Canadian federal personal income tax is calculated based on taxable income, then non-refundable tax credits are deducted to determine the net amount payable. For 2019, every taxpayer can earn taxable income of $12,069. This was increased by indexation to $12,298 for 2020. However, on December 9, 2019, the federal government presented legislative proposals that would provide an additional amount of BPA for 2020 and later years for the basic personal amount (BPA), spousal amount and eligible dependant amount. See the article on the basic personal amount for details. All legislative proposals are subject to parliamentary approval.
The basic personal tax credit is calculated by multiplying the tax rate for the lowest tax bracket by the basic personal amount. The 2019 tax credit is 15% x $12,069 = $1,810. For 2020 the tax credit for those with incomes up to $150,473 will be $13,229 x 15% = $1,984.35. This is $139.65 more than the tax credit before the legislative increases.
Provincial or territorial income taxes are paid in addition to the federal taxes, based on where the taxpayer resides on December 31 of the tax year. All provinces and territories except Quebec use the taxable income amount calculated for federal tax purposes, and then apply their own income tax rates. All provinces and territories have most of the same tax credits as the federal tax credits, but usually in different amounts. The provincial or territorial tax rate for the lowest tax bracket is used to calculate the tax amount of most of the provincial tax credit. Quebec is the only province which does not use their lowest tax bracket to calculate most personal tax credits.
To see the combined federal and provincial/territorial tax rates, see the tables of Personal Income Tax Rates. These tables also include the marginal tax rates for capital gains, and both types of Canadian dividends. The federal and provincial or territorial personal amount is also shown, and the rate used to calculate non-refundable tax credits.
To determine your taxes payable, use our Personal Income Tax Calculators.
See our Personal Income Tax page for links to tables of personal income tax rates and personal tax credits for all provinces and territories.
For links to the latest tax return forms on the Canada Agency (CRA) website, and information on filing your tax return, see our Filing Your Return page.
Federal Government Links:Canada Revenue Agency home page - English - Français Canada Business - Service for Entrepreneurs - all provinces/territories
Income Tax Act and Regulations
Canada Pension Plan and Regulations
Employment Insurance Act and RegulationsExcise Tax Act and Regulations (includes Goods & Services Tax)
Old Age Security Act and Regulations
Revised: December 12, 2019
Copyright © 2002 Boat Harbour Investments Ltd. All Rights Reserved. See Reproduction of information from TaxTips.ca