Master Canadian Taxes: A Start-Up Visa Entrepreneur’s Guide

There can be no better program than Canada’s Start-Up Visa (SUV) Program for global entrepreneurs – it is a well-honed initiative for entrepreneurs to build their businesses and gain permanent residency in Canada.

That’s great, isn’t it? So far, so good.

But then, you come across a potential minefield – Canadian taxes. From GST/HST to corporate tax and deductions, from local regulations to provincial rules – navigating taxes in Canada as a Start-Up Visa entrepreneur can get pretty tough!

However, understanding the local tax system is key to business success in your new country. No matter which country you call home, taxes are an inescapable part of modern life – the sooner you understand them, the better you can settle down.

This guide makes taxes simple! We break down the information into plain language, making it easy to navigate your financial responsibilities.

All you need to do is stay compliant, maximize savings, and focus on growing your business. After all, that’s why you relocated, isn’t it?

Understanding the Canadian Tax System

Canada’s tax systems support entrepreneurs in planning their business operations efficiently and provide incentives for small and medium-sized businesses.

However, as an entrepreneur setting up a business under the Start-Up Visa program, you need to know your tax obligations, tax incentives, and government fees to ensure 100% compliance.

As a Start-Up Visa holder, you’ll be subject to several taxes, including:

Corporate Income Taxes: Tax on your company’s profits.
Goods and Services Tax (GST) / Harmonized Sales Tax (HST): A sales tax on most goods and services.
Personal Income Taxes: Tax on your salary or dividends.
Payroll Deductions: Deductions for employees’ pensions, insurance, and taxes.
Capital Gains Taxes: Tax on profits from selling assets like shares.

Canada has both federal and provincial taxes, so rates and rules will vary depending on where your business is located.

Let’s now look at these different taxes in more detail:

Corporate Income Tax

This tax applies to the profits your business earns in Canada.

Most often, Start-Up Visa businesses are set up as Canadian-Controlled Private Corporations (CCPCs), as they are subject to lower tax rates.

Federal Corporate Tax:

General Rate: 15% on your business profits.
Small Business Deduction: CCPCs can get a reduced rate of 9% on their first CAD 500,000 of active business income.

Provincial Corporate Tax:

Each province levies their own corporate tax rates. For example:

Ontario: 11.5% (general), 3.2% (reduced for small business).
British Columbia: 12% (general), 2% (small business).

To qualify for the Small Business Deduction, your business must be a CCPC, and the income must be from active business, not passive investments.

Goods and Services Tax (GST)/Harmonized Sales Tax (HST)

The GST/HST is a tax on most goods and services in Canada – Most countries have a version of this tax, and you are likely to be familiar with the concept. However, let us look at the specifics here.

If your business makes more than CAD 30,000 in a year, you must:

Register for GST/HST.
Collect the tax from your customers.
Send the collected tax to the government.

What are the Rates?

Federal GST: 5%
HST: Some provinces combine the GST with their own sales taxes – this means combined rates like 13% in Ontario and 15% in Nova Scotia.

Input Tax Credits (ITCs): Note that you can get credits for the GST/HST you pay on business expenses.

Timelines for GST/HST Registration: You must register with the Canada Revenue Agency (CRA) within 30 days of exceeding CAD 30,000 in revenue (in a single year).

Personal Income Tax

As an entrepreneur under the Start-up Visa Program, you are required to pay personal income tax on any salary or dividends you earn or take from your business.

Canada has a progressive tax rate system -taxes increase as your income rises.

Federal Personal Income Tax Rates (2025):

Up to CAD 53,359: 15%
CAD 53,360 to CAD 106,717: 20.5%
CAD 106,718 to CAD 165,430: 26%
CAD 165,431 to CAD 235,675: 29%
Over CAD 235,675: 33%

Provincial Income Tax: In addition to the Federal Personal Income Tax, each province adds its own tax rates to your earnings. This means that where you live will also have an impact on your taxes.

Payroll Deductions

When you hire employees for your start-up, you will be responsible for deducting and sending in the following.

