Canadian Income Tax Calculator 2009

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 2012, 2011, 2010 see our 2012 income tax calculator, 2011 income tax calculator, 2010 income tax calculator, or go back to 2013 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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148 Comments

  1. Tamara 07/24/2008 at 12:56 pm

    What a great tool for people use.

    It helps people stay in control of their finances.

    Lorne you are amazing!

  2. LSM Insurance 07/24/2008 at 2:05 pm

    Thanks for the nice comments. Regarding A.L’s comment the marginal tax rate is the percentage of tax you would pay on your last dollar earned. Regards … Lorne

  3. Joe Riche 07/28/2008 at 1:26 pm

    Great calculator!

  4. LSM Insurance 07/28/2008 at 2:39 pm

    Joe. Thanks for your comment. I’m glad you found the calculator useful.

    Regards … Lorne

  5. Dan MacLellan 07/29/2008 at 8:39 am

    Lorne,

    What a useful tool, marginal versus average tax rates have always caused confusion for people, I think this acts as a really simply way to clarify.

  6. LSM Insurance 07/29/2008 at 1:40 pm

    Dan, thanks for sharing your comments. Have a great day! Lorne

  7. Rich 07/30/2008 at 6:36 pm

    How does the marginal differ from the average tax rate?

  8. LSM Insurance 07/30/2008 at 6:51 pm

    The marginal tax rate is the amount tax you pay on the last dollar earned. The average tax rate is average percentage of tax you are paying on your income. I hope this helps! Regards … Lorne

  9. J 07/31/2008 at 5:09 pm

    Great calculator. It’s very quick and easy to use. Too bad I have to pay all that tax

  10. LSM Insurance 07/31/2008 at 5:10 pm

    Thanks! Unfortunately I can’t do anything about the tax rates in Canada.

  11. Eric 08/01/2008 at 9:49 pm

    I live in the US, am a CFP, and am trying to help my Canadian-citizen mother with the sale of some non-residential (primary residence) land in NS. Questions:
    1. Does the calculator for NS include the national tax, or is it in addition to the Canada Revenue tax? (That’s how it works in the US…)
    2. The property has been owned for 40 years, I am awre and understand the crystallaization that occurred in 1994, and it appears that there will be a $30,000 LTCG. Amount of tax?

  12. LSM Insurance 08/02/2008 at 8:55 am

    Hi Eric,

    Thanks for the questions. The calculator would only includes the Provincial and Federal Tax.

    I’m not sure what the LTCG would be? Regards … Lorne

  13. Eric 08/02/2008 at 9:01 am

    Long Term Capital Gains (eligible for capital gains rate). In the US, property or investments have to be owned for more than 12 months to qualify for the lower rate. If less than 12 months, the regular income tax rate applies. To clarify my previous question: the calculated amount estimates both Federal and provincial tax? Next question: Does HST also apply to property sales? If so, what is the rate, and is it on the whole sales price or just the gain? Thanks SO much for your assistance!! Eric

  14. Richard Parkinson 08/02/2008 at 10:20 am

    Unlike the US where mortgage interest is deductible, and therefore may incur a capital gain, in Canada, mortgage interest is not deductible on the principal residence, and
    therefore in Canada there is no capital gains or any other tax on the gain in value on a principal residence, which you indicated was the case, in your first post. (This is not to say a province may have their own tax, but I am not aware that Nova Scotia has one on the capital gain of a principal residence).
    Also it would help if all posters identify what the abbreviations they are using means. In your last post you mention HST. I assume you are meaning Harmonized Sales Tax, but to be safe it helps if it is expanded so everyone knows.
    Here in BC, as in many other provinces, we have a PTT (Property Transfer Tax) which is paid by the purchaser on the sale of a property. If you didn’t have a PTT in your province, e.g. I don’t believe Nova Scotia has it, then you likely wouldn’t know what I was taking about.
    If I have missed something, please let me know.

    Richard

  15. LSM Insurance 08/02/2008 at 11:01 am

    Richard. Thanks for your insights. Lorne

  16. Eric 08/02/2008 at 12:39 pm

    Sorry, the property is non-primary residence. My 1st message did not clearly state that. Also, humble apologies for usiong abbreviations, I had run out of room for the message.

