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Canadian Income Tax Calculator 2010
There are big savings for filing on time even if you can't pay all your taxes right away.Find out how much 2009 income tax you owe in Canada in one easy step.
If you would like to know the income tax for 2009 or 2008 see our 2009 income tax calculator or 2008 income tax calculator.
Don't forget to file your taxes on time. There are big savings by filing on time, even if you can't pay all your taxes right away.
These calculations do not include non-refundable tax credits other than the basic personal tax credit.
These rates give you a basic of idea of how much tax you should pay, but depending on your employment and business and personal circumstances you could pay a lot less. Be sure to visit a competent tax advisor before filing your return.
* Eligible Dividends are dividends from a Canadian corporation on which corporate tax has already been paid. Normally the dividend issuer will alert you to the eligibility of a given dividend. All other Canadian dividends are considered Ineligible Dividends. Non-Canadian Dividends do not qualify for the dividend tax credit. They are simply treated as income.
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Hi,
excellent site and great tool, thank you.
I’m moving from Victoria, BC to Hull, PQ this November 2009, will I pay the taxes for Quebec or BC for 2009? would I benefit by delaying my move to January 2010,
thanks,
If you’re moving to another province, time it carefully. You’re generally considered to be resident in the province in which you live on Dec. 31 each year. So, if you’re moving to a lower-taxed province, move before Dec. 31 if you can. This way, you’ll pay tax at lower rates in your new province for 2009. If you’re moving to a province with higher tax rates, delay your move until early next year if possible.
Given Quebec’s tax rates are considerably higher than BCs (check out your income using this calculator) waiting until January if you can would be best. If this is not possible, and the tax difference is several thousand dollars, consider vising friends or relatives over Christmas and New Years, so that you are residing in BC on Dec. 31.
One other tidbit you need to know is that the QPP pension plan is in dire straights compared to the CPP plan. Just plan to move out of Quebec before you start claiming QPP or CPP and you will get CPP. There is a current question mark as to whether QPP will survive to the same extent as CPP (http://www.nationalpost.com/story-printer.html?id=1520302).
Unfortunately for those Quebecers who never earning CPP credits because they never worked outside of QC are out of luck in terms of claiming CPP.
Hi
Please advice on.., if these are tax deductable: a) Tooth implants, b) Hair transplant, c) College courses?
Thanks
Dan
You ask an interesting mix of questions.
The George Bush answer is “yes”.
Here is the Al Gore answer.
Fortunately there is a definitive answer. The CRA at http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns300-350/330/llwbl-eng.html provides a list of allowable deductions and both dental and hair transplant surgery are included.
You also want to consult http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns300-350/330/menu-eng.html for an explanation on how to calculate your deduction / credit.
Regarding the college expenses, the CRA bulletin that describes the tax credit is available at http://www.cra-arc.gc.ca/E/pub/tp/it515r2/it515r2-e.html.
Very useful calculator! Just wondering what is included in the calculation. EI, CPP, Health Care Plans, Disability Insurance, Death Benefit, etc? I work for the federal government and they deduct a lot for the above. Would these be included in the calculator? Thanks for the help!
Hi,
I have enjoyed reading through some of the comments and answers. It is a very good forum. I was wondering if anyone has information on this. CRA has some, but I find it confusing.
1) I have recieved a tuition reimbursement for a job I took. Taxable or non-taxable?
2) I am moving away from home for a job. Company going to give me money for renting a house. Will be gone for 2 years. Primary residence has been with parents to date. Can this be non-taxable, or is it going to be taxable as well?
Thanks!
Unfortunately, no. The only deduction it takes into account is the federal and provincial basic exemption. To include all of the other things would require a massive input data screen, which defeats the purpose of this quick basic calculator. Unless you are on the fringe of a rate change, the other deductions probably won’t make a big difference in your marginal tax rate, which is the figure most people want to know. For example in BC, the marginal rate is 20.06% from $10,320 (the basic personal exemption amount) to $35,716, where the provincial rate increases by 2.64% until the $40,726 federal rate changes, and they see saw back and forth until you reach the maximum BC rate of $43.7% at $126,264.