Canada Pension Plan (CPP): Contributions for employees’ retirement.
Employment Insurance (EI): Premiums for employees who may lose their jobs.

Note that both employees and employers contribute to the CPP and EI programs.

Income Tax: Withholding tax from employees’ salaries.

Employer Contributions (as per 2025):

CPP: 5.95% of gross earnings (up to a maximum annual contribution limit).
EI: 1.58% of insurable earnings (up to the annual maximum limit).

Capital Gains Tax

If you sell shares in your business or other assets for a profit, you may have to pay capital gains tax.

However, under the Lifetime Capital Gains Exemption (LCGE) initiative, CCPC shareholders can avoid tax on up to CAD 971,190 (in 2025) from the sale of qualified small business shares.

Save Money with Tax Credits and Incentives

If this seems like you are just giving away your hard-earned money, there is good news ahead. Canada offers several tax incentives to encourage innovation and business growth – check your eligibility for these initiatives.

Scientific Research and Experimental Development (SR&ED) Tax Credit:
- Refundable or non-refundable credits for research and development costs.
- CCPCs can claim up to 35% on the first CAD 3 million of eligible expenses.
Investment Tax Credits (ITCs): Incentives for specific industries or regions.
Provincial Tax Incentives: Many provinces offer additional credits for research and business development.

Key Tax Changes in 2025

And now, we come to the tax updates announced for 2025.

Online Mail: The CRA will send most business correspondence online. Make sure your email is up-to-date in your My Business Account.
Capital Gains Tax: There may be changes to capital gains tax rates.
Trust Reporting: New reporting requirements for trusts.
Canada Pension Plan: Enhanced CPP contributions.

We recommend talking to a reliable immigration consultant in Canada to help you understand how these changes may affect your application.

Government Fees for the Start-Up Visa

While you now have a better idea of the Canadian tax systems, do you know what government fees you need to pay when applying for the Start-Up Visa?

Here’s a ready reckoner on what you will be asked to shell out in 2025:

Permanent Residence Application Fees:
1. Principal Applicant: CAD 1,365
2. Spouse/Partner: CAD 1,365
3. Dependent Child: CAD 230 each
Right of Permanent Residence Fee (RPRF): CAD 515 per adult (payable upon approval).
Work Permit (Optional): CAD 155
Biometrics Fees: CAD 85 per person or CAD 170 per family (two or more members).

Financial Planning Tips for Start-Up Visa Entrepreneurs

Paying taxes in Canada is unavoidable, but there’s no reason to shy away from them. After all, these contributions help support the services and infrastructure that benefit you and your community.

You can proactively plan to ensure that you are not paying unnecessarily, though. Some tips to avoid this pitfall include the following:

Get a Tax Advisor: A Canadian tax advisor can help you understand and meet all your tax obligations.

Keep Good Records: Keep detailed records of all income, expenses, and tax filings.

Use Tax Credits: Take advantage of available tax credits to lower your tax bill.

Register for GST/HST In Time: Avoid penalties by registering as soon as you meet the revenue threshold.

Immigrant entrepreneurs in Canada can optimize their tax savings through various strategies. They can explore federal tax credits, including non-refundable credits for medical expenses and charitable donations, as well as refundable credits like the GST/HST Credit. Start-up grants also provide valuable financial support for new businesses.

That’s It, For Now!

The Start-Up Visa Program has proven to be a great way to immigrate to Canada as an entrepreneur and start a successful business.

However, understanding the Canadian tax system is essential for your long-term success. By planning carefully and using Canada’s tax incentives, you can reduce your tax burden and grow your business.

This comprehensive but easy-to-understand guide gives you the key aspects of Canada’s tax system for Start-Up Visa applicants. Entrepreneurs should stay updated on tax laws and ensure compliance to optimize their financial outcomes.

For more help with tax planning or the Start-Up Visa Program, talk to a tax professional or immigration lawyer. At Woodhaven, we are always ready to guide you about Canadian business rules.

by Woodhaven