    Question: Is Harmonized Sales Tax charged on the sale of non-prim. residence property in Nova Scotia? If so, on what is it figured-the total sales price, the amount after subtracting selling costs, migration etc., or just the capital gain?

  17. Richard Parkinson 08/02/2008 at 4:09 pm

    Unfortunately I don’t believe this is the purpose of this forum, especially for the original intent of this thread, i.e. comments re the tax calculator.
    I live in BC, so to provide an answer would require surfing the internst to try and determine the answer, which of course, you can do yourself. I would suggest contacting a realtor in Nova Scotia, who would probably know the answers to your questions without having to research. Here is a website of realtors who claim to be one of the top two teams in Nova Scotia: link to halifaxmetrohomes.com

    The Nova Scotia Finance website is at: link to gov.ns.ca

    For the record, I found out the following regarding the HST

    In Nova Scotia, the Harmonized Sales Tax (HST) has replaced both the N.S. Provincial Sales Tax (formerly known as the Health Services Tax) and the Federal sales tax formerly known as the Goods and Services Tax [GST].

    The Harmonized Sales Tax (HST) is administered by the federal government and applies to all goods and services with some exceptions. It combines the federal Goods and Services Tax (GST) of 5 per cent and Nova Scotia’s value-added tax of 8 per cent.

    The HST relies on the same tax base, legislation, input tax credits and tax returns as the federal GST.

    The HST is a value-added tax levied on the additional value of goods or services at a point of production or exchange. Although businesses pay the HST on their inputs, they are generally eligible to recoup this tax expenditure through input tax credits.

    The HST differs from retail sales taxes in other provinces (PEI, ON, MB, SK and BC) in that it applies to both goods and services and it provides input tax credits to businesses to offset the taxes paid in input.

  18. LSM Insurance 08/02/2008 at 10:51 pm

    Richard, Thanks for taking the time to research this. Eric I try to help out where I can – but I don’t want to offer advice beyond my area of expertise.

    I hope you found the calculator and the above information useful. Regards … Lorne

  19. Eric 08/03/2008 at 9:05 am

    Thanks to all for the sharing. Great info Richard. I sincerely appreciate your time.

  20. Sigal 08/11/2008 at 7:58 pm

    Are RESP contributions deductible?

  21. LSM Insurance 08/11/2008 at 8:04 pm

    Hi Sigal,

    Thanks for the question. Registered Education Saving Plan (RESP) contributions are not deductible. They do however qualify for a 20% Canadian Education Savings Grant (CESG) up to a maximum of $500 per year per child and the funds grow on a tax sheltered basis.

    I hope this helps! Lorne

  22. Richard Parkinson 08/11/2008 at 9:03 pm

    If your child was born after December 31, 2003,there is also a further $100 per year available, know as the Canada Learning Bond (CLB).

    As Lorne mentioned, the RESP is not tax deductible. However there is a solution for people who can afford to pay more than the $208 per month that maximizes the CESG grant. A leveraged loan for a young person, i.e. younger than 5 years old, can potentially be better than an RESP for a contribution rate of $400 or more per month, and for someone who is comfortable with a much higher risk strategy.

    In the current market environment I am not comfortable with borrowing to invest, but surprisingly some people are. Ask yourself this question:

    You decide to borrow to invest, say $100,000 and 2 weeks later the market drops 5%. Do you say “great, I will borrow more”?, or do you say “How did I let that guy talk me into this nightmare? If the former, you are a candidate, if the latter, don’t do it.

  23. Patti 08/28/2008 at 7:35 am

    I have cottage sold a property which I paid $40,000 (and sold for $87,000. What things can I claim to expense the difference. Can I claim the interest on my mortgage which I had to obtain the property? The property is in N.S. Any information you can supply would be great re any exceptions.

  24. Richard Parkinson 08/28/2008 at 9:51 am

    First the disclaimer, your accountant should be the definitive reference for your questions. Having said that, without knowing a lot of other details, I assume this was a cottage for personal use, and not for rental. I also assume it was not one of several you have bought and sold as a flip, (if yes, then be aware of IT-459 available from link to cra-arc.gc.ca).
    It my understanding that the mortgage interest you paid can only be deducted if this cottage was obtained for the purpose of earning an income, i.e. a rental property. Otherwise I believe the only opportunity to reduce tax, would be if you had some capital losses on other investments, which you likely have, given the market. This would be a good time to get rid of any dogs of stocks or mutual funds that have no hope of recovering anytime soon. Again if it was not a rental property, I don’t believe you can write off any other expenses either.
    If you had an adult child (over 18 to own real estate in Canada)who did not have a principal residence, you could have transferred ownership to him or her, to claim as their principal residence, but of course that raises a whole lot of other issues and caveats.
    Sorry to not support the answer you were hoping for.