You can check out the rates for your province from the CRA website http://www.cra-arc.gc.ca/tx/ndvdls/fq/txrts-eng.html.
For a more detailed and accurate analysis, you will probably want to buy one of the tax preparation programs, where you can enter all of the deductions and credits.
The good news is the result from our calculator is going to give you the worst case scenario, i.e. you will probably pay less, after other deductions and credits, so you are erring on the right side.
The Income Calculator is terrific, very helpful.
I am thinking the Calculator does not account for things like CPP, EI, etc.-type deductions, would this be correct? What percentage of a person’s *net* income do all those deductions typical reduce a person’s total take home pay? (I live in BC). Perhaps a next version of your Income Calculator might be a feature that accounts for those deductions
Again though, your Income Calculator is great, thanks so much for providing it!
Regards,
Ernie
The problem with an all encompassing calculator is where do you draw the line? At the extreme end you have a full blown tax program, that requires dozens of data entry points to arrive at a precise answer, i.e. you can send it to the CRA as your tax fiing. There are tax credits, refundable tax credits, medical deductions, RRSP contributions, etc.
We chose to keep it simple, i.e. only one data entry number, your taxable income. The tax rates in BC, where I also happen to live, are detailed on the CRA website http://www.cra-arc.gc.ca/tx/ndvdls/fq/txrts-eng.html. Our calculator uses these rates to calculate your average and marginal tax rates based on your input number for taxable income. The only thing we subtract is your basic personal exemption, which is $9,373 in BC and $10,320 federally. You can test this with the calculator.
Enter a taxable income of less than $9,373 and it will show $0 tax payable, and 0% tax rate.
Now enter $9,500, and you will see the marginal tax rate is 5.06%, the BC rate.
Now enter $10,500 and the marginal tax rate jumps to 20.06%, based on the 15% federal and 5.06% provincial.
Given there are 13 provinces and territories, each with their own tax rates, and levels, you can hopefully appreciate how much coding would be involved to make this calculator more complex than it already is.
I have just negotiated a vehicle allowance from my employer.
I live and work in BC and need to know is the allowance a taxable benefit. Will taxes be deducted from the allowance cheque.
thanks
This is a question where wording is everything, e.g. allowance vs. benefit. The definitive guide is available from the CRA http://www.cra-arc.gc.ca/E/pub/tg/t4130/t4130-08e.pdf
Of course I suspect you would like the short answer.
If you are an employee and your employer provides you with a non-taxable car allowance for the business use of your own car and the amount is reasonable, this car allowance is not included in your taxable income. In order for an allowance to be considered reasonable, it must directly relate to the number of business kilometres driven in a year.
A car allowance is not considered reasonable if you receive specific reimbursements for direct costs (other than supplementary business insurance and toll or ferry charges) and/or the allowance does not approximate your cost of operating the vehicle. If the car allowance is not reasonable, it is included in your income and you are entitled to deduct the portion of the automobile costs directly related to employment use.
If your employer does not reimburse you for the business use of your car or you do not receive a not-taxable car expense allowance, your car expenses are deductible from income in proportion to the business use of the car. To claim these expenses, you will need to have your employer complete and sign Form T2200 (Declaration of Conditions of Employment) confirming you are required to use your car for employment purposes. While you do not have to file this form with your income tax return, you should keep it with your records in case the CRA wants to see it.
As always your final authority should be the CRA, your accountant, or other tax professional.
Hi
it’s a nice tool.
just a question:
I was working in NB from january to june 2009. let’s say i earned 18 K$. then i moved to quebec where i’m working now. i expect to get 17K$ by the end of the year. so my Income for this year is about 35K$. i dont know how the ncome tax will be claculated in this situation since it’s my first year.
thanx
As I have indicated in previous posts, the federal tax you will pay is the same in all 13 provinces and territories, however each province / territory has their own rates in addition to the federal.
The provincial rate you pay is based on your province / territory of residence as of Dec. 31 of the year, so if you are in Quebec at the end of this year, you will be filing as a Quebec resident.
If you run the calculator you will notice for $35,000 of taxable income you will pay about $800 more in tax than if you were in NB.
Currently earning $59,000 per year, could some one tell me at what annual wage the tax bracket would take a significant increase?
