Tax Lawyers in Canada

Canada operates a comprehensive taxation system involving various rules and regulations at both the federal and provincial levels. Here’s a broad overview of Canada’s tax rules:

• Income Tax System: Income is taxed at both the federal and provincial (territorial) level as Canadians are expected to pay tax on their worldwide income. The rates are progressive, meaning they increase as income increases.
• Sales Tax: The federal government levies a Goods and Services Tax (GST), while Provincial governments apply a Provincial Sales Tax (PST), on most goods and services consumed in Canada. Both are combined in some provinces to form Harmonized Sales Tax (HST).
• Property Tax: Property tax is a tax on an asset. If you own a home in Canada, you will need to pay property tax on it.
• Corporate Tax: Corporations in Canada, including non-profits and inactive corporations, pay tax on both profits and on capital. Corporate taxes are levied at the federal level, as well as the provincial level.

The Canada Revenue Agency (CRA) is the governing tax authority in Canada. They administer federal taxes like income tax, Goods and Services Tax (GST)/Harmonized Sales Tax (HST), government benefits, and related programs, and ensure fiscal compliance on behalf of governments across Canada.

In some provinces and territories, the CRA also administers provincial taxes on behalf of the provincial governments, while in others, separate provincial tax agencies/government agencies handle provincial tax matters.

The CRA is a department of the federal government, and its activities are overseen by the Minister of National Revenue.

The Canada Revenue Agency (CRA) exchanges information with the U.S. Internal Revenue Service (IRS) through the provisions and framework of the Canada-U.S. tax treaty.

Under the intergovernmental agreement, relevant information on accounts held by U.S. residents and U.S. citizens (including U.S. citizens who are residents or citizens of Canada) are reported to the Canada Revenue Agency (CRA).
 
Also, the Foreign Account Tax Compliance Act (FATCA) in the U.S. requires non-U.S. financial institutions to report to the U.S. Internal Revenue Service (IRS) accounts held by U.S. persons.

Canadian taxpayers are required to gather all relevant documents such as their Social Insurance Number (SIN), T4 Slips (employment income), T4A slips, receipts for deductions, RRSP contribution receipts and other relevant documents, when they are set to file their taxes.

The following options are available to taxpayers for filing:

• NETFILE-certified tax software (electronic filing)
• Through a tax preparer using EFILE-certified tax software (electronic filing)
• Community volunteer tax clinic
• Paper tax return
• SimpleFile by phone (by invitation only)

After filing, you would be required to pay what you owe or proceed to get a refund. Afterwards, you would monitor the progress of your tax return and respond to any prompt from the CRA.

Tax laws are passed through a well-structured legislative process originating with proposals in the federal or provincial budgets in Canada.

It is introduced in Parliament or a provincial legislature, undergoing multiple readings, debates, and committee reviews, where amendments can be made.

After approval by both the House of Commons and the Senate, the bill receives royal assent from the Governor General or Lieutenant Governor, becoming law. The government may also issue regulations to detail the implementation of the new tax law.

The Government of Canada sets federal income tax rates, while provinces and territories set their own additional rates, all of which are progressive, i.e., the higher your income, the higher your tax rate. To see the 2024 tax rates, kindly click here.

These rates apply to your taxable income, which is your income after deductions, credits, and exemptions.

The following income types are not taxable in Canada:

• Most gifts and inheritances, though tax consequences may apply.
• Lottery winnings, including from Canadian lotteries, are tax-free, with conditions.
• GST/HST credits, Canada Child Benefit (CCB), and Climate Action Incentive Payment (CAIP) now referred to as Canada Carbon Rebate (CCR), depending on your province or territory.
• Most life insurance payouts after someone’s death.
• Compensation received from province or territory for victims of criminal acts or motor vehicle accidents.
• Most strike pay from your union, even if picketing duties were required.
• Disability or death payments to war veterans from Canada or an allied country.
• Family allowance and handicapped children’s supplement in Quebec.

There are significant consequences for not filing taxes in Canada. They are:

• Loss of access to benefits like the Canada Child Benefit (CCB) and GST/HST credit.
• Late-Filing Penalty: The CRA charges a penalty of 5% of the balance owing, plus 1% for each full month your return is late, up to a maximum of 12 months. Repeated late filing can increase penalties.
• Interest is also charged on any unpaid taxes starting from the day after the due date. This interest compounds daily and can add up quickly.
• The CRA can collect unpaid taxes by garnishing wages, seizing bank accounts, or placing liens on properties. In severe cases, when tax evasion is suspected, legal proceedings will be commenced, potentially leading to fines or imprisonment.

There are several tax exemptions in Canada by way of tax credits. These exemptions can help individuals and businesses reduce their taxes. They are:

• The federal basic personal tax credit, which allows you to reduce your tax burden resulting in more money in your pocket.
• Principal residence exemption
• Charitable donations
• Tax-Free Savings Accounts (TFSAs): Withdrawals from TFSAs are tax-free.
• college or university tuition
• medical expenses for the lesser of an amount equal to 3% of your income or the annual amount set by the government
• Caregiver expenses
• Small business deductions
• Certain export sales

The cost of hiring a Canadian tax lawyer will usually vary from client to client, as it is dependent on the scope of services requested by the client.

At Taxlawyers.com, we help Canadians find licensed tax consultants that can provide the services they need without significantly impacting their finances with our directory of experienced tax lawyers Canada and in-house tax lawyer/attorneys.

Before hiring a tax lawyer Canada, it’s important to:

• Identify your specific tax needs.
• Research potential candidates and conduct due diligence.
• Initiate contact.
• Discuss fees and make necessary arrangements.

At taxlawyer.com, we simplify this process by maintaining a directory of experienced Canadian tax lawyers and Canadian tax law experts. With our free 10-minute income tax consultation, we’ll connect you with the tax lawyer best suited to your needs.

Select your state or province below to connect with a qualified tax lawyer today:
Canada:

• Ontario
• British Columbia
• Alberta
• Quebec
• Manitoba
• Nova Scotia

United States

• California
• Florida
• Illinois
• Alabama
• Texas
• Virginia
• New York
• New Jersey
• Maryland
• Oklahoma
• Georgia
• Nevada
• Arizona
• Colorado