  25. Patti 08/28/2008 at 11:58 am

    Not the answer I was hoping for but at least I can writeoff any expenses, we incurred, that pertain to upgrading the property as long as the expenses were not general maintenance, correct?

  26. Richard Parkinson 08/28/2008 at 4:16 pm

    Capital gains are calculated by subtracting the adjusted cost base (ACB) of the non revenue generating property from the fair market value (FMV), or (reasonable) sale price, at the time of disposition. The ACB is the original cost, plus the cost of any capital improvements over the years (not normal repairs). I would interpret this to mean relacing the hot water heater would be considered a repair, while adding a sundeck, paving a driveway, or adding a bathroom, would be considered a capital improvement, in that it increases the value of the property.

  27. Richard 09/25/2008 at 8:44 am

    Do you know when TFSA account takes effect and how it differs from an RRSP? Thanks …

  28. LSM Insurance 09/25/2008 at 8:53 am

    The Tax Free Saving Account (TFSA) takes effect on Jan 1, 2009. The account is very different from an RRSP. Contributions are made with after-tax dollars but withdrawals are tax-free.

    The TFSAs also has an unique feature many people are unaware of. All withdrawals from the account create an equal amount of contribution room. This makes it a great place to save for a major purchase in a tax efficient manner and replace the savings in the future.

    Another nice feature of the TFSA is that earnings within the account and withdrawals do not affect income-tested benefits such as the Canada Child Tax Benefit or Guaranteed Income Supplement.

  29. Richard Parkinson 09/25/2008 at 9:36 am

    The start date for the TFDA is January 1, 2009. The expectation is that any investments that you might consider for a RRSP will also be eligible for TFSAs, e.g. mututal funds, segregated funds, etc.
    One complication thus far has been obtaining information of the details from investment opportunity providers as they create the necessary paperwork, procedures, and reporting to support this new concept.
    I believe the TFSA will be a better solution than RRSPs for low income earners, i.e. people in the lower marginal tax rates (MTR), or wherever their marginal tax rate in retirement will be higher than their current MTR, e.g. 15%. So young minimum wage earners would do better to put any excess cash into a TFSA, while earning carry forward room in their RRSPs, and when their income improves, to where a deposit in an RRSP makes sense, start moving money over from the TFSA to the RRSP.

  30. Adam 09/30/2008 at 2:17 pm

    This is a fantastic tool! But I was just wondering about one thing: if I am a resident of Nova Scotia, but working in Alberta, which rate is my income taxed at?

  31. Richard Parkinson 09/30/2008 at 3:36 pm

    For matters of tax, I prefer to use the CRA website as a source, given if you can’t trust their information, who can you trust :-).

    They have published an interpretive bulletin at: link to cra-arc.gc.ca

    This bulletin states:

    “In some cases, an individual will be considered to be resident in more than one province on December 31 of a particular taxation year. This situation usually arises where an individual is physically residing in a province other than the province in which he or she ordinarily resides, on December 31 of the particular taxation year. For example, an individual might be away from his or her usual home for a considerable length of time on a temporary job posting or in the course of obtaining a post-secondary education. An individual who is resident in more than one province on December 31 of a particular taxation year will be considered to be resident only in the province where he or she has the most significant residential ties, for purposes of computing his or her provincial tax payable.”

    So without knowing more of your individual circumstances, e.g. do you own a home in NS, etc. my interpretation of this is your tax rate will be based on Nova Scotia.

  32. LSM Insurance 09/30/2008 at 3:51 pm

    Richard – thanks for your insights. Lorne

  33. Qifeng 10/13/2008 at 8:30 am

    Hi, I hold work permit in Canada now and I am not resident here. Can I ask return all of income tax that deducted from my wages per month? In addition, if my wife and daughter came here, I have to cover their living cost and they did not work. At that moment, my income tax would be less than the amount now? Thanks.

