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 level of the property tax (OZB). It's ridiculously high in Canada because it's the primary source of income for municipalities. Some pay $10,000 a year, a few even more. This tax can also fluctuate dramatically 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 house (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 tax.
Canada doesn't have a mortgage interest deduction, nor does it have a notional rental value. The tax system appears simpler, but it's complicated by provincial regulations that are sometimes used as pet peeves.
General deductions are rare, and if they do exist, it's rarely worthwhile to claim them. If you do, you can expect an inspection by the tax inspector.
Many immigrants will sooner or later encounter capital gains, which are often taxable in Canada. The rules can sometimes be quite complicated.
For example, upon death, all assets are valued as if they had been sold at a profit and taxed accordingly.
There are also some nasty "change of use" rules. For example, if you rent out a vacation home and then move in yourself, you'll run into this rule. The property will then be taxed as if you sold it.
The capital gains tax has already driven many to despair.
The annoying "Sales Tax"
A constant source of irritation is the "Sales Tax," which is always calculated after the fact. The prices displayed usually exclude the tax. Sales Tax rules vary in each Canadian province, including those for businesses.
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, which are highest where people have the least. Many people are annoyed by this, but politicians seem unable 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).