Canada

Social security contributions

For 2025, Canadian-resident employees are required to pay government pension plan contributions of up to CAD 4,430.10 and employment insurance premiums of up to CAD 1,077.48. However, Quebec employees instead contribute a maximum of CAD 4,735.20 in Quebec government pension plan contributions, CAD 860.67 in employment insurance premiums, and CAD 484.12 to a Quebec parental insurance plan.

Starting 1 January 2019, Canadian and Quebec government pension plan contributions were increased by an enhancement that will be phased in over seven years. The enhanced portion of the contributions is deductible, while a credit equal to 14.5% (for 2025, 14% starting 2026) of the lesser of the base (non-enhanced) amount payable and the required base premiums for the year is allowed in computing an individual's federal taxes payable.

Self-employed persons contribute double the employee's government pension plan contribution (i.e. for 2025, up to CAD 8,860.20, or if in Quebec, CAD 9,470.40) and are permitted to deduct half of the base (non-enhanced) contribution and 100% of the enhanced contribution. The non-deductible portion qualifies for a tax credit. Self-employed persons are not liable for employment insurance premiums but may opt to pay them. Self-employed persons in Quebec must contribute up to CAD 860.44 to the Quebec parental insurance plan.

Consumption taxes

Federal Goods and Services Tax (GST)

The GST is a federal sales tax levied at a rate of 5% on the supply of most property and services made in Canada. It is a value-added tax (VAT) applied at each level of supply, and registrants can recover the GST on their purchases or imports as an input tax credit (ITC), to the extent that their purchase or import is in the course of their commercial activities. GST does not apply to supplies that are zero-rated (i.e. effectively taxed at 0%) or are exempt. Examples of zero-rated supplies include basic groceries, qualifying medical devices, prescription drugs, feminine hygiene products, certain agriculture and fishing supplies and equipment, most exports of goods and services and most international freight and passenger transportation services. Examples of exempt supplies include sales of used residential real property, most supplies by registered charities, and most healthcare (by professional practitioners), educational, and financial services.

The GST registration threshold is CAD 30,000 of sales to Canadian consumers annually. Generally, registrants charge GST on all their sales (unless specifically zero-rated or exempt) and pay GST on their purchases. They remit or claim a refund for the amount of net tax reported (i.e. the difference between the GST charged and the GST paid) and claimed as an ITC. Exempt supplies are not considered to be made in the course of commercial activities, and registrants are generally not entitled to claim ITCs with respect to GST paid on expenses in the course of making of exempt supplies.

Harmonised Sales Tax (HST)

Five provinces have fully harmonised their sales tax systems with the federal GST and impose a single HST, which includes the 5% GST and a provincial sales tax component. HST has the same tax base, tax returns and rules as the GST (with very few exceptions). There is no need to register separately for GST and HST because both taxes are accounted for under one tax return and are jointly administered by the Canada Revenue Agency (CRA). The HST rates follow.

Notes

1. Nova Scotia's HST rate decreased from 15% to 14% on 1 April 2025 (i.e. the provincial portion of the HST decreased from 10% to 9%).

GST/HST and the digital economy

Non-resident vendors that are considered to be ‘carrying on business in Canada’ and making taxable supplies in Canada are generally required to register for GST/HST, regardless of whether they have a physical presence in Canada or not (the same CAD 30,000 annual sales to Canadian consumers registration threshold applies). In addition, non-resident vendors that neither have a physical presence in Canada nor carry on business in Canada may also have the obligation to register for and collect GST/HST under a simplified regime, including:

• foreign-based digital businesses that supply intangible personal property and services to consumers (non-GST/HST registrants) in Canada
• non-resident operators of digital/distribution platforms that facilitate the supply of intangible personal property and services to consumers (non-GST/HST registrants) in Canada, and
• non-resident digital accommodation platforms that facilitate the supply of short‑term accommodation by private residential property owners.

Non-resident suppliers or non-resident operators of distribution platforms participating in transactions involving goods for sale that are located at fulfilment warehouses in Canada and sold to purchasers in Canada may be required to register under the regular regime, if the non-resident vendor is, through a fulfilment warehouse in Canada:

• selling goods directly to consumers in Canada on their own account, or
• using an online marketplace platform to facilitate the sale of goods by other non-residents to consumers in Canada.

