The Canadian tax system - Segment 2


Host: Welcome to the segment called The Canadian tax system, part of the International Students and Income Tax video.

This segment mentions links where you can get more information. You can find all these links in the Related links for this segment.

With me today is Nicole Bélanger. Welcome Nicole.

Subject matter expert: Thank you Sarah.

Host: Can you tell us why Canadians have to pay taxes?

Subject matter expert: Taxes are the main source of revenue for the government and help pay for many of the services and benefits that Canadians enjoy. Three different levels of government collect taxes: federal, provincial or territorial, and municipal.

Each level of government is responsible for certain types of taxes.

Host: So, what types of taxes are collected in Canada?

Subject matter expert: There are three types. First, there are the personal income and property taxes, which the individual pays to the government.

Secondly, there are value-added taxes such as the goods and services tax, or GST, provincial sales tax, or PST, and in some provinces the harmonized sales tax, or HST. Consumers pay these types of taxes on things that they buy, and the businesses that collect the taxes are responsible for remitting them to the CRA.

Finally, there are excise taxes on certain manufactured goods and excise duties on products such as cigarettes, alcohol, and gasoline. The excise taxes and duties are generally included in the price of the product.

Host: What does the government do with the income tax it collects?

Subject matter expert: Canada's tax system pays for roads, public utilities, education, health care, economic development, cultural activities, defence, and law enforcement, among other things.

Tax revenue is used to deliver benefits to lower-income families, charities, students, retirees, and persons with disabilities.

It also provides social services such as old age security benefits, employment insurance benefits, the Canada child tax benefit, the working income tax benefit, and the universal child care benefit.

Host: Who pays taxes in Canada?

Subject matter expert: The Canadian tax system is based on residency. This means that Canadian residents pay taxes on their income from all sources, both inside and outside of Canada, and non-residents of Canada pay taxes only on their income from Canada. We'll talk more about residency in the segment called Residency and why it's important.

Host: For international students who've never had to pay income tax before, can you explain how the personal income tax system in Canada works?

Subject matter expert: Yes, Sarah, individuals who earn income have to pay personal income tax on two levels: the national or federal level and the provincial or territorial level.

The CRA collects, assesses, audits, and enforces most federal, provincial, and territorial individual and corporate income taxes.

Host: Let's say I'm an international student and I have to file a tax return. How do I calculate the taxes I owe?

Subject matter expert: You have to fill out an income tax and benefit return and send it to the CRA.

On the return, you list your income and deductions, calculate federal and provincial or territorial tax, and figure out if you owe taxes to the government for the year, or if you are entitled to a refund of some or all of the tax that was deducted from your income during the year.

If you lived in Quebec on December 31, you may need to use the package for residents of Quebec to calculate your federal tax only. You will also have to file a Quebec provincial return.

Host: Where can I find general information on the Canadian tax system?

Subject matter expert: For more information, go to, and select Learning About Taxes.

Host: Thank you, Nicole.

This concludes the segment called The Canadian tax system, part of the CRA's International Students and Income Tax video.

Thank you for watching.

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