Canada: tax residency & income tax rates

Tax residency rules in Canada

As of 2026, Canada’s tax-residency test centres on a presence threshold of 183 days^ⓘPwC Worldwide Tax Summaries“If an individual, who, as a matter of fact, is considered not a resident of Canada, sojourns (i.e. is temporarily resident) in Canada for 183 days or more in a calendar year, the individual is deemed to be resident in Canada for that entire year”View source · accessed 2026-09-18. Canada's core residency test for individuals is primarily based on significant residential ties to Canada, such as a home, a spouse or common-law partner, or dependants, not on counting days. As a secondary backstop, someone who lacks those significant ties is still deemed a resident for the whole year if they sojourn in Canada for 183 days or more in a calendar year.

Significant residential ties test

This is Canada's primary, factual test for individual tax residency. The CRA first looks at whether a person maintains significant residential ties such as a home, a spouse or common-law partner, or dependants in Canada, then weighs secondary ties like bank accounts, a driver's licence or health insurance as supporting evidence. [source]Canada Revenue Agency (CRA)“Significant residential ties to Canada include: a home in Canada, a spouse or common-law partner in Canada, dependants in Canada”View source · accessed 2026-09-18

Tax treaty tie breaker

When someone qualifies as tax resident of both Canada and another treaty country under domestic law, Canada's tax treaties generally assign residence to the country where the person has closer personal and economic ties, which can override the domestic ties-based or 183-day outcome. [source]PwC Worldwide Tax Summaries“Normally, under Canadian law and the residency provisions of most tax treaties, an individual is considered resident in the jurisdiction to which the individual has closer personal and economic ties, although other factors may influence this conclusion.”View source · accessed 2026-09-18

Income tax rates in Canada

As of 2026, the headline personal income tax rate in Canada is 33%^ⓘPwC Worldwide Tax Summaries“Federal taxable income (CAD*) | Tax on first column (CAD) | Tax on excess (%) Over | Not over 0 | 58,523 | 0 | 14.0 58,523 | 117,045 | 8,193 | 20.5 117,045 | 181,440 | 20,190 | 26.0 181,440 | 258,482 | 36,933 | 29.0 258,482 | | 59,275 | 33.0”View source · accessed 2026-09-18. The top federal personal income tax rate is 33 percent, applying to federal taxable income above about 258,482 Canadian dollars for 2026. This is the federal rate only. Every province and territory levies its own additional income tax on top, and combined federal-provincial top marginal rates are commonly cited as exceeding 50 percent in provinces such as Ontario and Quebec, since Canada is a federal system with no single binding combined top rate.

Pit bottom rate

14% (as of 2026)^ⓘPwC Worldwide Tax Summaries“Recently enacted legislation reduces the lowest marginal PIT rate from 15% to 14.5% for 2025 and to 14% for 2026.”View source · accessed 2026-09-18 — The lowest federal marginal tax rate, which applies to the first bracket of income, was cut from 15 percent to 14.5 percent for 2025 and then to 14 percent for 2026 under recently enacted legislation.

Vat standard rate

5% (as of 2026)^ⓘPwC Worldwide Tax Summaries“The GST is a federal sales tax levied at a rate of 5% on the supply of most property and services made in Canada.”View source · accessed 2026-09-18 — Canada's federal Goods and Services Tax is levied at a flat 5 percent nationwide. This is the federal-only rate. Many provinces add their own provincial sales tax, or replace it with a combined Harmonized Sales Tax (HST) applied alongside the GST, so the total sales tax a consumer actually pays is often higher than 5 percent.

Provincial sales tax hst pst

On top of the 5 percent federal GST, five provinces charge a combined Harmonized Sales Tax (HST) of 13 to 15 percent, three provinces levy a separate Provincial Sales Tax (PST) of 6 to 7 percent, and Quebec applies its own Quebec Sales Tax (QST) of 9.975 percent in addition to the GST. Alberta and the territories add no provincial sales tax at all, so only the 5 percent GST applies there. [source]PwC Worldwide Tax Summaries“The HST rates follow. Province HST rate (%) New Brunswick 15 Newfoundland and Labrador 15 Nova Scotia 14 Ontario 13 Prince Edward Island 15”View source · accessed 2026-09-18

Capital gains tax

Only half of a capital gain is included in an individual's taxable income in Canada, and that taxable half is then taxed at the person's ordinary marginal tax rates rather than at a separate flat capital gains rate. A proposed increase of this inclusion rate to 66.67 percent was announced in 2024 but was cancelled in March 2025, so the 50 percent inclusion rate remains in force. [source]PwC Worldwide Tax Summaries“Half of a capital gain constitutes a taxable capital gain, which is included in the individual's income and taxed at ordinary rates.”View source · accessed 2026-09-18