Thank you
I am a tax and computer idiot and I leave in Ontario. This year, I received $45,000 Director Fees and $10,000 Dividend. Could you tell me how much taxes I’ve to pay. And, how much taxes I’ve to pay if all my $55,000 income were Directory Fees? Thanks.
John
An answer is difficult because I assume you have other income that just these two items, so total income needs to be taken into consideration.
Directors fees are taxed just like any other income, so our calculator works for the two calculations i.e. tax payable on
$55,000 = $11,054 vs.
$45,000 = $ 7,939
Another complication is whether the dividends you speak of are from a public or private company.
If a public company, e.g. a large corporation, then one can assume the dividends are eligible (i.e. Tax has already been paid on the dividend).
However if they are from a private company where the dividends are part of the under $500,000 small business income, then they are ineligible. You will notice that the tax payable from an eligible corporation is 6.94% for $45,000 of annual income, but 15.86% if ineligible.
So assuming the dividends are from a public company i.e. eligible, 6.94% tax on $10,000 of dividends is $694.00 so by my reckoning, having the $10,000 of dividend income will save you $2,421 in taxes, largely due to the $10,000 of dividend income taxed at the better rate of $6.94% vs. 31.15%.
However if they are ineligible dividends, then their tax rate is $1,586.00 (15.86% X $10,000) for a savings of $1,529.00 over all $55,000 as regular income.
A tax program will be a better choice than my “back of the napkin” calculation to be sure.
Dear Richard,
Thanks a lot for your prompt and helpful reply.
My brothers and I own the company. I am the employee and also am one of the owners. Based on what you explained, my dividend is the ineligible dividend. Am I correct?
John
Thanks for the feedback. Unfortunately questions such as yours often require the special knowledge of a tax accountant as the definitive word.
I am a life insurance and investments advisor, so tax is something I have my accountant do for me. However I enjoy these questions as it is an opportunity for me to do a bit of research and improve my overall understanding of issues I hadn’t thought of.
The CRA at http://www.cra-arc.gc.ca/tx/bsnss/tpcs/crprtns/dvdnds/menu-eng.html
Here they state: “An eligible dividend is any taxable dividend paid after 2005 to a resident of Canada by a Canadian corporation that is designated by that corporation to be an eligible dividend. A corporation’s capacity to pay eligible dividends depends mostly on its status.”
This is so clear, I don’t need to comment further, right? :-). Is that double talk or what?This site has links to other information related to this complex topic.
From what you explained to me re the source, I would agree they are likely ineligible, so subject to the higher tax, albeit still better than straight taxable income.
One quick question. My annual earnings for 2009 will be very close to $37000. due to a “partial wind-up” of a past pension plan, I am due to receive $24000. I plan to take this $ in cash rather then keep it locked in as I am in need of the cash. I realize I will pay taxes on this $24000, my question is what amount will I pay???
Thanks for your help. Your site is always most informative.
Dan
You don’t say which province you reside in, but assuming it is Ontario, and assuming the $24,000 is in addition to your $37,000, the calculation would be:
Taxable Income Tax payable Marg. Tax rate
$37,000.00 $5,707.00 24.15%
$61,000.00 $12,923.00 31.15%
so the difference of this $24,000 costs you $7,215 in tax payable (i.e. $61,000 of income rather than $37,000)
$24,000.00 $7,216.00 30.07%
The concern when you add a windfall like this is it’s impact on your marginal tax rate. As you can see it increases your rate due to our progressive tax system in Canada from 24.15% to 31.15%. So taking the money results in a net 30% hit.
Another option would be to only keep out $12,000 (50% of the windfall) and put the rest into an RRSP.
Taxable Income Tax payable Marg. Tax rate
$37,000.00 $5,707.00 24.15%
$49,000.00 $9,185.00 31.15%
$12,000.00 $3,478.00 28.98%
This reduces your marginal tax rate by a bit, but probably no enough to entice you to do this.