Provincial retail sales tax (PST)

The provinces of British Columbia, Manitoba, and Saskatchewan each levy a PST (in addition to the 5% GST) at 7%, 7%, and 6%, respectively, on most sales of tangible personal property, software, and certain taxable services. Each province has its own PST legislation with separate rules.

PST is administered by each province’s tax authority, separate from the CRA. Unlike GST/HST, PST is not a VAT (it is a retail sales tax) and is not recoverable. Therefore, any PST paid on purchases by a business cannot generally be claimed as an ITC or refund and becomes a cost of business input.

PST generally does not apply to sales of taxable goods, software, and services acquired by the purchaser solely for resale; registered purchasers can claim this resale exemption by providing suppliers with their valid registered PST vendor number. In British Columbia, non-registered wholesalers can provide a purchase exemption certificate to a vendor to make their purchase exempt. Certain exemptions also exist for purchases used in manufacturing, farming, and fisheries.

Alberta and the three territories (the Northwest Territories, Nunavut, and the Yukon) do not impose a retail sales tax. However, the GST applies in those jurisdictions.

British Columbia PST

British Columbia requires certain out-of-province vendors to register for PST. Non-residents of British Columbia located:

• in Canada that sell taxable goods, or
• in or outside Canada that:
  • sell software and telecommunication services, or
  • maintain an inventory of goods in British Columbia for sale in the province.

to customers for consumption or use in British Columbia are generally required to register for BC PST if their annual revenue from sales in British Columbia exceeds CAD 10,000 (and in some instances where they do not meet this threshold). 

Businesses that facilitate sales or leases of certain goods, services (including accommodation services), or software for third parties through their online platform, including accepting payment from a consumer (known as marketplace facilitators) are required to collect and remit BC PST on those sales and leases made in British Columbia. Marketplace facilitators are also required to charge BC PST on marketplace services they provide to resellers. Software used on devices in British Columbia is subject to BC PST.

Manitoba PST

Manitoba requires certain businesses that do not have a physical presence in the province to register for PST. Out-of-province vendors that do not carry on business in Manitoba, but sell or lease taxable goods to purchasers who acquire the goods for consumption or use in Manitoba are required to be registered for PST as a vendor and to collect the PST, if they:

• cause the goods to be delivered in Manitoba
• solicit the order for the sale in Manitoba, directly or through an agent, by advertising or any other means
• accept orders originating in Manitoba to purchase tangible personal property, or
• hold inventory of taxable goods in the province, available for sale to Manitoba customers.

Vendors are required to register and collect and remit PST on their sales to Manitoba customers. PST applies on streaming services and media purchases of music, audio and television programs, movies and other video, and ring tones (text and other alert) sold to purchasers that are ordinarily resident in Manitoba. Effective 1 January 2026, PST will apply on cloud computing services, including Software-, Platform- and Infrastructure-as-a-Service.

Online sales (including accommodation) platform operators are responsible for the proper collection of PST, regardless of whether the actual seller is registered as a vendor or the goods are shipped to the purchaser in Manitoba from an address outside of Canada. The threshold at which businesses must register for and collect Manitoba PST is CAD 30,000 of taxable sales. 

Saskatchewan PST

Saskatchewan has broad registration requirements for out-of-province sellers, even if they do not carry on business in the province. Non-resident sellers of goods are required to register for Saskatchewan PST if they:

• make goods available for purchase in Saskatchewan
• accept orders to purchase tangible personal property that originate in Saskatchewan, or
• cause the tangible personal property to be delivered in Saskatchewan.

Businesses that operate online sales platforms are required to register for and collect Saskatchewan PST. Out-of-province vendors do not have to register for Saskatchewan PST if they only make sales to Saskatchewan customers through online accommodation platforms or marketplace facilitators that are registered for Saskatchewan PST. Generally, Saskatchewan PST applies on software for use in Saskatchewan, including Software-, Platform- and Infrastructure-as-a-Service.

