What are Taxes?
Taxes are collected by the government so they can provide programs and services to people every day. Everyone in Canada is required to pay taxes in some way. It may seem like people pay a lot of taxes, but the services the government provides are very costly, and lots of people use them. Therefore, everyone needs to help contribute to the city, province and country they live in.
Some of the programs and services that are funded by taxes are public schools, parks and recreational centers, hospitals and health care, medical research, national defense, disaster relief, roads and highways, railways, public broadcasting and social assistance (which helps support the very poor when they need it).
Common types of taxes include: income tax, sales tax, property tax, corporate tax and inheritance tax. They are paid at three levels of government: Federal, provincial and municipal (city).
Most people have money taken from their paychecks each time they get paid. This is called income tax. Each year Canadian citizens must complete an income tax return claiming all of the income they made that year. They can also claim certain deductions and tax credits (these vary from province to province). Common deductions are: tuition and books for post-secondary education, interest paid on student loans etc. When you file your income tax you will either get a return, meaning you overpaid that year and will receive some money back, or you will owe, meaning you didn’t contribute enough and you are required to pay more. In Canada the CRA (Canada Revenue Agency) collects income tax.
If you own property (land, house, apartment building, office complex, cottage etc.) you are required to pay property tax. This tax is based on the value of the property. Property values are determined by property assessors who establish what the property is worth based on what it could sell for on the market.
For young people the most common tax you will have to pay is sales tax. It is a surcharge applied to most items you want to buy like, candy, clothes, books, music, video games, toys, movies and sports equipment. For example if you want to buy a new video game that costs $39.99 and you work hard, save up and take two twenties to the store, you will not have enough to cover the cost of the game. This is because a sales tax will be applied to the “sticker price”. Sales taxes or consumption taxes are collected on most goods, with the exception of basic food necessities, prescription medicines and baby necessities. In Canada sales tax also differs from province to province. There is PST- Provincial Sales Tax, GST- Goods and Services Tax and HST- Harmonized Sales Tax.
Sales Tax by Province
|British Columbia||5% (GST)||7%|
|Nova Scotia||15% (HST)||0%|
|New Brunswick||13% (HST)||0%|
|Prince Edward Island||14% (HST)||0%|
|Northwest Territories||5% (GST)||0%|
|Yukon Territory||5% (GST)||0%|