When Visiting Canada, You Should Know the Taxes for Tourists

Understanding Tax Responsibilities for Tourists Visiting Canada

Aside from being praised as one of the most “livable countries“ in the world, Canada also has great tourist potential. Canada is a country where you can equally see beautiful, rich nature, but also spectacular, developed, and safe cities. Here you can enjoy a great variety of outdoor activities and go camping, hiking, kayaking, fishing, or snowboarding.

If you are more for indoor fun, Canada won’t disappoint here either – it is rich with carnivals, festivals, and other cultural events. This country has it all, and people are aware of it. That is why it represents one of the top tourist destinations in the world. If you are planning to join millions of others and visit Canada, here are some things you should know about taxes and financial obligations for tourists.

Gambling Tax in Canada

Let’s start with taxes you may be obliged to pay if you decide to have some fun and try your luck at some of the popular Canadian gambling establishments. To the joy of all tourists worldwide, there is no formal “gambling tax” that may be applied to amateur gambling. This means that you won’t be subject to taxation even if you win big, regardless of whether you are a Canadian citizen or a tourist. As you can learn more about gambling tax on different sources, there are some restrictions. Only professional players are subjected to taxation of gambling profits, and this only applies if these activities are their official sources of income. However, as you have to report any international money transfer that exceeds 10.000 USD, we advise you to keep all records and receipts related to your gambling activities.

Goods and Services Taxes

Canada’s tax regulations are a bit complicated and depend heavily on two criteria: the province you are visiting and the type of product or service you buy. There is a Federal Tax or Goods and Services Tax charged by all provinces (5 percent), a Provincial Sales Tax charged by most provinces (5 to 10 percent), and a Harmonized Sales Tax charged by some provinces. Simply put, all the prices on goods and services that you can see in Canada are net and do not include mentioned taxes.

Only groceries and dental or medical services are exempt from this rule. So, if you want an estimation of the budget you’ll need when visiting Canada, you should calculate at least 5 percent of the price increase to the net value. In some cases, this goes up to 15 percent, so start planning your journey adequately and timely.

Lodging Taxes

If you are visiting Canada for a period shorter than 30 days and plan to stay in a hotel or some other short-term rental, you will be subjected to taxation. There are two main types of taxes you should know about when planning a visit, but here we refer to a Municipal and Regional District Tax, which is common in most countries worldwide. This tax is being collected by the local, regional, or provincial authorities, depending on the province you are settled in, and they amount to up to 4 percent. Collected taxes are then invested in further improvements of tourist landmarks or promotion of a city or area. This tax is important, as it makes Canada more appealing for future visits.

Destination Marketing Fees

The second important fee that you may be subjected to is the Destination Marketing Fee, applied by some hotels, places, and accommodations. In the eyes of the law, this is not formally a tax, but if you choose to visit the landmark or stay at the hotel that collects this fee you will be obliged to pay for it. The “owner” of the place, accommodation, or attraction collects this fee, and as such it does not go into the state or province budget.

Sadly, these fees are added to the Goods and Services Tax, and they range from 3 to 12 percent, depending on the site. Some historical places in Calgary don’t require this fee, but others do. As an illustration, among many others, Niagara Falls adopted such a fee, so consider this when calculating the expenses and planning a visit to different attractions. As one of the most famous waterfalls in the world, this is a small price to pay to own a memory for a lifetime.

Income Taxes

The income tax system is important for Canadian residents and runs for every fiscal year. If you visit Canada as a tourist, this tax will not apply to you unless you earn income in this country. The law stipulates that dividends, rental payments, management fees, annuity fees, and similar go under “income” and are taxable as such. In this case, you will be subjected to taxes as a non-resident. The taxation is pretty simple – you would have to prepare and file your income tax return and submit it to the competent authority – the Canada Revenue Agency. It is important to note that income taxes are high and go from the lowest 23.85 percent in Nunavut to as much as 32.05 percent in Quebec.

Conclusion

Beautiful, rich with tourist attractions, both indoor and outdoor, safe and family-friendly, Canada offers much more than just a vacation. It is a place where you can spend quality time roaming through mountains, arctic lands, and forests, but also enjoy beautiful cities full of skyscrapers and modern technologies. For full delight without any surprises, the same as when you travel to any other country, just make a good plan and familiarize yourself with all the costs that may occur. Luckily for you, we have prepared this article to keep you informed about the possible taxation for tourists in the country, so all that is left for you is to enjoy!