about a permanent refundable Ontario tax credit to assist with the cost of permanent home modifications that improve accessibility or help a senior be more functional or mobile at home. It can also be claimed by senior homeowners and tenants, and people who share a home with a senior relative.

Ontario — Taxes and Benefits
Provides a broad overview of the Ontario tax system. Sections focus on benefit and tax programs by type of person (children, seniors, students, women, and people with a disability) or by topic (child care, dental, education, employment, health, housing and legal aid. There is also a section specifically for businesses, including the ONT-TAX online service, a tax credit calculator and information on other taxes and charges.

Individuals — Leaving or entering Canada and non-residents
Information on international and non-resident taxes for individuals and trusts. Includes residency determinations, tax treaty information (i.e. Canada’s tax agreements with other nations), average exchange rates for converting income or deductions to Canadian dollars, and other general information. There is also an online non-resident tax calculator online tool.

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