Canadian Economy

The Canadian economy is quite diverse and varies from province to province as all the regions have their different assets. For instance, the western provinces are more into the production of natural resources like lumber, metals and oil; the prairie provinces on the other hand are into the production of industrial, energy and farm products, while the eastern provinces produce more automotive, energy and consumer goods.

  • Public vs Private Enterprise

    The Canadian economy is comprised of both private and public enterprises. The public enterprises, called Crown Corporations are controlled by the government through government appointed directors. These public enterprises can be found at the federal level, provincial/territorial level and municipal level.

    A large chunk of the jobs in Canada can be found in the private sector. In recent years however, there has been more employment opportunities in the public sector than in private enterprises. Public sector employment encompasses the transportation industry, hospital, utilities, schools, and museums, to name a few.

  • Rate of Unemployment

    At 5.9% as at 2017, Canada’s unemployment rate can be considered average, when compared to that of other G20 countries. However, this particular rate is Canada’s lowest recorded unemployment rate since February 2008, which means unemployment is actually on the decline in Canada.

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Major Sectors of the Canadian Economy

The Canadian service sector covers two-thirds of their economy. Manufacturing, natural resources and real estate are other major sectors of the Canadian economy.

  • Natural Resources

    According to the natural resource department of the Canadian government, Canada is one of the largest producers of energy in the world. Natural gas is one of Canada’s natural resources, of which they’re the fourth largest exporters and fourth largest producers in the world; they’re also the third largest crude oil exporters in the world, and the second largest uranium producers and exporter in the world.

    With large coal, gas, oil and Saskatchewan deposits, Alberta is the source of majority of Canada’s natural resources and the largest agricultural area in Canada.

  • Information & Communications Technology (ICT)

    When it comes to technology, Canada, particularly in areas like Toronto and Vancouver, is increasingly becoming competitive. People from Silicon Valley, America’s tech hub, are beginning to take advantage of Canada’s Start-UP Visa program to find their way to Canada.

    About two-thirds of Canada’s ICT is made up of computer and software services and about two-thirds of those ICT products are exported. Thanks to the high demand for computer and software services, a lot of improvement has been recorded in this sector’s wages and employment.

  • Food and Agriculture

    Canada is the fifth-largest producer of agriculture and agricultural-food products in the world. The agricultural industry is one of the most viable industries in their economy as it accounts for one in eight jobs.

    The provinces and territories all have their own distinct agricultural goods and services. The Saskatchewan province has the largest crop growth area, which is wheat, while the Quebec region is responsible for the production of about 75% of the maple syrup consumed in the world today!

  • International Trade

    Canada’s top 4 exports for 2016 were energy products, consumer goods, metals and minerals and motor vehicles. So, where are these goods exported to?

    The U.S. is Canada’s largest consumer. However, Canada is a signatory to some international free trade agreements, like the Comprehensive Economic and Trade Agreement (CETA) and the North American Free Trade Agreement (NAFTA).

Canadian Tax System

Corporate, property, income and sales tax are some of the taxes available in Canada. Income tax is the Canadian government’s largest source of revenue. It funds more than half of their federal budget, while Sales and Corporate tax both account for about 15% of the federal revenue.

  • Income Tax System

    The Canadian taxation system is based on residency and is effective from 1st of January to 31st of December every year. Canadian residents are mandated to file their yearly tax return by April 30th which is the deadline. The tax return should include income earned from outside and within Canada.

    Those living outside Quebec are mandated to file just one tax return which includes federal and provincial taxes. Those living in Quebec on the other hand, must file two different returns for provincial and federal taxes.

    Like other countries, Canada’s income taxes are progressive. The implication of this is that you pay more taxes if you earn more.

  • Sales Tax System

    The Canadian government also taxes citizens on consumer goods. The Goods and Services Tax (GST) and the Provincial Sales Tax (PST), from both the federal and provincial governments respectively, are applied to most of their goods and services.

    Some provinces combine the PST and GST to form what is called Harmonized Sales Tax (HST), while some provinces do not have PST. Since both the provincial and federal governments are responsible for levying sales taxes, tax rates on certain consumer goods and services will vary according to province.

    A lot of new comers to Canada are always shocked at the prices of items at checkout. This is can be attributed to the fact that they do not include sales tax in the price advertised, meaning consumers might end up paying between 5% and 15% more than the price listed as taxes.

  • Property Tax System

    Property tax applies to assets. Property tax is levied on people who own homes in Canada. Like other Canadian tax programs, the amount you pay as property tax varies according to your location. And property tax is levied at the local level.

    Payment of taxes may not be anybody’s favorite activity, but property tax is used to provide several services like snow removal, fire protection, water, policing, and garbage collection.

  • Corporate Tax System

    Canadian corporations, including inactive and non-profit corporations are required to pay tax on both capital and profits.  Corporate taxes are levied both at the provincial and federal levels. Corporate tax varies according to the corporation size and province of operation.

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