Lastly plan C, if you know you were not going to make as much next year as in 2009, and have the RRSP contribution room, put all of the $24,000 into your RRSP for 2009, and get the deduction. You won’t get any refund as this deposit of $24,000 just keeps your tax payable the same as without it. Then in January 2010, take the $24,000 out of your RRSP in $5,000 increments each month due to 10% witholding tax. So in $2010 you will have $24,000 minus $2,400 witholding to play with. Of course you will have to claim this income for 2010 and pay the remaining tax on it in April of 2011, but you will have had most of the money to play with in 2010.
This later stategy only makes sense if your income will be less in 2010, and you plan to invest the extra money with the hope of having your money make money. If your plans are to spend the money on a new car, or other depreciating asset, then probably best to take your lumps now rather than later.
I’m just wondering if your tax calculator includes the Provincial tax or not?
Yes it does, both federal and provincial. You can prove this to yourself with this test.
In BC the Provincial personal exemption is $9,373. Any income below will show $0 tax and 0% tax rates. The federal personal exemption is $10,320. So using the calculator input the values:
$9,000 and you will see the marginal tax rate is 0%.
now try $9,500 and see the marginal tax rate is 5.06%, the lowest BC rate.
lastly input $10,350 and you will see the marginal tax rate is 20.06%, 5.06% for BC, and 15% for federal.
This calculator only takes into account your Basic Personal Amount (BPA) which we mortals know as our personal exemption. This means the results are a worst case scenario. If you have other tax credits and deductions your tax payable will be less than the number we show.
Hello, I am new to Canada
My taxable earnings this year will be $8000, I started working in November and have been paying tax.
I pressume that I am due a rebate next year, when and how will I received that?
Thanks
Liam
You don’t say what province you are in, but if we use BC for example, with a personal exemption of $9,373, you wouldn’t have to pay any tax. How you get the tax you paid back requires you to file a tax return for 2009. These must be filed by April 30 of the following year for employees.
So $8,000 for 2 months suggest $48,000 per year. Tax payable would be $8,439 for the year, so your refund could be as high as $700. As soon as you receive your T4 slip from your employer and all other tax income related slips, consider immediately filing your 2009 tax return. On the tax return you will indicate your income as $8,000 but the personal exemption will negate that, leaving you with a tax refund. If you file electronically, you should receive your refund within a couple of weeks, especially if you do it as early as possible.
One question I am not 100% sure of is whether there is a minimum time of residence before you can claim the full personal exemption. I assume as long as you are resident in the province before Dec. 31 of the year, you are entitled to the full exemption. However to be sure you will want to call the CRA information line:
Individual income tax enquiries
Tax information for individuals, including personal income tax returns, instalments, RRSPs, and the Working Income Tax Benefit
Hours of service and service standard
1-800-959-8281
One last comment. Assuming an income of $8,000 in 2009, you would be entitled to contribute 18% to an RRSP (Registered Retirement Savings Plan), however for 2009, you would not obtain any benefit from doing so, as your marginal tax rate is zero. Instead consider putting that amount or more into a Tax Free Savings Account (TFSA) in 2009. When you receive your Statement of Adjustments from the CRA in May / June 2010, which confirms your tax filing has been accepted, you will see a box identifying you have $1,440 of RRSP contribution room (i.e. the amount you could have contributed, but didn’t). You will receive more benefit from using this room for your 2010 tax year than for 2009. You could for example, move the money from your TFSA to your RRSP in 2010, leaving you with recontribution room of $1,440 plus any gain in your TFSA account.
I hope this ramble makes sense.
Could parents of a child under 18 do investment for their kid and then take out the money out of investment (Capital Gain Tax) with child marginal tax rate which may be close to zero?
i hv recently immigrated to toronto. and my package is $ 5000 per month.
wanted to know that the tax rate of 15% will start for forst $ 40000 and rest $20000 for 22%.
or there is a lottle exemption or no tax on some part of my salary.
Or in canada there is no income that is exempted from tax.
Recently immigrated to toronto. and my package is $ 5000 per month.
wanted to know that the tax rate of 15% will start for first $ 40000 and rest $20000 for 22% onwards.
or there is a little exemption or no tax on some part of my salary.
Or in canada there is no income that is exempted from tax.
The income tax system in Canada is known as a progressive tax system, with a federal table that applies to all Canadians plus a provincial table for each province, that increases at various levels.
Visit the CRA website http://www.cra-arc.gc.ca/tx/ndvdls/fq/txrts-eng.html for the specific details.
