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The Least Taxing Place in Canada

0 Comments 20 August 2013

The Least Taxing Place to Live in CanadaIf you were asked which provinces had the lowest income taxes, what would you say?

That’s exactly what Abacus Data asked (among other questions) in their annual survey of Canada’s Best and Worst Provinces.

And Alberta came out on top, trailed by Newfoundland and Labrador and Saskatchewan – a bit of a change from last year when Quebec was perceived to be the province in third place in the lowest income tax list.

Survey participants were also asked which provinces they thought had the highest income tax rates; in both 2012 and 2013 Ontario topped the list, followed by Quebec and British Columbia.

But are people’s perceptions of the least (and most!) taxing places in Canada a reflection of reality?

On their website, the province of Alberta brags that they have the lowest combined federal and provincial corporate tax rate in the country at 25% and of course we all know that there’s no provincial retail sales tax!

But what if we just look at personal income tax? How do the provinces stack up when we look at what people are actually taxed?

We decided to check with the Canada Revenue Agency (CRA) and find out.

Applying the CRA’s provincial and territorial tax rates combined chart, if your taxable income is $30,000 in 2013, you would be taxed at a rate of:

  • Newfoundland and Labrador – 7.7%
  • Prince Edward Island – 9.8%
  • Nova Scotia – 8.79% on the first $29,590 of taxable income, + 14.95% on the next $29,590
  • New Brunswick – 9.39%
  • Quebec – 16%
  • Ontario – 5.05%
  • Manitoba – 10.8%
  • Saskatchewan – 11%
  • Alberta – 10%
  • British Columbia – 5.06%
  • Yukon – 7.04%
  • Northwest Territories – 5.9%
  • Nunavut – 4%

So with this level of taxable income, Nunavut is the clear winner of the least taxing place in Canada award, followed by Ontario and British Columbia.

And most of the provinces have lower personal income tax rates than Alberta!

At least the people surveyed got one thing right; Quebec has one of the highest personal income tax rates in Canada – the highest for taxable incomes below $40,000.

And it turns out that both Manitoba and Saskatchewan actually both belong on the highest income taxes list.

Proving once again that perception and reality are often two different things.

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