Main types

Income tax: Applied to wages, business income, investment income, and other earnings. Canada uses a progressive system, so higher income is taxed at higher rates.

Sales tax: Charged on many goods and services through GST, HST, or provincial sales taxes.

Payroll tax: Deducted from employment income to fund programs such as public pensions and employment insurance.

Property tax: Paid on land and buildings, usually to local governments.

Capital gains tax: Applied when certain assets are sold for profit.

How it works in Canada

The Canada Revenue Agency administers most federal and provincial income tax collection, except in Quebec, where Revenu Québec handles provincial income tax collection. Individuals are generally taxed on worldwide income if they are residents of Canada, while non-residents may pay tax only on certain Canadian-source income.

Why taxation matters

Taxation helps fund services that people use every day, including roads, hospitals, schools, public safety, and income support programs. It also supports the broader economy by financing government operations and public investment.

Simple explanation

A simple way to think about taxation is this: people and businesses contribute part of their earnings or spending to the government, and the government uses that money to run public services and programs.