In Ontario, your basic personal exemption for 2009 is $8,881 and is $10,320 federally. So, if your taxable income is less than $8,881 you will pay no tax; if over $8,881, but less than $10,320 your tax rate is just the provincial rate of 6.05%. Over $10,320 your rate is 15% federal and 6.05% provincial for a total of 21.05%.
The table below shows the marginal tax rates based on taxable income for both federal and Ontario combined. Ontario also has surtaxes for high income earners, to further complicate the calculations.
Consider if your taxable income was $35,000; your tax payable would be $5,282. Your rate between $10,320 and $35,000, which is your marginal tax rate is 21.05% . However your $5,282 tax payable includes the deduction for your basic personal exemption so your average tax rate is 15.09% ($5,282/$35,000). Now take your $60,000 of taxable income. The calculator shows the marginal rate at 31.15%, and the average tax rate at 21.02%. As your income increases so does your marginal and average tax rate until you exceed the maximums as shown on the following table:
Ontario (ON)- combined federal & provincial tax rates including surtaxes
first $36,848 21.05%
over $36,848 up to $40,726 24.15%
over $40,726 up to $64,882 31.15%
over $64,882 up to $73,698 32.98%
over $73,698 up to $76,440 35.39%
over $76,440 up to $81,452 39.41%
over $81,452 up to $126,264 43.41%
over $126,264 46.41%
I hope this answers your question, and provides a bit more insight to our Canadian tax system.
Regarding the question:
“Could parents of a child under 18 do investment for their kid and then take out the money out of investment (Capital Gain Tax) with child marginal tax rate which may be close to zero?”
The quick answer is no, you can’t save tax in the way you have indicated.
There is a tax rule concept called “attribution” that is meant to stop what you would like to do. It is a complex rule, beyond the scope of this forum, however I direct you to two websites for the detail:
http://www.cra-arc.gc.ca/E/pub/tp/it511r/it511r-e.html the interpretive bulletin that describes the rules, and
http://www.cga-canada.org/en-ca/AboutCGACanada/CGAMagazine/2007/Sep-Oct/Pages/ca_2007_09-10_prof_taxstrategy.aspx
- an article from the Certified General Accountant’s website that addresses the essence of what it appears you would like to do.
This article states:
“The Income Tax Act contains a series of rules known as attribution rules. These can cause any income realized on property transferred to other taxpayers to be assigned back to the transferor of the property, and they apply where the property is transferred directly or via a trust.”
If my husband makes over $200,000 per year and I want to have my own small business, do I have to pay at (his/ours) the higher tax rate?
No you don’t. You would file a separate return, either personal if you are running your business as a sole proprietorship, or if incorporated, then two returns, one for the business and one for you as an individual, neither of which influenced by your husband’s tax rate, unless he was a shareholder in the business.
Your husband’s rate does not influence yours in any way unless you have joint assets that generate income, e.g. a $20,000 GIC. Technically you should each claim 50% of any income from this investment. Some people choose to have the lower income spouse pay it all, but should you be audited by the CRA, they will likely reassess both of you as they will have lost out on the higher marginal tax rate he would be in, and paid tax on, compared to you making say $30,000 per year.
I live in Ontario and make 75k per year in salary income. I purchased a home which will be ready for occupancy in 2010. My intent was to live there but I may need to sell as soon as it’s complete. I have read that I will need to pay capital gains tax…is that the case? Would you recommend i speak with a real estate laywer or a tax accountant for further details?
Also, based on the calculator above and my income level, I would need to pay a “marginal capital gains tax” of 17.70%”. So, for example, on 100,000 in capital gains, I would need to pay 17.7% on 50% of the gain. So $50,000 x 17.7% = $8,850. Is that correct?
Thank you!
Lee
Your calculaton looks correct. Although I would be surprised if you would have that much of a capital gain in this real estate market. Remember that you will have several costs for disposal, e.g. 7% real estate commission assuming you will be using a realtor to sell it, that would reduce your net gain, nor to mention other fees to build it. More likely in the end you will have a capital loss.
The first document to read is available for download from http://www.cra-arc.gc.ca/E/pub/tg/t4037/README.html see page 16.
