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Canada
Generally, corporations incorporated in Canada, or conducting business through a permanent establishment in Canada are subject to both federal and provincial corporate income taxes. The total corporate tax burden usually amounts to 20-35 percent depending on the province/territory or operation.
As of June 2022, the Headline Corporate Income Tax (CITs) rates in Canada were as follows:
| Taxable income (CAD) | Tax rate |
|---|---|
| Provincial/territorial | 8% – 16% |
| Federal | 15% |
In 2023, the net average income tax rate for a single worker was 25.1%.
Canada enforces a progressive or graduated system of taxation on employee income, meaning the percentage of tax increases as income increases. Marginal tax brackets mean that tax is applied to portions of income, not the aggregate amount.
Federal personal income tax rates for 2023:
| Taxable Income (CAD) | Tax rate | Tax Brackets |
|---|---|---|
| 50,197 | 15% | on first $50,197 |
| 50,197 – 100,392 | 20.5% | on the next $50,195 |
| 100,392 – 155,625 | 26% | on the next $55,233 |
| 155,625 – 221,708 | 29% | on the next $66,083 |
| 221,708+ | 33% | on income above $221,708 |
Income tax is paid at both a federal level and provincial/territorial level with provinces & territories setting their own income tax rates and brackets.
Provincial/territorial rates are published in full by the Canada Revenue Agency.
There are a number of employer contributions that employers are required to cover as part of the Canadian social security system.
These include; the Canada Pension Plan (CPP); Employment Insurance (EI); Employer Health Tax (EHT); and Worker Insurance.
Worker insurance is calculated based on the location of the employee, not the employer.
Taking Ontario rates as an example:
| Contribution item | Contribution rate |
|---|---|
| Canada Pension Plan (CPP) | 5.7% with a max. contribution of CAD$3,499.80 |
| Employment Insurance (EI) | 2.212% with a max. contribution of CAD$1,333.84 |
| Employer Health Tax (EHT) | 0.98% to 1.95% of the total payroll amount |
| Worker Insurance | 0.31% |
So, total Employer Contributions (for an employer operating in the province of Ontario) would total between ≈9.612% and ≈10.1%.
By partnering with Horizons as your Global PEO, we can take on the responsibility of withholding all payroll taxes and employee income taxes, as well as making the required declarations to the relevant tax authorities.
Employee contributions include the Canada Pension Plan (CPP); Employment Insurance (EI); and Worker Insurance.
Ontario rates give a good indication of employee contribution rates:
| Contribution item | Contribution rate |
|---|---|
| Canada Pension Plan (CPP) | 5.7% with a max. contribution of CAD$3,499.80 |
| Employment Insurance (EI) | 1.58% with a max. contribution of CAD$952.74 |
| Worker Insurance | 0.31% |
In Ontario, total employee contribution rates total ≈7.03%
Hire borderless talent with Horizons
Your business can easily hire employees in Canada without opening a local entity. We handle local employment law, complex tax regulations, and international payroll in 180+ countries worldwide. All you need to do is focus on your business.
Canada Revenue Agency
Yes, employer payroll tax contributions in Canada include ‘CPP’, ‘EI’, ‘EHT’, and Worker Insurance.
Income taxes are paid annually via the Canada Revenue Agency’s online portal.
Canada – 2023 CIT tax rates