  34. Pat 10/13/2008 at 5:42 pm

    I have an opportunity to unlock my pension do to “financial hardship” . The payout would be app. $24000, less $7000 in taxes (BC), which is quite a hit considering the circumstances. Because of the hardship situation , on my 2008 tax return should I expect a bigger or smaller tax refund ? Regards, Pat

  35. LSM Insurance 10/13/2008 at 5:54 pm

    Qifeng, Thanks for the question. I’m not sure of the answer I would check with your tax advisor.

  36. LSM Insurance 10/14/2008 at 10:05 am

    Hi Pat,

    The following was posted by one of my associates Richard Parkinson.

    Your question is a great opportunity to acquaint everyone to some significant changes made, effective May 8, 2008, to what can be done with locked in pension plans. Standard Life have a good summary of these changes on a document located at: link to pointbreakcg.com starting in page 2 [actually it provides some good insight to the new Tax Free Savings Account (TFSA) as well].

    Unfortunately you don’t provide enough information for an accurate estimate of a tax refund, in part because it depends on your marginal tax rate (I assume, based on your tax to payout ratio, is 29%), and whether you continue to work. For example, let’s assume your taxable income from employment is $36,000 per year. Using this calculator, it shows your marginal tax rate (the rate you pay on the last dollar earned) is 22.98%. Now add on the $24,000 payout which bumps your taxable income to $50,000. You will notice that your marginal tax rate goes up to 29.98%, and difference in tax payable goes from $5,391 to $9,457 or $4,066 difference in tax. Now using the calculator, change your taxable income to $50,000 before the payout. Now your tax on the payout is all at 29.98% or $7,294. This highlights the impact of our Canadian progressive tax system.

    Now let’s suppose you are an employee who has had income tax deducted based on a $50,000 per year taxable salary, but 6 months into the year, you become sick, and no longer able to work. The tax deducted during the first 6 months is based on your making $50,000 per year, but now you will only be making $25,000 so in effect you have paid more tax that necessary. This will provide you with some further tax savings and additional refund dollars, and a lower average tax rate.

    The reason the government set up such stringent rules for pension funds is they wanted to ensure these funds would be available in retirement, and therefore should be considered a last resort source of current living expenses funding.

  37. Pat 10/14/2008 at 3:00 pm

    Thank you for our quick and informative response. Regards, Pat

  38. LSM Insurance 10/14/2008 at 3:02 pm

    You’re welcome. I’m glad we could help! Lorne

  39. shiraz khimji 10/14/2008 at 6:17 pm

    does it make any difference, if my income is trictly pension income and my age is 60. would it change when I am 65.

  40. Richard Parkinson 10/14/2008 at 7:53 pm

    I would like to respond Shiraz, but not sure what you mean by “it”. Please expand, e.g. is “it” tax owing, conversion option, or something else?

    Obviously at 65, you would start to receive Old Age Security at 65 (OAS, which based on the current monthly benefit (Oct-Dec 2008) if $516.96)which would be added to your income for tax purposes. What would seem more important is ensuring you are taking advantage of the recent pension splitting changes.

    Please flesh out your question a bit more so that I may be able to provide a more complete answer.

  41. Armando 10/22/2008 at 1:10 pm

    I would like to know if the US companies will report dividends taxs payed in US, will be reported in my T3, for canadian tax purposes, and will I get it back in my Canadian taxes?

    Thank you,

    A.B.

  42. LSM Insurance 10/24/2008 at 8:55 am

    Armando’s thanks for you question. Unfortunately I think this is best answered by an accountant who specializes in Canada / US tax rules, which is not my sphere of knowledge. However a Google search provided some information that should provide you with some answers. You will want to check out these links:

    A CIBC site states:

    What if my account is not in Canadian dollars?

    All tax slips, except T3s, are issued in the currency of the account. In accordance with CRA regulations, T3s are issued in Canadian dollars only. For foreign or multi-currency accounts, all summaries will display the 2006 annual average Canadian currency conversion rate as published by Canada Revenue Agency, or available on the Bank of Canada website at http://www.bankofcanada.ca.

  43. Fen Smit 11/11/2008 at 7:16 pm

    If a person works and earns income in several provinces what determines which province or territory they should file in.

  44. Victor 11/11/2008 at 7:42 pm

    Lorne,

    I have a part-time job and have to fill in some tax forms for payroll. I also have a business (not incorporated, just self-employed). The tax forms (TD1-E and TD1ON-E) ask for what my earnings for 2008 are, or an estimate of them.

