Canada’s Tax Rates
In Canada, corporate income is taxed at 5%; long-term capital gains are included in the calculation of taxable profit. Expenses including training and depreciation on fixed assets can be deducted for tax purposes. Some areas also impose a business tax at their discretion.
There are three sales taxes :
- Goods and Services Tax (GST).
- Harmonized Sales Tax (HST).
- Provincial sales taxes (PST).
More specifically, goods and services are taxed at 5% + a provincial tax ranging from 0 – 10 %. HST at 13% only applies in Newfoundland and Labrador, Nova Scotia and New Brunswick.
Income tax is calculated as follows :
- Federal tax rates: 15 – 29% progressive
- Provincial tax rate: 10 – 24% progressive
Relocation costs, living allowances, investment, medical and school fees are all tax deductible.
Accounting Requirements In Canada
Canadian accounting standards were introduced by the Canadian Accounting Standards Board of the Canadian Institute of Chartered Accountants (CICA). Annual accounts are based on Generally Accepted Accounting Principles.
The tax year is normally the calendar year but companies may elect to use different accounting dates. Companies, other than banks, insurance companies and public bodies, must follow CICA guidelines.
Financial accounts must include a balance sheet, a profit and loss account, a statement of retained earnings and a cash flow statement. Audited financial statements must be prepared annually.