Canada - Overview and introduction

Canada - Overview and introduction

Taxation of international executives

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Both federal and provincial governments levy income tax. In all provinces but Québec, the individuals file a single tax return with the federal government, which collects both federal and provincial taxes. Québec collects its own tax using a separate tax return. Compliance is based on a self-assessment system.

Income of individuals, corporations, and trusts is subject to tax. Partnerships are not taxed directly; partners are instead taxed on their share of partnership income.

Residents are subject to Canadian income tax on their worldwide income. If any income is attributable to compensation for services performed outside Canada and is subject to foreign tax, relief from double taxation is available by claiming foreign tax credits.

Non-residents are subject to Canadian income tax on compensation attributable to services performed in Canada, as well as on gains from the disposal of taxable Canadian property. Income earned in Canada from property and certain other sources such as dividends, rents, and royalties is subject to a federal tax levied at a flat rate of 25% (which may be reduced under the terms of an applicable tax treaty) that is withheld at source.

The official currency of Canada is Canadian Dollar (CAD).

Herein, the host country refers to the country to which the employee is assigned. The home country refers to the country where the assignee lives when he/she is not on assignment.

© 2016 KPMG LLP, a Canada limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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