In Canada, personal and corporation tax are two distinct types of taxes that are levied on individuals and businesses respectively. Understanding the difference between the two is important for individuals and businesses that want to make informed decisions about their tax obligations.

Personal tax is levied on individuals based on their income and is used to fund government programs and services. Personal tax is calculated based on the individual’s taxable income and is collected by the Canada Revenue Agency (CRA).

Corporation tax, on the other hand, is levied on businesses and is used to fund government programs and services that benefit businesses and the wider community. Corporation tax is calculated based on the taxable income of the corporation and is also collected by the CRA.

One of the main differences between personal and corporation tax is the way in which they are calculated. Personal tax is calculated based on an individual’s taxable income, which is determined by taking into account their gross income, deductions, and tax credits. Corporation tax, on the other hand, is calculated based on the taxable income of the corporation, which is determined by subtracting expenses from revenue.

Another key difference between personal and corporation tax is the rate at which they are levied. Personal tax rates vary depending on the individual’s taxable income and can range from 15% to 33%. Corporation tax rates, on the other hand, are set by the government and are generally higher than personal tax rates.

It is also important to note that corporations have the ability to structure their finances in a way that can reduce their tax liability. For example, corporations can make investments in certain types of assets or take advantage of tax credits that are not available to individuals.

In conclusion, understanding the difference between personal and corporation tax is important for individuals and businesses that want to make informed decisions about their tax obligations. Personal tax is levied on individuals based on their income, while corporation tax is levied on businesses and is calculated based on the taxable income of the corporation. Personal tax rates are generally lower than corporation tax rates, but corporations have the ability to structure their finances in a way that can reduce their tax liability.