Canadian income tax rates vary according to the amount of income a taxpayer earns. In addition, taxpayers pay different rates on different portions of their income, pending which bracket the income falls under. Canada has what is considered a “marginal tax rate system”.


What is a Progressive Tax System?

The Canadian tax system is a progressive system, which means low-income earners are taxed at a lower percentage than high-income earners. In essence, the tax system taxes the first dollars earned by all taxpayers at a lower rate. Then, the rates gradually raise on earnings as they exceed the minimum threshold and continue to increase.


How Much is Income Tax in Canada?

The taxation rates, also known as tax brackets, apply to income earned between predetermined minimum and maximum amounts as set out by the Minister of Finance. Taxpayers do, and should, know what bracket they are in. Knowing your tax bracket is essential to help you make decisions about how and when to claim deductions. If married, knowing your tax bracket is important so you and your spouse know when to claim certain amounts or credits. Also, knowing one’s income tax bracket is important so the taxpayer knows when to make withdrawals that would earn additional income.

Important to note, tax rates apply to the taxpayer’s “taxable income”, which is one’s gross income less any deductions they may be entitled to. Each province and territory also have their own tax bracket, which are not always identical to the federal brackets. Taxpayer’s should be sure to review their provincial rates in addition to the federal rates.

Canadian Federal Income Tax Brackets for taxpayers in 2018 are as follows:

2018 Taxable Income Other Income Capital Gains Eligible Canadian Dividends Non-eligible Canadian Dividends
First $46,605 15% 7.50% -0.03% 5.76%
Over $46,605 up to $93,208 20.5% 10.25% 7.56% 12.14%
Over $93,208 up to $144,489 26.0% 13.00% 15.15% 18.52%
Over $144,489 up to $205,842 29.0% 14.50% 19.29% 22.00%
Over $205,842 33.0% 16.50% 24.81% 26.64%


The Canada Revenue Agency (the “CRA”) changes income tax rates periodically, so it is important to ensure you review their current rates each year. To do so, you can review their website.


When is my Income Tax Due?

For individual taxpayers, it is important to file your income tax returns on time. To avoid penalties and interest on your tax return, you must file and submit your return by April 30, 2019. In addition, it is important to be prepared to owe money to the CRA once your return is processed. You should be ready to pay this soon after you file your return.

If a taxpayer files late, the CRA changes a late penalty that is equal to 5% of the balance you owe and an additional 1% for every month you are late paying them the amount you owe from your return.

To pay taxes to the CRA, the easiest method is to register for the CRA’s online platform called “My Account”. This platform is an online portal where you can review your returns, credits, benefits and taxes owing, among other important tax information.


If you have questions about your taxes, or won’t be able to pay the amount you owe the CRA, call us today! We can help.



This article provides information of a general nature only. It does not provide legal advice nor can it or should it be relied upon. All tax situations are specific to their facts and will differ from the situations in this article. If you have specific legal questions you should consult a lawyer.