Canada

Overview

Last reviewed - 16 December 2019

Canada is the largest country in the western hemisphere and one of the largest in the world. Located in the northern part of North America, Canada extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean. It has a stable government, a skilled workforce, and its residents enjoy a high standard of living. The country has a well-developed transportation system and is rich in natural resources. Canada's official languages are English and French, and Ottawa is its federal capital. A parliamentary democracy, the country is divided into ten provinces and three territories. The official currency is the Canadian dollar (CAD).

Canada has a thriving free-market economy, with businesses ranging from small owner-managed enterprises to multinational corporations. Canada's economic development was historically based on the export of agricultural staples, especially grain, and on the production and export of natural resource products, such as minerals, oil and gas, and forest products. However, secondary industry has evolved to the stage where Canada ranks as one of the top manufacturing nations of the world. The service industry has also expanded rapidly and has transformed the Canadian economy from one based primarily on manufacturing to one with a significant service-based sector. Canada is among the world's major trading nations, with the United States (US) its primary trading partner.

Despite Canada’s abundant natural resources, skilled labour force, modern capital plant, and strong banking system, significantly lower crude oil prices in recent years have taken a considerable toll on the oil and gas sector and the country’s overall economy. However, lower energy costs helped consumers and the non-resource based sectors. Along with the lower Canadian dollar and the improved US economy, Canada’s manufacturing sector has grown, with higher exports to the United States.

US President Trump’s ‘Buy American’ policy and the renegotiation of the North American Free Trade Agreement (NAFTA) have introduced uncertainty for Canadian businesses who export into the US market. Even though the NAFTA's replacement, the United States-Mexico-Canada Agreement (known in Canada as the CUSMA), has been negotiated, it is uncertain whether the CUSMA will be ratified by all three countries. Passage of the US tax reform legislation in December 2017, and the resulting decrease in the US federal corporate tax rate, are also expected to hurt Canadian exports and the level of foreign investment in Canada. Canada’s 2018 Federal Fall Economic Statement addressed US tax reform indirectly by enhancing the first-year capital cost allowance deductions for most depreciable property, as well as an immediate 100% deduction for newly-acquired manufacturing and processing and clean energy equipment, to encourage continued Canadian investment; it remains to be seen whether this is sufficient to address US tax reform and keep Canada competitive.

Interest rates, which had been rising since mid-2017, have remained steady during 2019, so consumers who continue to be heavily indebted due to the low interest rates from past years may continue to exercise fiscal restraint. Likewise, most provincial governments are generally reining in spending to balance their books and likely will make only minimal contributions to overall economic growth in 2019. In contrast, the federal government has incurred large deficits in recent years and is still committed to invest in improving Canada’s infrastructure. Canada’s new and resale housing markets have been strong, especially in British Columbia and Ontario, creating extremely high residential house prices in parts of those provinces. Those provinces have each implemented measures to stabilise the housing market, including an additional tax on foreign purchases of residential housing in specified locales. This has generally resulted in cooling the housing market in British Columbia. Elevated home prices and household debt, along with an uncertain United States trade landscape, pose a risk to Canada’s economy.

In Canada, PwC has more than 6,700 partners and staff in locations from St. John's on the Atlantic coast to Vancouver on the Pacific. With more than 110 years of excellence in Canada, we provide industry-focused professional services, including audit and assurance, risk assurance, tax, deals, and consulting in areas such as cybersecurity and privacy, human resources, digital transformation, and forensics. As tax laws constantly change, professional advice is essential. PwC in Canada works with companies of all sizes and in all industries to help tailor solutions using local knowledge and global experience. The priority of PwC Canada's Personal Tax, Estate and Wealth Planning Team is to understand your overall financial affairs and planning so we can identify tax strategies that help you achieve your goals. Linked into our global tax practice, we draw from a broad network of professionals who are trained to understand a spectrum of wealth matters to assist you in planning for the future.

Quick rates and dates

Corporate income tax (CIT) rates
Headline CIT rate (%) Federal CIT: 15%. Provincial and territorial CITs range from 11% to 16% and are not deductible for federal CIT purposes.
Corporate income tax (CIT) due dates
CIT return due date Six months after the company's taxation year end.
CIT final payment due date Generally, two months after the company's taxation year end.
CIT estimated payment due dates Tax instalments are generally due on the last day of each month.
Personal income tax (PIT) rates
Headline PIT rate (%) Federal top rate: 33%.
Provincial/territorial top rates range from 11.5% to 21%.
Personal income tax (PIT) due dates
PIT return due date 30 April (15 June for self-employed individuals)
PIT final payment due date 30 April
PIT estimated payment due dates If applicable, 15 March, 15 June, 15 September, and 15 December.
Value-added tax (VAT) rates
Standard VAT rate (%) Combined federal and provincial/territorial sales taxes range from 5% to 15%.
Withholding tax (WHT) rates
WHT rates (%) (Div/Int/Roy) Resident: NA;
Non-resident: 25 / 25 / 25, may be reduced by treaty and to 0% for most interest paid to arm's-length non-residents.
Capital gains tax (CGT) rates
Corporate capital gains tax rate (%) Half of a capital gain constitutes a taxable capital gain, which is included in the corporation's income and taxed at ordinary rates.
Individual capital gains tax rate (%) Half of a capital gain constitutes a taxable capital gain, which is included in the individual's income and taxed at ordinary rates.
Net wealth/worth tax rates
Headline net wealth/worth tax rate (%) NA
Inheritance and gift tax rates
Inheritance tax rate (%) NA
Gift tax rate (%) NA

NA stands for Not Applicable (i.e. the territory does not have the indicated tax or requirement)

NP stands for Not Provided (i.e. the information is not currently provided in this chart)

All information in this chart is up to date as of the 'Last reviewed' date on the corresponding territory Overview page. This chart has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this chart without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this chart, and, to the extent permitted by law, PwC does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this chart or for any decision based on it.

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