    What do I enter: my gross profits or net profits after all business expenses? Since my gross profits place me under the 9600$ tax barrier, I wasn’t too sure how things will work and at which points will my total income including my part-time job’s will begin taxing me?

    Keep in mind I live and operate my business in Quebec but my PT job is in Ontario.

    Thanks for any help!

    Victor

  45. Paula 11/11/2008 at 8:41 pm

    Not sure if you can help or not. I am looking to find a way to calculate what my return on day care expenses will be. The reason I am looking is that my ex and I (he has a lawyer) are working through dividing the cost of day care. His lawyer has advised me that the way the it works is that we take the cost less my tax refund and divide the balance. So I’m searching for a way to help me calculate the return.

    Any help would be appriciated.

    Thanks,
    Paula

  46. Richard Parkinson 11/11/2008 at 9:05 pm

    Paula, your question is probably better answered directly rather than through this public forum. I have asked Lorne Marr to forward you my e-mail so that we can communicate directly, as I suspect 10-15 minutes should be sufficient to create an Excel spreadsheet to calculate this.

  47. Richard Parkinson 11/11/2008 at 9:16 pm

    Reply to Fen Smit’s question:

    I posted this information to another question awhile ago, but it can be difficult to sort through them all. so probably easiest to just repost it here.

    For matters of tax, I prefer to use the CRA website as a source, given if you can’t trust their information, who can you trust :-).

    They have published an interpretive bulletin at: link to cra-arc.gc.ca

    This bulletin states:

    In some cases, an individual will be considered to be resident in more than one province on December 31 of a particular taxation year. This situation usually arises where an individual is physically residing in a province other than the province in which he or she ordinarily resides, on December 31 of the particular taxation year. For example, an individual might be away from his or her usual home for a considerable length of time on a temporary job posting or in the course of obtaining a post-secondary education. An individual who is resident in more than one province on December 31 of a particular taxation year will be considered to be resident only in the province where he or she has the most significant residential ties, for purposes of computing his or her provincial tax payable.

    So without knowing more of your individual circumstances, my interpretation of this is your tax rate and filing province / territory will be based on where your primary residence is located. Hope this helps, as I always feel more comfortable with an answer if it is from the guys who are going to ding me if they say it is wrong.

  48. LSM Insurance 11/12/2008 at 8:38 am

    In response to Victor. The calculator provides the taxes owed based on your net income. For spevific tax questions you should consult your local tax advisor. Best Regards … Lorne

  49. Stephanie 11/13/2008 at 11:13 pm

    Similarly to Paula, I am also looking for a way to calculate “net child care expense” for the exact same reason. I’m baffled that such a common requirement is uncommonly covered out in cyber space. Would love instruction on the excel spreadsheet as well if possible. Thanks!

    Stephanie

  50. Richard Parkinson 11/13/2008 at 11:52 pm

    I have been in contact with Paula via e-mail and sent her an Excel sheet, althought still not sure if we have nailed it. I will ask Lorne to send you my e-mail address so you can contact me directly, and I will send it to you.

    We will put together an online calculator for this in the next couple of weeks. I’ll email you to let you know when it’s online.

    Thanks for speaking up. Child care is such a thorny financial question, not to even mention the issues of quality of care and time with one’s own child.

  51. Mike 12/15/2008 at 3:29 pm

    Great tool!

    so it is a personal income tax calculator. what if you are married and merge your income with your wife’s? Does this calculator still give you accurate in that case?

  52. Richard Parkinson 12/16/2008 at 2:11 am

    Accuracy is a relative term. This calculator provides the average and marginal tax rate based on taxable income, i.e. it assumes you have already taken deductions and credits into account to arrive at the input value of taxable income. If the input taxable income calculation is correct, then the calculator will provide a reasonably accurate prediction of your taxes payable, tax rates etc., whether for one person, a couple, or a family. This calculator is meant to provide a feel for the rates, but cannot address the detail between gross income and net taxable.

    The problem of course, is determining all of the deductions and credits to subtract from your gross income(s), virtually requires you to do a detailed tax form to account for all of that.