Quebec sales tax (QST)

Quebec's sales tax is a VAT structured in the same manner as the GST/HST. The QST is charged in addition to the 5% GST and is levied at a rate of 9.975% on the supply of most property and services made in the province of Quebec. QST rules are generally harmonised with those of the GST/HST, but QST is administered by and remitted to Revenu Québec (Quebec’s tax authority), through filing of the QST return. Revenu Québec also administers the GST/HST on behalf of the CRA for most registrants that are resident in the province.

The mandatory QST registration rules, under the regular QST regime, also apply to non-residents of Quebec where they are carrying on business in Quebec. Quebec has harmonised its QST system with the federal GST/HST measures on the digital economy (see above). Operators of distribution platforms that sell foreign goods located in fulfilment warehouses in Canada and operators of short-term accommodation platforms may be required to register and collect QST on certain sales made to Quebec consumers under a simplified QST regime.

Net wealth/worth taxes

There are no net wealth/worth taxes in Canada.

Inheritance, estate, and gift taxes

There are no federal or provincial/territorial inheritance, estate, or gift taxes. However, an individual who dies is deemed to have disposed of any capital property immediately before death. This can result in any accrued capital gains being subject to income tax in the manner discussed under Capital gains in the Income determination section. In addition, most provinces and territories impose probate fees or administrative charges for probating a will.

Property taxes

Property taxes are levied by municipalities in Canada on the estimated market value of real property within their boundaries, and by provinces and territories on land not in a municipality. In most provinces and territories, a general property tax is levied on the owner of the property. Some municipalities levy a separate business tax, which is payable by the occupant if the premises are used for business purposes. These taxes are based on the rental value of the property at tax rates that are set each year by the various municipalities. School taxes, also generally based on the value of real property, are levied by local and regional school boards or the province or territory.

British Columbia speculation and vacancy tax (SVT)

In British Columbia, an annual SVT is imposed on residential property in certain urban centres in British Columbia (i.e. Metro Vancouver Regional District, Capital Regional District and 26 other municipalities); most islands in British Columbia are excluded, except Vancouver Island. The SVT targets foreign and domestic homeowners who do not pay income tax in British Columbia above a certain threshold, including those who leave their homes vacant. The tax rate, as a percentage of the property’s assessed value on 1 July of the previous year, is:

• 2% (3% after the 2025 calendar years) for foreign investors and satellite families.
• 0.5% (1% after the 2025 calendar year) for British Columbians and all other Canadian citizens or permanent residents who are not members of a satellite family.

Up-front exemptions are available for most principal residences and for qualifying long-term rental properties and certain special cases, including home renovation, illness, and divorce. A non-refundable tax credit may be available in varying amounts (depending on the type of owner) for owners subject to the SVT to reduce the amount of SVT owing.

All residential property owners in the areas subject to the SVT must:

• make a declaration (i.e. register and claim an exemption) online by 31 March of the following year, and
• if no exemption is available, pay any tax owing by the first business day in July of the following year (2 July in 2026).

If a property has multiple owners, each owner must complete a separate declaration, even if they are married to another owner of the property. An owner with multiple properties must complete a separate declaration for each property. Failure to file a declaration for a calendar year will result in an assessment at the 2% tax rate (3% after 2025) for the taxpayer, regardless of residency status or exemption eligibility.

Federal tax on Canadian housing owned by non-residents

An annual 1% federal underused housing tax (UHT) applies on the value of non-resident, non-Canadian-owned residential property considered to be vacant or underused. Certain residential property owners in Canada are required to file an annual declaration for each Canadian residential property they own for the prior calendar year, by 30 April of the following calendar year, even if they claim an exemption from the tax. Failure to file the mandatory declaration could result in significant penalties. The tax generally applies to owners (other than Canadian citizens or permanent residents, in most cases, and certain owners [i.e. ’specified Canadian corporations’, partners of ’specified Canadian partnerships‘, and trustees of ’specified Canadian trusts‘]). Exemptions are available, including to those who lease their properties to qualified tenants for a minimum period in a calendar year, and for certain employee accommodations.