The second document to review is http://www.cra-arc.gc.ca/E/pub/tp/it120r6/it120r6-e.html
There is something called the 1+ rule that you may be able to take advantage of if you currently have a principal residence, but you do have to have lived in the new for this to work.
I definitely would suggest you speak with an accountant, ideally one who specializes in real estate transactions and tax issues. The reality is everything is pretty much a specialty these days, and a general purpose accountant may not know of all of the options available in your circumstances.
this tool is great but I have a question for my case,,I’m single and live by myself in Ontario. I make $1719/month how much tax do I have to pay?
Thank you
Assuming $1,719 is your gross monthly pay, times 12 = $20,628 annually. Our calculator shows the tax payable at $2,257, or /12, $188 per month. Remember the only deduction this calculator considers is your basic personal exemption. So assuming there are no other deductions, your monthly take home pay would be approx. $1,531.
Chances are of course that there will be other deductions, e.g. group benefits, CPP, EI, etc, further reducing your take home amount.
Hope this answers your question.
If I make 40,140 a year ( 26 pay periods ) how much would i owe in taxes? I’m confused as to how this works, with personal claim amount and such….. and what all will lower that amount i owe?
A specific answer to your question is impossible to answer in this forum. The best source of this information is your payroll department. The reason is, there are dozens of tax credits, and deductions, only a few of which some people are able to claim. To keep it simple, the only deduction we incorporate in our calculator is your basic personal exemption, which various from province to province. For example in BC, the BC exemption for 2009 is $9,373, and federal is $10,320.
So how this works is, if you make less than $9,373 you pay no tax.
Between $9,373 and $10,320 you will pay the 5.06% provincial tax. Above $10,320, you will pay 15% federal and 5.06% provincial for a combined 20.06% until you reach the next plateau. Likely less if you have other deductions.
The calculation of payroll considers many more items in the calculation of take home pay, e.g. CPP deduction which 4.95% for an employee on the first $46,300 for 2009, i.e. they take 4.95% of your take home pay each pay period until the maximum $46,300 is reached. If you make exactly $46,300 they will take the 4.95% off every pay. If you make twice that, in approx. July, they will have deducted the maximum 4.95% of $46,300, and you will see your take home pay increase accordingly.
Then there is Employment Insurance (EI), http://www.cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/t4032/jn09/menu-eng.html, dependent spouse and / or children, your portion of your group benefits plans, possibly a group RRSP plan, etc.
As you can hopefully see, depending on the province you live in, and the number of your deductions and credits, your net take home pay will be different than other employees making the same income.
One last mystery of life. People often ask the question, “how come when I work overtime, more of it goes to tax?” Based on your annual income you make $1,544 gross every two weeks, now let’s assume you work overtime and the overtime pay for the pay period was $1,000. The payroll tables assume you now make $2,544 per pay period * 26 periods or $66,144 annually. Use the calculator to see the problem. Your marginal tax rate is much higher, i.e. at $40,140 your marginal tax rate in Ontario is 24.15%, however at $66,144 it 32.98%. So they would deduct $329.80 from your $1,000 overtime, rather than $241.50. Of course if you only make the extra for one pay period, you would get most of the difference back as a refund at filing time.
So visit your payroll department and get someone to explain your pay slip to you.
I think I am missing something. The amount calculated here for NS is almost exactly the amount I come up with when using the rates quoted on the CRA site for federal tax alone. The NS provincial income tax does not seem to be included here (even though each province has different results, which should not be the case if only fed tax were being calculated). Is this correct? Or am I really missing something?
Using $20,000 as an example for ease (which results are even more off the mark than my own numbers), you end up with $2509 payable using this calculator. However, that doesn’t even cover the fed tax (@15%) which is $3000. Add in the provincial tax (@8.79%) which is $1758 for a total of $4758. That is nearly double what is quoted here. As I said, I am missing something.
Yes unfortunately you have missed something, however don’t feel bad, it took me ages to figure this out from dozens of sources.
