Canadian income tax is considered to be the highest grosser of the annual revenues that is received by the Government of Canada. The tax is collected by the federal government on behalf of the Canadian provinces and territories (except Quebec) and the income tax system of Canada is administered by the CRA or Canadian Revenue Agency. Anyone who is working in Canada will have to pay Canadian income tax. The various federal tax rates levied are 15%, 22%, 26% and 29% depending on the value of the taxable income. The taxation year in Canada is from January to December and the Canadian tax return has to be filed by April 30th of the following year for salaried individuals and for self employed individuals the final date for receiving tax returns is June 15th.

Tax Filing for Canadian Residents

Canadian Income tax is levied on the worldwide income of Canadian residents. For non residents there are certain types of income that is earned from Canadian sources that are taxable. The Canadian residents will have to use the T1 Tax and Benefit Return and it is the same for individuals and sled employed individuals. The amount of tax that will have to be paid by the individual depends on the value of their taxable income. The taxable income is calculated by reducing the allowed expenses from the gross income received. There are different ways in which the Canadian tax for personal income is collected.

• Deduction at source – The tax is deducted from the pay of the individual and is paid to the CRA by the employer or the income source

• Installment payments – The tax payer will pay the estimated taxes during the year in various installments without waiting till the end of the year to settle the tax

• Payment on filing – The tax is paid when the income tax return is filed by the individual

• Arrears payment – The tax is paid after the tax return has been filed.

Federal Tax Rates

The Federal Tax Rates For The Year 2013 Is As Follows

• Tax rate of 15% is levied on the first $43,561 of the taxable income

• Tax rate of 22% is levied on the next $43,562 of the taxable income

• Tax rate of 26% is levied on the next $47,931 of the taxable income

• Tax rate of 29% is levied on taxable income above $135,054

This is the federal tax rate that is applicable for all territories and provinces of Canada except Quebec and the provincial or territorial tax rates will differ from one another.

Filing of Canadian Tax Return

There are three ways to file your Canadian tax return and they are

• NETFILE

• EFILE

• MAIL

NETFILE is the considered to be a process that is fast and easy and involves using the internet to file your returns online. One has to ensure that the returns are prepared using the web applications or commercial tax preparation software that has been certified by the CRA for the return to be accepted. EFILE is done with the help of electronic filing service providers who are registered with the CRA. The necessary documents are taken to the service provider who will fill in the details and file the return on your behalf. The tax return paper can also send across to the CRA using mail and the mail will have to be send to the CRA office that is responsible for tax services in your province or territory.

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