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New Canada Income Tax Brackets & Important Dates For 2023
Canada Revenue Agency (CRA) kicks off the 2023 tax-filing season on February 20, 2023 and Canadians have to file their 2022 tax returns before May 1, 2023.
Understanding the tax system in Canada can help you plan your career, life, and expenses better.
Canada has a progressive tax system i.e your taxes will depend on the tax bracket based on your salary.
This article will help understand how the tax system works in Canada.
Canada Tax Fundamentals/ basics
The Canada Revenue Agency (CRA) administers income tax in Canada. Furthermore, Canada’s tax year begins from January 1 to December 31.
Additionally, the due date to pay unpaid income tax is by May 1, 2023 this year. There may be a penalty for late submissions, but they are still accepted.
Employers generally withhold statutory tax deduction from your wages and remit CRA.
These statutory deductions consist of income tax for Canada Pension Plan and Employment Insurance.
Types of Income Taxes in Canada
- Federal Tax – standard for all
- Provincial tax – varies depending on your province.
When you begin working in Canada, your employer will ask you to fill out form TD-1 for federal tax.
In addition to the provincial-specific TD1 form for your provincial tax.
Moreover, your employer will deduct some amount from each pay cheque for Canada Pension Plan (CPP) and Employment Insurance.
How Taxes are Calculated
Canada has a progressive tax system, meaning as your salary increases, you’ll fall into a higher tax bracket.
When filing taxes, you’ll pay federal plus provincial tax. The federal tax has a standard tax bracket that may update each year.
In comparison, the provincial tax changes depending on your location.
Below is an example to help you understand how taxes in Canada are calculated. For simplification, the example below demonstrates calculations for federal tax.
Important Dates For Tax-Filing Season 2023
- Mar 1, 2023: Deadline to contribute to an RRSP, a PRPP, or an SPP
- Apr 30, 2023 (May 1, 2023 since April 30 is a Sunday): Deadline to file your taxes
- Jun 15, 2023: Deadline to file your taxes if you or your spouse or common-law partner are self-employed
- Apr 30, 2023 (May 1, 2023 since April 30 is a Sunday): Deadline to pay your taxes
2022 Federal income tax brackets (Federal income tax rates)
| 2022 Federal income tax brackets* | 2022 Federal income tax rates |
|---|---|
| $50,197 or less | 15% |
| $50,197 to $100,392 | 20.5% |
| $100,392 to $155,625 | 26% |
| $155,625 to $221,708 | 29% |
| More than $221,708 | 33% |
For example:
Let’s say your taxable income in 2022 was $51,000. Here’s how you can calculate estimate for your federal tax.
Since your salary lies within the first and second tax bracket, you’ll pay:
- 15% tax on the amount up to $50,197 = $7,529.55
- 20.5% on the remaining amount between $50,197 to $100,392
- $51,000-$50,197 = $803
- So, 20.5% of $980 = $164.61
Total estimated federal tax = $7,529.55 + $164.61 = $7694.16.
Please note this is just an estimate and actual tax owed by you may be different depending on CPP/EI premiums and other proactive tax deductions from your salary.
Similarly, you can calculate the provincial tax depending on that province’s tax brackets as mentioned below.
| Provinces / Territories | Rates for 2022 tax year |
|---|---|
| Newfoundland and Labrador | 8.7% on the first $39,147 of taxable income, + 14.5% on the next $39,147, + 15.8% on the next $61,486, + 17.8% on the next $55,913, + 19.8% on the next $54,307, + 20.8% on the next $250,000, + 21.3% on the next $500,000, + 21.8% on the amount over $1,000,000 |
| Prince Edward Island | 9.8% on the first $31,984 of taxable income, + 13.8% on the next $31,985, + 16.7% on the amount over $63,969 |
| Nova Scotia | 8.79% on the first $29,590 of taxable income, + 14.95% on the next $29,590, + 16.67% on the next $33,820, + 17.5% on the next $57,000, + 21% on the amount over $150,000 |
| New Brunswick | 9.40% on the first $44,887 of taxable income, + 14.82% on the next $44,888, + 16.52% on the next $56,180, + 17.84% on the next $20,325, + 20.3% on the amount over $166,280 |
| Quebec | 15% on the first $46,295 of taxable income, + 20% on the next $46,285, + 24% on the next $20,075, + 25.75% on the amount over $112,655 |
| Ontario | 5.05% on the first $46,226 of taxable income, + 9.15% on the next $46,228, + 11.16% on the next $57,546, + 12.16% on the next $70,000, + 13.16% on the amount over $220,000 |
| Manitoba | 10.8% on the first $34,431 of taxable income, + 12.75% on the next $39,985, + 17.4% on the amount over $74,716 |
| Saskatchewan | 10.5% on the first $46,773 of taxable income, + 12.5% on the next $86,865, + 14.5% on the amount over $133,638 |
| Alberta | 10% on the first $131,220 of taxable income, + 12% on the next $26,244, + 13% on the next $52,488, + 14% on the next $104,976, + 15% on the amount over $314,928 |
| British Columbia | 5.06% on the first $43,070 of taxable income, + 7.7% on the next $43,071, + 10.5% on the next $12,760, + 12.29% on the next $21,193, + 14.7% on the next $42,738, + 16.8% on the next $64,259, + 20.5% on the amount over $227,090 |
| Yukon | 6.4% on the first $50,197 of taxable income, + 9% on the next $50,195, + 10.9% on the next $55,233, + 12.8% on the next $344,375, + 15% on the amount over $500,000 |
| Northwest Territories | 5.9% on the first $45,462 of taxable income, + 8.6% on the next $45,465, + 12.2% on the next $56,899, + 14.05% on the amount over $147,826 |
| Nunavut | 4% on the first $47,862 of taxable income, + 7% on the next $47,862, + 9% on the next $59,901, + 11.5% on the amount over $155,625 |
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