New Brunswick (Canada) tax system: audit, reporting and optimization of taxation of Canadian companies and individuals: VAT, income tax and capital gains

Basic taxes (briefly)

Personal tax 15-33%
Corporate tax (in detail) The base federal tax rate is 38%.
Capital gains tax. Details Half of the gains from the sale of assets are included in income taxed at regular tax rates.
VAT. Details The federal GST rate is 5%. GST is similar to VAT.
Other taxes Social contributions, Property tax, Land transaction tax
Government fee
Stamp duty No

International tax agreement

Algeria, Argentina, Armenia, Australia, Austria, Azerbaijan, Bangladesh, Barbados, Belgium, Bermuda, Brazil, Bulgaria, Cameroon, Chile, China, Colombia, Croatia, Cyprus, Czech Republic, Côte d'Ivoire, Denmark, Dominican Republic, Ecuador, Egypt, Estonia, Finland, France, Gabon, Germany, Greece, Guyana, Hong Kong, Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Jamaica, Japan, Jordan, Kazakhstan, Kenya, Korea (Republic of), Kuwait, Kyrgyzstan, Latvia, Lebanon, Lithuania, Luxembourg, Malaysia, Malta, Mexico, Moldova (Republic of), Mongolia, Morocco, Namibia, Netherlands, New Zealand, Nigeria, Norway, Oman, Pakistan, Papua New Guinea, Peru, Philippines, Poland, Portugal, Romania, Russian Federation, Senegal, Serbia, Singapore, Slovakia, Slovenia, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Tanzania, Thailand, Trinidad and Tobago, Tunisia, Turkey, Ukraine, United Arab Emirates, United Kingdom, United States, Uzbekistan, Venezuela, Vietnam, Zambia, Zimbabwe
   
Anguilla, Aruba, Bahamas, Bahrain, Brunei Darussalam, Cayman Islands, Cook Islands, Costa Rica, Curaçao, Dominica, Guernsey, Isle of Man, Jersey, Liechtenstein, Panama, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, San Marino, Sint Maarten, Turks and Caicos Islands, Uruguay, Virgin Islands (British)


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Individual taxation

Canadian residents pay income tax on their worldwide income, and non-residents pay income tax on income from sources in Canada.

Income tax is levied at the federal and 10 provincial and 3 territorial levels.

The federal tax is levied on a progressive scale:

  • from income up to 49,020 CAD, at a rate of 15%;
  • from 49,020 to 98,040 CAD, at a rate of 20.5%;
  • from 98,040 to 151,978 CAD, at a rate of 26%;
  • from 151,978 to 216,511 CAD, at a rate of 29%;
  • over 216,511 CAD, at a rate of 33%.

The provinces and territories set their own tax rates and income levels to which they apply. Rates are also progressive and range from 4% to almost 26% depending on the level of income and the province or territory. The definition of taxable income is the same as the federal one, except in Quebec.

There is also a minimum alternative tax, calculated in a special way, which is payable if it exceeds the regular tax. The minimum alternative tax may be credited in future periods against the ordinary tax if the ordinary tax exceeds the minimum alternative tax.

Half of the gain on the sale of assets is included in income taxable at ordinary tax rates. There are special rules for accounting for tax purposes for gains on stock sales and dividends.

Income tax

Canadian companies pay tax on their worldwide income; non-resident companies pay tax on income from sources in Canada.

The basic federal tax rate is 38%. It is reduced to 28% for income generated within the province or territory of Canada. There are reduced rates for small companies, manufacturing companies, etc. For income generated in the province/territory, there is also a regional income tax, with rates ranging from, generally, 2% to 16%, depending on the size of the profit and the province/territory.

Half of the gain on the sale of assets is included in income taxed at ordinary tax rates. There are special accounting rules for tax purposes for gains from the sale of shares and dividends. Dividends from Canadian companies, as a general rule, are not taxable to a Canadian company.

CFC rules

A foreign affiliate is a foreign company with a Canadian resident's ownership interest of at least 1% and together with related parties of at least 10%. With more than 50% ownership, a foreign company is considered a controlled company.

Certain types of income of a foreign affiliate are included in the taxpayer's taxable income. Usually these are certain types of income from property, passive income with some exceptions, certain types of capital gains.

Withholding tax on income

Withholding tax on dividends and royalties is withheld at a rate of 25%. Interest paid to unrelated parties is not subject to withholding tax.

Tax may be withheld on certain other types of income.

Tax rates may be reduced in accordance with double taxation avoidance agreements (DTAs).

VAT (Goods and Services Tax - GST)

The federal GST rate is 5%. GST is similar to VAT. At the provincial level a similar tax can also be levied. The five provinces charge HST (harmonized sales tax) with rules similar to the GST at 13% to 15%. Quebec levies a similar tax on certain transactions at a rate of about 10%. Some other provinces have imposed provincial retail sales taxes with their own rules and rates.

Property tax

Property taxes are levied at the municipal and provincial/territorial levels.

Land transaction tax

Tax is levied at the provincial and territorial levels, generally at rates of 0.02% to 3%; rates are usually higher for non-residents and they may be charged additional tax.

Double taxation treaties

Canada has entered into the following tax information exchange arrangements:

94 DTCS: Algeria, Argentina, Armenia, Australia, Austria, Azerbaijan, Bangladesh, Barbados, Belgium, Bermuda, Brazil, Bulgaria, Cameroon, Chile, China, Colombia, Croatia, Cyprus, Czech Republic, Côte d'Ivoire, Denmark, Dominican Republic, Ecuador, Egypt, Estonia, Finland, France, Gabon, Germany, Greece, Guyana, Hong Kong, Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Jamaica, Japan, Jordan, Kazakhstan, Kenya, Korea (Republic of), Kuwait, Kyrgyzstan, Latvia, Lebanon, Lithuania, Luxembourg, Malaysia, Malta, Mexico, Moldova (Republic of), Mongolia, Morocco, Namibia, Netherlands, New Zealand, Nigeria, Norway, Oman, Pakistan, Papua New Guinea, Peru, Philippines, Poland, Portugal, Romania, Russian Federation, Senegal, Serbia, Singapore, Slovakia, Slovenia, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Tanzania, Thailand, Trinidad and Tobago, Tunisia, Turkey, Ukraine, United Arab Emirates, United Kingdom, United States, Uzbekistan, Venezuela, Vietnam, Zambia, Zimbabwe.

24 TIEA: Anguilla, Aruba, Bahamas, Bahrain, Brunei Darussalam, Cayman Islands, Cook Islands, Costa Rica, Curaçao, Dominica, Guernsey, Isle of Man, Jersey, Liechtenstein, Panama, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, San Marino, Sint Maarten, Turks and Caicos Islands, Uruguay, Virgin Islands (British).

Currency controls

In general, there is no restriction on foreign exchange transactions.

    Taxes of Canada

    Min. rate for corporate tax 38%
    Capital gains tax 50% of the regular rate
    VAT 5%
    Withholding tax 25%/0%/25%
    Exchange control No
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