Taxes and Levies by Level of Taxation

Federal Government

Under the Constitution, the federal government has the power to impose both direct and indirect taxation. Direct taxation applies directly to the firm or person on which tax is levied and cannot be shifted to another party. Examples of direct taxation include personal and corporate income tax, capital gains tax, and retail sales tax. Indirect taxation is a tax that is not levied on the final consumer of a good or service, but, rather, is paid indirectly through a higher price. Examples of an indirect tax are custom duties and excise taxes.

With respect to the mining industry, the Government of Canada imposes:

  • corporate income taxes under the Income Tax Act (Part I, corporate income tax, and Part XIII, withholding tax);
  • the GST (goods and services tax), a value-added tax that applies to virtually all goods and services purchased (but GST paid on business input is refunded) and sold (but exported products and services are zero-rated);
  • payroll levies (e.g., Employment Insurance, Canada Pension Plan, or Quebec Pension Plan for a business located in Quebec), property taxes, and indirect taxes, such as sales;
  • excise taxes - of limited application to mining, but are levied on selective business inputs such as fuel - the tax can either be a specific tax or an ad valorem tax (percentage of value); and
  • custom duties.

For other general information, visit the Canada Revenue Agency's Business web page. To see which tax rates are applicable in specific jurisdictions, go to Tables on the Structure and Rates of Main Taxes.

Since the 1985 Western Accord, the Government of Canada does not levy any tax similar to a royalty on the exploitation of non-renewable natural resources.

Provincial and Territorial Governments

Provincial and territorial governments have the power to impose direct taxes, such as corporate income and sales taxes. Provincial and territorial governments impose:

  • corporate income taxes in all provinces and territories;
  • capital taxes (all phased out as of July 1, 2012); 
  • mining taxes and royalties related to the exploitation of natural resources (on their respective territory as well as offshore);
  • payroll levies - health and/or post-secondary education taxes (in Manitoba, Ontario, Quebec, Newfoundland and Labrador, Nunavut, and the Northwest Territories) and Workers' Compensation in all provinces and territories;
  • value-added taxes in Quebec, New Brunswick, Nova Scotia, Newfoundland and Labrador, and Ontario; and
  • excise taxes (particularly on fuel) and sales taxes (Prince Edward Island, Manitoba, Saskatchewan, and British Columbia).

Municipalities

Municipalities' taxation powers are limited to taxation on properties, licences, and fees.