Overview of the Canadian tax system

Canada is a federation, which means that the work of governing the country is shared by Canada's federal, 10 provincial, and 3 territorial governments. These governments all have taxation powers. The taxes raised in Canada support a wide variety of social programs and government services.

The Department of Finance helps the federal government decide who gets taxed, how they get taxed, and how much they get taxed. Similar organizations responsible for tax policy exist in each province and territory.

The Canada Revenue Agency (CRA) administers tax laws for the Government of Canada and for most provinces and territories. The CRA also delivers various social and economic benefits through the tax system.

Income taxes represent the biggest revenue source to both the federal and provincial governments. The CRA collects federal income tax as well as those charged by the Government of British Columbia, the provincial host to the 2010 Winter Games.

The Canadian income tax system is based on self-assessment. Under the self-assessment system, taxpayers are responsible for making sure they declare income and pay taxes due. The CRA monitors the self-assessment system to ensure compliance with Canadian tax laws.

Individuals, corporations, and other taxpayers that are resident in Canada are taxed in Canada on their worldwide income - that is, they are taxed each year on their annual income from all sources whether inside or outside of Canada. Non-residents of Canada subject to income tax in Canada can generally be categorized as those carrying on an activity in Canada (e.g., business, employment, etc.) and those receiving income from Canada without carrying on any activity here (e.g., receipt of royalties, dividends, interest, etc.).

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Canada's international tax regime imposes responsibilities on those that pay amounts to non-residents of Canada. Generally speaking, payers have to withhold a stated percentage from these payments and remit these amounts to the Government of Canada as the final withholding tax or as payments on account of the final tax owing, which is determined once a Canadian income tax return has been filed and assessed. Any excess amounts collected are refundable.

Canada maintains an extensive network of tax treaties with other countries to remove tax barriers to trade and investment and to promote improved tax administration in an increasingly interconnected world. Individuals and businesses drawn to Canada or receiving Canadian-source income in connection with the 2010 Winter Games will, in many cases, benefit from one or more of the over 85 Canadian tax treaties that are currently in force. A complete list of Canada's tax treaties is available on the Department of Finance Web site.

Goods and services tax (GST) is a national value-added tax charged on the supply of most goods and services. GST is charged at a rate of 5% in most of Canada including British Columbia, the provincial host to the 2010 Winter Games. In certain Atlantic provinces, GST has been combined with a provincial tax component to result in an integrated 13% value-added tax, known as the harmonized sales tax (HST). The GST/HST regime does not raise tax dollars on the sale of basic groceries, exports from Canada, childcare services, and a limited number of other goods and services.

As a general rule, everyone that commercially supplies goods and services in Canada is required to register for GST/HST purposes. Registrants are responsible for collecting and remitting the GST/HST they charge their customers for taxable supplies of goods and services. GST registrants are entitled to claim input tax credits to recover the GST/HST they pay on purchases made in the course of carrying on their commercial activities. If you are a non-resident of Canada making supplies in Canada, you should be aware of some special rules. For more information, see Guide RC4027, Doing Business in Canada - GST/HST Information for Non-residents.

While almost everyone has to pay the GST/HST charged on the supply of most goods and services, non-residents of Canada may benefit from a rebate on qualifying purchases.

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More information on Canada's value-added tax system is available at Goods and services tax/harmonized sales tax (GST/HST).

The Province of British Columbia (B.C.), the host province of the 2010 Winter Games, together with its local governments charge a variety of taxes including property tax, retail sales tax, and hotel room tax. Please contact the B.C. Ministry of Small Business and Revenue or the appropriate local authority for more information on provincial and municipal taxation in B.C.

Other taxes and charges could impact 2010 Winter Games-related activities, and you should make the appropriate enquiries to understand your rights and obligations. For more information about the taxes and benefits the CRA administers, see our home page. Other useful information is available by visiting the Canada Site and the other sites to which this page is linked.