Taxes are important for people earning an income in Canada. Here’s more on which province in Canada has the lowest tax rates. As a nation with a developed welfare infrastructure & socially accessible public programs, taxes play an integral role in Canadian society. 

However, due to the fact that they can incur extra costs or deduct from the income of individuals, the question of low tax rates is often a popular one. Coming to which province in Canada has the lowest tax rates, the place is Nunavut. But, the question is more complex than it might appear at first glance. 

The kind of Taxes In Canada: 

Canada features numerous different taxes, the two most common being: 

  • Income tax 
  • Consumption tax 

However, numerous other kinds of taxes might be relevant to your situation. 

Income Taxes

Income taxes are two-fold in Canada. There is the federal income tax rate, which applies to all residents in Canada across all territories & provinces – & the provincial income tax rate, which varies from province to province. People in Canada will have to pay a combination of both these income taxes. 

Moreover, Canada’s tax rates are organized into brackets. However, there is a common misconception of income tax in Canada that one’s income goes up, so does the flat rate by which one’s total income is taxed. Well, this is not the case. Instead, the income is taxed in a tiered system across these brackets. For instance: 

The 2023 tax rates cite 15% on income, which is CAD 53,359 or less, & 20.5% tax on income between $53,359 & $106,717. 

Suppose your yearly income in Canada is CAD 90,000 instead of simply jumping to the relevant federal tax rate for your bracket. In that case, you will pay the applicable tax on the amount that corresponds to the lower bracket before paying the corresponding tax rate, i.e., 20.5% on the amount over the bracket limit. This implies that instead of paying $18,950 in income tax, you will be paying $15,515 in annual income tax. 

Thus, to determine which province in Canada has the lowest tax rates, we need to use an example salary to better judge the relevant taxes. According to Statistics Canada, a Canadian worker’s average national employment income in 2021 was $51,600 CAD.   

The federal tax rate in 2023 for this salary is 15%. Below is the list of how much an individual would pay in taxes in every province: 

  • British Columbia: CAD 7,515;
  • Alberta: CAD 8,399;
  • Saskatchewan: CAD 8,296;
  • Manitoba: CAD 9,564;
  • Ontario: CAD 7,449;
  • Quebec: CAD 9,331;
  • New Brunswick: CAD 9173;
  • Nova Scotia: CAD 7,515;
  • Prince Edward Island: CAD 9,909;
  • Newfoundland and Labrador: CAD 9,487;
  • Northwest Territories: CAD 7,502;
  • Nunavut: $6,727 CAD; and
  • Yukon: CAD 7,704

Well, as you can see, the tax payable is the lowest in Nunavut. This might not be constant & can vary significantly on one’s income as well as expenses. 

Consumption Taxes 

Consumption taxes are similar to income taxes. While the federal government imposes a national consumption tax, also known as GST, every province also has PST, i.e., Provincial Sales Tax. Canadian residents are required to pay both kinds of taxes. 

However, some provinces combine GST with their local PST, which is also called HST, i.e., Harmonized Sales Tax. While HST operates similarly to charging GST & PST individually, it is more convenient for bookkeeping as a single tax rate. The national GST in Canada is 5%.

Among provinces which charge both consumption tax rates, the following are the 2023 PST rates: 

  • British Columbia: 7%
  • Manitoba: 7% 
  • Quebec: 9.975%
  • Saskatchewan: 6%

Among provinces that combine consumption taxes, the 2023 HST rates are: 

  • Ontario: 13%
  • New Brunswick: 15%
  • Newfoundland & Labrador: 15%
  • PEI: 15% 
  • Nova Scotia: 15%

Moreover, the following provinces & territories do not charge a PST & only charge GST on goods & services: 

  • Alberta 
  • Nunavut
  • Northwest Territories
  • Yukon