I just checked this with my own tax calculator, and another website that has a similar calculator to this one. This calculator uses the 2009 rates as published on the CRA website http://www.cra-arc.gc.ca/tx/ndvdls/fq/txrts-eng.html . Unfortunately this website doesn’t show the Basic Personal Exemption numbers (CRA calls it the Basic Personal Amount)., which this calculator and others takes into account.
So for the $20,000 you start with, here is how the calculation is done, and this agrees with not only the LSM calculator, but others elsewhere on the web, so I am very confident what I am about to show you is accurate.
federal NS Tax Payable
1. Rates 15.00% 8.79%
2. BPA $10,320.00 $7,981.00
3. taxable income $20,000.00 $20,000.00
4. minus BPA $9,680.00 $12,019.00
5. Net tax payable $1,452.00 $1,056.47
6. Total tax payable $2,508.47 (1452 + 1056.47)
I have numbered each row for a brief explanation:
1. these are the 2009 tax rates on the first $40,726 federal and $29,590 provincial (2009 rates)
2. the basic personal exemption is $10,320 federal and $7,981 provincial. If your taxable income was less than $7,981, you would pay no tax at all. Above $7,981, but less than $10,320, you would pay 8.79% on anything over $7,981. Above $10,320 to $29,590 the tax rate is 23.79% (15 + 8.79).
3. so using your suggested $20,000 of total income
4. we subtract the BPAs, both the federal and provincial to arrive at the taxable amount subject to federal tax and Nova Scotia tax.
5. we then apply the 15% federal rate of 15% to $,9,680 and the provincial 8.79% to $12,019 to arrive at
6. the total tax payable of $2,508.47, which agrees with this calculator.
I trust this answers your question.
i live in alberta, i collected around $17,000 of Ei benefit and i maked $36,000 on my job for the year 2009, i wanna know how much i will get back as income tax if my if my total income tax deduction is $11,000? thanks
You do not provide enough information with your question to provide an accurate answer, but your questions suggests you may not be aware of the rules related to EI benefits. The website you need to visit to learn more is:
http://www.servicecanada.gc.ca/eng/ei/information/repayment_2009.shtml
This site says:
What you should know
Whatever the type of benefits you receive, EI payments are taxable income, meaning federal and provincial or territorial taxes, where applicable, are deducted when you receive them.
At the time you file your income tax return, depending on your net income and if you were paid regular benefits, including regular fishing benefits, you may be required to repay some of the EI benefits you received. If your 2009 net income from all sources exceeds $52,875 you will be required to repay 30% of the lesser of:
your net income in excess of $52,875; or
the total regular benefits, including regular fishing benefits, paid in the taxation year.
Exemption :
You do not have to repay your EI benefits if:
your 2009 net income is less than $52,875; or
you received less than 1 week of regular or fishing benefits in the preceding 10 taxation years; or
you were paid special benefits, i.e. maternity, parental, sickness or compassionate care benefits. However, if you received a combination of regular and special benefits within the same tax year, you may still have to repay a percentage of the regular benefits received.
So in my opinion, your taxable income based on the $36,000 and $17,000 for 2009 is $53,000. Just plug this number in the calculator and it will tell you how much income tax you will have to pay, assuming you have no other deductions than your basic personal exemption. Not sure what the $11,000 deduction you mention is, but assuming it is in addition to your personal exemption, e.g. a RRSP contribution, then deduct the $11,000 from the $53,000 and enter that amount as taxable income in the calculator to come close to your tax payable.
I am a Vancouver resident working as an independant contractor, not an employee. I will be working all over AB. May I deduct the cost of my accomodation and living expenses? (My employer will not be paying them). It is the price I must pay to work. May I deduct travel expenses to/from home as an independant contractor? I know it would be cheaper to move the family to AB, but that won’t fly!
Thanks for your help[; especially if it’s “Yes”!
First let me say that I am not a tax expert, and that an accountant is better qualified to provide the definitive answer. However having said that I do have some experience with this from years past as a co-owner of a limited company providing telecommunications consulting and training services. I do remember one important test we had to pass, which I believe still exists today was whether we were truly independent, or employees in disguise, i.e. working exclusively for one company, but considered an contractor by them. EI, CPP, etc are issues that complicate this relationship for sure.
Based on my research, it appears most of the items you mention would be deductible. Here are some links that will provide you will a lot more information.
