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______________________________________________________________________________Stewart McKelveyDoing Business in Atlantic CanadaCHAPTER 6 – TAXATION LAWAny resident of Canada, whether individual or corporate, pays tax on its worldwide income. On the otherhand, non-residents pay tax on their Canadian source income, which will typically include income fromemployment or business carried on in Canada (subject to relief from any applicable income tax treaty towhich Canada is a party) and the disposition of taxable Canadian property.Since 2000, the government of Canada has steadily reduced corporate and personal income tax rates atall income levels, and has also introduced various tax measures to create a favourable tax environment toencourage investment and entrepreneurship in Canada. The current status of these initiatives is reflectedbelow.Personal Income TaxIndividual Canadian residents are taxed on a progressive basis – the higher the income, the higher thetax rate. For 2009, the federal tax rates payable are:Taxable IncomeTax Rate$0 - $40,726 15%$40,727 - $81,452 22%$81,453 - $126,264 26%$126,265 and over 29%In addition to federal tax, each of the Atlantic Provinces levies personal income tax directly on taxableincome earned by residents of the particular province. Provincial taxable income is calculated using thesame definition as federal taxable income. However, a separate set of tax brackets and tax rates areused to calculate provincial tax, and the tax credits available to an individual also vary from province toprovince. For 2009, the provincial tax rates payable are:New BrunswickTaxable IncomeTax Rate$0 - $35,707 9.65%$35,708 - $71,415 14.5%$71,416 - $116,105 16%$116,106 and over 17%Page 33