Canadian Taxation System (CLB 5)


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Canadian Taxation System

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Canada's tax system is similar to that of many countries. The tax system collects money from individuals and companies to help pay for government programs and services. Taxes are administered by the Canada Revenue Agency (CRA).
Many of the benefits we enjoy in Canada are paid for by taxes. Canada's tax system pays for such things as roads, public utilities, schools, health care, economic development and cultural activities. A main form of taxation in Canada is income tax.
Taxes are taken directly from many types of income that you receive. Employers and other payers usually take off taxes from the income they pay you, and people with business or rental income normally pay their taxes by installments.
Each year, people who are Canadian residents, for tax purposes, complete an income tax return. On this form you list your income, deductions and tax credits so you can calculate your share of taxes payable. Also, by completing a return, you provide the federal government with the information it needs to determine your eligibility for the Canada Child Tax Benefit (CCTB) and the Goods and Services Tax/Harmonized Sales Tax (GST/HST) credit.
For individuals, federal and provincial taxes are usually collected at the same time when you file your yearly income tax return (generally by April 30). This determines whether the correct amount of tax has been collected throughout the previous year, resulting in either a refund for you (if you have paid too much tax) or a balance owed to the government. You are charged penalties and interest if you pay your income taxes late.