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All governments in Canada impose a tax on income, and Nunavut is no exception.
Nunavut applies the lowest income tax rates in the country. Overall, the Nunavut income tax system is progressive, fair, and economically competitive with all other Canadian jurisdictions, including the other two territories.
Income taxes are progressive, meaning the rates increase as an individual’s income increases. Income tax brackets are adjusted annually. Please refer to the Nunavut Tax Rate Sheet for this year’s income tax rates and brackets.
Income Tax Administration
The administration of the income tax system is controlled by two income tax acts, one at the federal level and one at the territorial level.
The Government of Nunavut also has a tax collection agreement that allows the Canada Revenue Agency (CRA) to collect our taxes for us, administer our income tax system on our behalf, and provide additional services to us at a minimal cost. Nunavut agrees to keep our tax system similar to the federal system for efficiencies in administration and enforcement.
Nunavut’s Income Tax Act governs our income tax system, and builds on the federal system by identifying territory-specific provisions, like special tax credits that apply only in Nunavut.
Income taxes are collected by the Canada Revenue Agency (CRA) on behalf of Nunavut.
Penalties and Fines
Every person who violates or fails to comply with the Income Tax Act or the regulations is guilty of an offence.
Offences are fully outlined in the Income Tax Act (Canada) and include things like:
- Failing to file a return.
- Making false statements, being involved in tax evasion or conspiring to commit an offence under the act.
- Violating the confidentiality of tax information can lead to a summary conviction.
Several personal income tax measures included in Nunavut’s Income Tax Act do not have federal counterparts. These measures affect the amount of territorial income taxes collected, but do not affect the amount of federal income taxes collected. These measures are:
- Cost of living tax credit
Residents can claim a refundable tax credit of up to $1,200.
- Cost of living supplement for single parents
Single parents with more than $60,000 in adjusted net income can claim a refundable tax credit of up to $255.12.
- Volunteer Firefighters Tax Credit
All full-time and part-time volunteer firefighters who complete at least 200 hours of community service, including training are eligible to claim a $586 non-refundable tax credit in 2018. This credit is indexed to inflation annually.
- Education and textbook tax credits
Full-time post-secondary students can deduct $465 per month they are in school from their taxable income. Part-time students can deduct $140 per month they are in school.