I believe one important distinction is whether you are truly an independent contractor. I recommend you first visit the CRA site:
http://www.cra-arc.gc.ca/E/pub/tg/rc4110/
which has a link to a paper that defines their rules for determining which you are. This is important as the rules are different for employees than contractors. Assuming you are a contractor, here is the CRA document that details deductible expenses for business and professional income:
http://www.cra-arc.gc.ca/E/pub/tg/t4002/t4002-e.html
As you will see the rules are far too detailed to even summarize them in this forum. The following link identifies allowable business expenses:
http://www.cra-arc.gc.ca/tx/bsnss/tpcs/slprtnr/bsnssxpnss/menu-eng.html
I found another site which detailed the following
Deductions from Independent Contractor Income
Several key sections (namely ss. 18, 20, 62, 63 and 67.1) of the Act affect the deduction of certain expenses from the calculation of business income, such as:
- Expenses incurred for the purpose of earning income;
- Capital cost allowance;
- Interest payments on certain investments;
- Certain moving expenses;
- Certain childcare expenses;
- 50% of food and beverage expenditures for meals of a business nature;
- Membership fees to social clubs for the purpose of business networking.
Similarly, some deductions are forbidden, such as:
- Capital expenditures;
- Personal or living expenses.
The issue of childcare expenses remains a much-discussed topic, without concrete resolution coming from the courts
Looks good from one BCer to another.
Hello, Very nice website. I have a question I could usee help with. I currently earn $72 000 and of course pay income tax on my taxable income. I am currently making an investment of $200 000 which will pay me 30% interest in the first year. I will earn an extra $60 000 of income and wondering what rate of tax I will have to pay on this extra amount. I am just wondering because I will be buying into a business which will reduce my taxable income. thanks
First I need to say that a complete answer to your question is far beyond the intent of this forum as some of your question raises other questions you haven’t asked, and you not provided enough information regarding the business, ownership, sole proprietorship, limited company, etc. So what follows are some comments based on what you have told us. I assume we are only talking about non registered money here.
My first observation is that you say you expect a 30% interest return on a $200,000 investment. This is clearly in the “too good to be true” category, and if possible, likely has the equivalent potential to lose 30% or more, so be cautious.
Regarding the amount taxable, if the return on the $200,000 is all interest, which is unlikely due to your stated 30% return, you would just add it to your $72,000 of income and enter $132,000 as your taxable income in the calculator. Remember our calculator only considers your basic personal exemption as a deduction.
The other choices of income category for the $60,000 are all dividends, or capital gains, or some combination of all three. You will also want to maximize your tax savings by taking advantage of the Tax Free Savings Account, if the investment is a candidate for a TFSA. If you didn’t contribute last year, you can deposit $10,000 this year, as well as your spouse if you have one. I assume this investment is some private placement which, while it is not impossible to be part of a TFSA, is very difficult, and you will want to ensure you have an accountant who knows the rules.
Not sure why you think buying into a business will reduce your taxable income, other than the potential for write offs if appropriate such as car expenses, and other overheads. If the $200,000 is borrowed money for investing, you can write off the cost of borrowing against your personal income.
My main concern, forgive me for being blunt here, is that the vagueness of your question suggests you have not put a lot of thought into this venture, and I hope you seek out a competent lawyer and accountant to review your plans. Given the dollar amount involved, and your income, it does not appear you can afford to lose this $200,000, if the deal doesn’t materialize as expected. It just doesn’t add up for me.
Two years ago I invested a measly $2,000 in a new company which held out the promise of tripling my money in 6 months. Here I am two years later, the investment never climbed above my buy-in price and is now worth $447.00. I loaned a friend $2,000 4 years ago for what was supposed to be a 2 month timeframe. By the time her secured creditors got hold of their share of the home sale proceeds, there was nothing left for me. Here I am 4 years later, without a dime returned, she filed for bankruptcy last year, and doubt I will ever see it. I relate these two stories, there are more, to indicate that things can appear rosy up front, and turn sour very quickly. Investors with Earl Jones and Bernie Madoff wish they had been more careful. Please be cautious and ask lots of questions. The more answers you receive will likely generate more questions, or at least it should.
Good luck.