Land transfer tax

All provinces and territories levy a land transfer tax or registration fee on the purchaser of real property within their boundaries. These levies are expressed as a percentage, in most cases on a sliding scale, of the sale price or the assessed value of the property sold and are generally payable at the time title to the property is registered. Rates generally range from 0.04% to 5%, depending on the province or territory, but may be higher if the purchaser is a non-resident. Some exemptions (or refunds) are available. Additional land transfer taxes may apply for properties purchased in the municipalities of Montreal or Toronto. Other municipalities may also impose these taxes and fees.

In British Columbia, a 20% land transfer tax (in addition to the general land transfer tax) is imposed on foreign entities (i.e. foreign nationals and corporations, and certain Canadian corporations controlled by such foreign persons), and certain trusts and/or their trustees that have a foreign connection (a taxable trustee), that purchase residential property in the Metro Vancouver Regional District (but excluding residential property located on the Tsawwassen First Nations treaty lands), the Capital Regional District, the Regional District of Central Okanagan, the Fraser Valley Regional District, and the Regional District of Nanaimo. Failure to pay the tax or file the required forms can result in interest, plus significant penalties, and/or imprisonment. Anti-avoidance rules will capture transactions that are structured to avoid this tax.

Relief from the additional land transfer tax is available to property acquired on behalf of a Canadian controlled limited partnership. Refund from the additional land transfer tax is available, subject to certain qualifying conditions, to:

• foreigners who become Canadian citizens or permanent residents within one year of purchasing a principal residence, or
• foreign workers coming to British Columbia under the British Columbia Provincial Nominee Program who purchase a principal residence on or after their confirmation under that program.

In an effort to stop tax evasion when property ownership is hidden behind numbered companies and trusts, the British Columbia government requires trustees, partners of a partnership, and corporations that acquire property to identify all individuals with a beneficial interest in the trust, partnership interest, or significant interest in the corporation on the property transfer tax return. For beneficiaries or trusts that are corporations, information about each director of the corporation must be disclosed. This applies to all property types, including residential and commercial, with exemptions for certain trusts (e.g. charitable trusts) and corporations (e.g. hospitals, schools, and libraries).

In Ontario, a 25% land transfer tax (in addition to general land transfer tax and Toronto’s land transfer tax) is imposed on foreign entities (i.e. foreign nationals and corporations, and certain Canadian corporations controlled by such foreign persons) and taxable trustees (i.e. trustees of a trust that has at least one trustee or beneficiary that is a foreign entity) that purchase residential property in the province. For this tax to apply, the land transferred must contain at least one, but not more than six, single family residence(s). The tax also applies to a standalone purchase of a parking space or storage unit and to unregistered dispositions of a beneficial interest in a residential property, when the purchaser of the interest is a foreign entity or taxable trustee. Failure to pay the new tax can result in a penalty, fine, and/or imprisonment. Exemptions from this additional land transfer tax are available in certain circumstances (including for foreign workers coming to Ontario under the Ontario Immigrant Nominee Program or for refugees under the Immigration and Refugee Protection Act, who purchase a principal residence), and rebates of the tax can be obtained in certain situations.

In Nova Scotia, a 10% land transfer tax (5% for transactions with an agreement of purchase and sale dated before 1 April 2025) is imposed on non-residents of Nova Scotia that purchase residential real property, in addition to municipal land transfer tax, if any. Exemptions are available for non-resident purchasers who move to (and become resident of) the province within six months of the transaction’s closing date.

Luxury and excise taxes

Luxury tax

A tax applies on sales, for personal use, of:

• luxury cars and personal aircraft with a retail sales price over CAD 100,000, and
• boats with a retail sales price over CAD 250,000,

calculated at the lesser of:

• 20% of the value above the sales price threshold, or
• 10% of the full value of the luxury car, boat, or personal aircraft.

Excise tax

Excise duties are levied at various rates on spirits, wine, beer, malt liquor, tobacco, and vaping products. When these goods are manufactured or produced in Canada, duty is payable on the goods at the point of packaging and not at the point of sale. When these goods are imported into Canada, duty is generally payable by the importer at the time of importation. Excise tax is also imposed on automobile air conditioners and fuel-inefficient automobiles, in addition to aviation fuel, gasoline, diesel fuel, and certain insurance premiums.