Canadian Finance 101 – Taxation – Types and Rates


Despite being one country, federally regulated to some extent, Canada is divided into Provinces or Territories each of which operates at times as a separate entity, especially with regards to Taxation, and all Government Documents and Banking.

Alberta for example differs from other provinces in the way it charges tax. Whereas the UK has VAT, in Canada these taxes are often split into a GST (General Sales Tax) and a PST (Provincial Sales Tax). GST is set by the federal government and charged across all provinces and territories. As of Oct 2011 the current GST is 5%.

Alberta does not charge PST, so residents of Alberta benefit from the lowest rates of tax. Other provinces charge PST of varying rates, and some have even created HST (a Harmonised Sales Tax in which GST and PST are combined and charged on everything including food items usually exempt from PST). British Columbia for example had a PST of 7% so when they harmonised the Taxes, goods in BC had 12% added to them for Tax (5% GST and 7% PST).

Unlike in the UK where VAT is always included in the price, taxes are always added on afterwards at the till, so be sure to allow for this when making purchases.

Additionally wage structures in North America assume that a gratuity or tip will be added to most service roles, so when paying in a restaurant assume the menu will first have tax added, and then a tip will be expected on top of this total (15% being a typical standard, with 20% representing good service).

If you have further questions feel free to email me at


Thank you- Courtesy of fellow Brit Simon Jackson at Edward Jones

Speak Your Mind