Canadian immigration laws and procedures. Guide for foreign and Canadian immigration law.

Canadian-Controlled Private Corporation (CCPC) is entitled to both a federal small business deduction of 16% and a lower Ontario tax rate on a certain amount of active business income earned in Canada for the year. The SBD is a tax incentive aimed to assist smaller CCPCs. Currently the small business deduction tax initiative is available to federally incorporated CCPCs with annual income up to $300,000 and provincially (Ontario) incorporated CCPCs with income up to $400,000. For 2005, the effect of the SBD reduced corporate tax rate for CCPCs to 18.62%, income in excess of the threshold ($300,000 federally or $400,000 provincially) is taxed at ordinary corporate tax rates.

3. Federal and Provincial Sales Taxation

Federal Goods and Services Tax (GST)

The Goods and Services Tax (GST) is a federal sales tax imposed under the federal Excise Tax Act on domestic consumption. GST has a broad tax base that extends to most tangible and intangible goods and services and taxes the supply of these goods at a rate of seven percent. With the exception of “small suppliers? persons who make “taxable supplies?in Canada in the course of a commercial activity are required to register under the GST legislation. Fundamentally, the GST burden falls on the ultimate consumer and, in this respect, is comparable to the provincial retail taxes. The seller becomes a GST registrant and acts as an agent of the Federal government in collecting and remitting the tax to the government. In the case of imports, the legal liability for payment of the GST rests on the importer.

Although the GST affects the ultimate consumer in the same manner as a provincial retail sales tax, there the similarity between the two taxes ends. A provincial retail sales tax is levied only upon the ultimate consumer. The GST, on the other hand, is levied at each transfer in the process, commencing with the sale of natural resources or raw materials to a manufacturer, then on the sale from a manufacturer to a wholesaler, and then on each subsequent sale through the supply chain until it reaches the ultimate consumer.

Provincial Sales Tax

Each province, except Alberta, levies a retail sales tax payable by the ultimate consumer or user of the goods in the province, which is usually paid at the retail sale level.  The tax is collectible by the vendor on behalf of the province.  The rates currently vary between five and twelve percent.  The base against which the rate is applied is the retail sale price, which, in addition to all commercial costs and profits, includes Customs duties and federal sales tax previously paid on the product.  As with the federal tax, a licensing system defers the incidence of tax to the moment of final sale.

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