Taxes in Canada
Tax haven for some
In a country without wealth tax, motorcycle tax, gift tax and inheritance tax, it is good to live.
And yet there are some forms of taxation that quite a few newcomers encounter.
A common complaint is the amount of the OZB (Real Estate Tax); the "Property Tax". This is ridiculously high in Canada because it is the main source of income for the municipalities. Some pay $10,000 per year, a few even more. This tax can also fluctuate badly from year to year.
The differences in levies are sometimes so enormous, even between neighbouring municipalities, that they can influence housing choices.
Anyone who makes changes to their home (for example, adding a garage) will immediately be assessed for this tax.
The income tax has a provincial part and a federal part
The state you live in can make a difference of thousands of dollars a year when it comes to income taxes.
Canada has no mortgage interest deduction but also no rental value deduction. The tax system seems to be simpler but it is complicated by the provincial attributes that are used here and there as real hobbyhorses.
There are hardly any general deductions and if there are, it is seldom profitable to enter them. If you do, you can count on an inspection by the inspector.
Many immigrants will sooner or later have to deal with capital gains and these are often taxable in Canada. The rules can sometimes be annoying.
In the event of death, for example, all assets are valued as if they had been sold at a profit and taxed accordingly.
There are also nasty "change of use" rules. For example, if you rented out a holiday home and then moved in yourself, you will run into this rule. The property will then be taxed as if you had sold it.
The capital gains tax has already driven many to despair.
The Annoying "Sales Tax"
A constant point of irritation is the "Sales Tax" that is calculated afterwards. The prices indicated are usually without the tax. In each Canadian province the "Sales Tax" rules are different, also for entrepreneurs.
It is striking that the "Sales Tax" is highest in the poorest provinces and lowest in the richest provinces.
This also applies to many other taxes that are highest where people have the least. Many people are annoyed by this, but politicians just can't seem to do anything about it. In fact, this has always been the case.
You might also want to check out the chapter on "greed" (link).