Capital gains inclusion rate increase cancelled

In mid-2024 the federal government proposed raising the capital gains inclusion rate from 50 percent to 66.67 percent. The start date was first deferred to 2026 and the increase was then formally cancelled in March 2025, so the inclusion rate for individuals stayed at 50 percent throughout. [source]Scotia Wealth Management“The capital gains inclusion rate (inclusion rate), which is the proportion of a capital gain that is taxable, was proposed to increase to 66.67% from 50%”View source · accessed 2026-09-18

Pit income brackets

14–33% (as of 2026)^ⓘPwC Worldwide Tax Summaries“Federal taxable income (CAD*) | Tax on first column (CAD) | Tax on excess (%) Over | Not over 0 | 58,523 | 0 | 14.0 58,523 | 117,045 | 8,193 | 20.5 117,045 | 181,440 | 20,190 | 26.0 181,440 | 258,482 | 36,933 | 29.0 258,482 | | 59,275 | 33.0”View source · accessed 2026-09-18 — These are the federal progressive income tax brackets for individuals for the 2026 tax year, which are indexed for inflation annually. Provincial or territorial brackets and rates are layered on top of these federal amounts and differ by province.

Special tax regimes in Canada

Canada does not tax the capital gain on the sale of a home that was the taxpayer's principal residence for every year they owned it. Since 2016 the sale and the principal-residence designation must be reported on the individual's tax return to claim the exemption. [source]Canada Revenue Agency (CRA)“If the property was solely your principal residence for every year you owned it, you do not have to pay tax on the gain.”View source · accessed 2026-09-18

Departure tax deemed disposition

An individual who emigrates from Canada and severs their residential ties is treated as having sold most of their property at fair market value right before departure and immediately reacquired it, which can trigger a taxable capital gain known as departure tax. Canadian real estate, Canadian pensions and registered accounts like RRSPs and TFSAs are excluded, and anyone whose affected property was worth more than 25,000 Canadian dollars must file a list of it with the CRA. [source]Canada Revenue Agency (CRA)“you are considered to have sold certain types of property (even if you have not sold them) at their fair market value (FMV) and to have immediately reacquired them for the same amount. This is called a deemed disposition.”View source · accessed 2026-09-18

Digital nomad visa in Canada

No (as of 2026)^ⓘCIC News“can enter Canada as visitors and can work remotely in Canada for up to six months at a time”View source · accessed 2026-09-18 — Canada does not currently offer a dedicated digital-nomad visa category. Instead, immigration guidance lets people enter and stay as ordinary visitors while continuing to work remotely for a foreign employer or foreign clients, without needing a Canadian work permit, because that activity is not treated as entering the Canadian labour market.

Nomad visa duration

Remote workers can stay in Canada as visitors and work remotely for up to six months per visit. Staying longer requires applying for a visitor record, and as of May 2026 they must also document that all of their income is earned outside Canada for a foreign employer or foreign clients. [source]CIC News“can enter Canada as visitors and can work remotely in Canada for up to six months at a time”View source · accessed 2026-09-18

Nomad visa tax treatment

Staying in Canada under the digital-nomad visitor allowance does not by itself make a person a Canadian tax resident. Canadian tax residency is governed by the same factual, ties-based test that applies to everyone, home, spouse or common-law partner, and dependants in Canada, with the 183-day sojourner rule only kicking in as a backstop once someone spends that much time in the country in a calendar year. [source]Canada Revenue Agency (CRA)“Significant residential ties to Canada include: a home in Canada, a spouse or common-law partner in Canada, dependants in Canada”View source · accessed 2026-09-18

Frequently asked questions

Sources

• Canada Revenue Agency (CRA) information been moved / determining your residency status.html · tax_authority, accessed 2026-09-18
• PwC Worldwide Tax Summaries individual / residence · big4, accessed 2026-09-18
• PwC Worldwide Tax Summaries individual / significant developments · big4, accessed 2026-09-18
• PwC Worldwide Tax Summaries individual / other taxes · big4, accessed 2026-09-18
• PwC Worldwide Tax Summaries individual / income determination · big4, accessed 2026-09-18
• Scotia Wealth Management 07 / cancellation of the proposed capital gains inclusion rate increase · other, accessed 2026-09-18
• Canada Revenue Agency (CRA) line 12700 capital gains / principal residence other real estate.html · tax_authority, accessed 2026-09-18
• Canada Revenue Agency (CRA) individuals leaving entering canada non residents / leaving canada emigrants.html · tax_authority, accessed 2026-09-18
• CIC News 05 / canada imposes stricter requirements on digital nomads 0575889.html · other, accessed 2026-09-18
• PwC Worldwide Tax Summaries individual / taxes on personal income · big4, accessed 2026-09-18

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When to talk to an advisor

This page maps Canada’s general rules — it cannot weigh your treaty position, your family and asset ties, or the timing of a move. If meaningful money depends on the answer, have a qualified advisor in Canada (and in your home country) review your situation before you act.