Toronto

๐Ÿ’ต

Taxes

Information about sales tax (HST) and basic tax filing expectations in Toronto and Canada.

Sections

1. Income Tax

Income tax in Toronto is collected by the Canada Revenue Agency (CRA) on behalf of both the federal and provincial governments. The tax rates are progressive, meaning the more you earn, the higher your tax rate.

Federal and Provincial Income Tax Rates (2023)

  • Federal Tax Rates:

    • 15% on the first $53,359 of taxable income
    • 20.5% on income between $53,359 and $106,717
    • 26% on income between $106,717 and $165,430
    • 29% on income between $165,430 and $235,675
    • 33% on income over $235,675
  • Ontario Provincial Tax Rates:

    • 5.05% on the first $49,231 of taxable income
    • 9.15% on income between $49,231 and $98,463
    • 11.16% on income between $98,463 and $150,000
    • 12.16% on income between $150,000 and $220,000
    • 13.16% on income over $220,000

Filing Procedures and Deadlines

  • Tax Year: January 1 to December 31.
  • Filing Deadline: April 30 of the following year (e.g., for 2023 income, the deadline is April 30, 2024).
  • Self-Employed Individuals: The filing deadline is June 15, but any taxes owed must still be paid by April 30.
  • How to File:
    • Online via CRAโ€™s NETFILE system.
    • Using tax software like TurboTax, UFile, or Wealthsimple Tax.
    • Paper filing (less common but still an option).

Deductions and Credits

  • Common Deductions:
    • RRSP (Registered Retirement Savings Plan) contributions.
    • Childcare expenses.
    • Union or professional dues.
    • Moving expenses (if relocating for work or school).
  • Common Credits:
    • Canada Workers Benefit (CWB) for low-income earners.
    • GST/HST Credit (for low- and moderate-income individuals).
    • Ontario Trillium Benefit (OTB), which includes property tax and energy credits.
    • Tuition and education credits (for students).

Local Considerations

  • Toronto residents may qualify for additional provincial benefits, such as the Ontario Child Benefit or the Ontario Senior Homeownersโ€™ Property Tax Grant.

2. Property Tax

Property tax in Toronto is levied by the City of Toronto and is based on the assessed value of your property, as determined by the Municipal Property Assessment Corporation (MPAC).

Rates and Costs

  • The residential property tax rate in Toronto for 2023 is approximately 0.66% of the assessed property value.
    • Example: For a home valued at $1,000,000, the annual property tax would be around $6,600.
  • Additional charges may include:
    • Education tax (set by the province).
    • City-building fund levy (to support infrastructure projects).

Payment and Deadlines

  • Property taxes can be paid in installments (monthly, quarterly, or annually).
  • Deadlines vary depending on the payment plan chosen, but the city typically sends out tax bills twice a year (interim and final).

Tax Relief Programs

  • Property Tax Deferral Program: Available for low-income seniors and disabled homeowners.
  • Rebate for Vacant Commercial/Industrial Properties: For eligible property owners.

3. Sales Tax (HST)

Toronto, like the rest of Ontario, is subject to the Harmonized Sales Tax (HST), which combines federal and provincial sales taxes.

HST Rate

  • The HST rate in Ontario is 13%:
    • 5% federal portion.
    • 8% provincial portion.

What is Taxed?

  • Most goods and services, including retail purchases, dining out, and professional services, are subject to HST.
  • Some items are exempt or zero-rated, such as basic groceries, prescription medications, and certain medical devices.

Rebates

  • GST/HST Credit: A tax-free quarterly payment to help low- and moderate-income individuals offset the cost of HST.

4. Other Taxes

Land Transfer Tax

  • When purchasing property in Toronto, you must pay both:
    • Ontario Land Transfer Tax.
    • Toronto Municipal Land Transfer Tax (MLTT).
  • Rates are tiered based on the property value, with rebates available for first-time homebuyers (up to $4,000 for the provincial tax and $4,475 for the municipal tax).

Vehicle-Related Taxes

  • Fuel Tax: Included in the price of gasoline.
  • Vehicle Registration Fees: Annual fees for registering your vehicle in Ontario.

5. Filing and Payment Assistance

Toronto offers several resources to help residents navigate the tax system:

Local Services

Free Tax Clinics

  • The CRAโ€™s Community Volunteer Income Tax Program (CVITP) offers free tax clinics for individuals with modest incomes and simple tax situations.
  • Many community centers, libraries, and non-profits in Toronto host these clinics during tax season.

Professional Tax Services

  • Accountants and tax preparers in Toronto can assist with complex tax situations. Popular firms include H&R Block, Liberty Tax, and local CPA offices.
  • Fees vary depending on the complexity of your return.

Tax Software

  • Online tax software like TurboTax, UFile, and Wealthsimple Tax are widely used in Canada. Many offer free versions for simple returns.

6. Tips for Managing Taxes in Toronto

  • Keep Records: Maintain receipts, pay stubs, and other financial documents for at least six years in case of an audit.
  • Set Up Direct Deposit: Register with the CRA to receive refunds and benefits faster.
  • Plan for Installments: If you owe taxes, consider setting up a payment plan with the CRA to avoid penalties.
  • Stay Informed: Tax laws and rates can change annually, so review updates from the CRA and the Ontario Ministry of Finance.

By understanding these tax categories and utilizing the available resources, you can effectively manage your tax obligations while living in Toronto. If you have specific questions or need personalized advice, consider consulting a tax professional or reaching out to the CRA directly.