  53. Debashis Roy 01/14/2009 at 7:42 pm

    Dear Sir,
    I am from India and undergoing fellowship in University of Western Ontario. I am in Work Permit here. My total salary from the department will be 70000 CAD at the end of 2009.
    How much tax I will have to pay. I am paying nearly 4500 per year as rent in the house I am living. Will I get any tax exemption from this.

  54. David Foster 01/23/2009 at 4:47 am

    I think the calculator is fantastic! What a great way to decide which is the best after tax investment for you.

    Do you have (or know of) a website that shows the breakdown of the tax rates per investment per province? rather than entering an amount to try and figure out the rates?

    eg: BC
    Interest Cap Gain Dividends
    0-10,000 10% 5% 0%
    10-35,000 18% 11% 0%
    35-50,000 25% 16% 3%
    etc.

    Thanks for your help with this.

    David

  55. LSM Insurance 01/23/2009 at 8:49 am

    Hi David,

    Thanks for the I note. I’m glad you found the calculator helpful.

    I’m unaware of an on-line calculator that would assist with the above calculation but we will consider adding something like this in the future.

    Regards … Lorne

  56. Lorne,

    Thank you for the excellent tool(s).

    The tax calculator is especially useful when evaluating tax consequences of different kinds of investments.

    All the best!

  57. LSM Insurance 01/25/2009 at 10:50 am

    Thanks for comment. I’m glad you like it. Regards … Lorne

  58. David Egerton 01/25/2009 at 12:03 pm

    I am a US citizen and I am looking at a job in Canada. Would I pay US or Canada taxes? I assume Canada, seeeing I would live there and get a work VISA. What is the difference between the average tax rate and the marginal tax rate? Is the “after-tax income” my take home income after ALL taxes are paid? I am trying to figure out if the $10,000 increase in pay that I would be receiving there is really an increase, considering the taxes are higher, gas is much more expensive and so is housing, especially if there is no tax deduction for mortgage interest (I believe I correctly read that in one of the above comments). Thank you.

  59. Richard 01/25/2009 at 6:40 pm

    Thanks for the post. H&R Block’s website (a Canadian tax firm) states:

    If you are a U.S. citizen resident in Canada, you are subject to exactly the same filing requirements that you would be subject to in the U.S.
    This means you must file U.S. Form 1040 every year, reporting your worldwide income. This fact may come as a surprise to you if you have been accustomed to Canadian rules, which tax on the basis of residency rather than citizenship.

    The net result is that if you are a U.S. citizen resident in Canada, you must file two returns each year: a Canadian return because you live here, and a U.S. return because you are a U.S. citizen. Fortunately, this does not necessarily mean you’ll have to pay taxes to both countries. There are several mechanisms available to make sure you’re not doubly taxed.

    Earned Income Exclusion

    You may be able to exclude up to $85,700 from income for US tax purposes by completing Form 2555 and attaching it to your return. Form 2555 is a special form excluding foreign earned income from taxation in the United States. To claim this exclusion you must be a bona fide resident of Canada or must have been living in Canada for at least 330 days out of the last 12 months. You must also file your return on time.

    Treaty Benefits

    In most cases, treaty benefits are not available to U.S. citizens because of Article XXIX, paragraph 2. This provision states that nothing in the treaty can prevent the U.S. from taxing its own citizens, except for those articles listed in paragraph 3. One of these exemptions is the article governing Social Security payments. This means that if you receive Social Security benefits from the U.S., these benefits are not taxable in the U.S. They are taxable only in Canada. You may claim a 15% deduction on Line 256 of your Canadian tax return.

    Regarding your other items are:

    1. Mortgage interest is not generally deductible in Canada, unless one participates in an investment loan plan
    2. You do not mention whether the extra $10,000 would be paid in US or Cdn. dollars. If Cdn. based on today’s exchange rate of around $.8 US = $1.00 Cdn, $10,000 becomes $8,000 if paid in Cdn. dollars or the equivalent of $12,000 Cdn. if paid in US dollars.

    All the best! Richard

  60. David Egerton 01/26/2009 at 11:02 pm

    When I quoted an increase in pay I did not think about the exchange rate. With the exchange rate of 0.8 US to 1 CDA, it becomes a pay decrease of $5000. My salary now is $71,400 US and it will be $83,000 – $85,000 CDA. But it seems like a good opportunity, though cost of living is also much higher. Anyways, I am still not sure the difference between average tax rate and the marginal tax rate. Is the “after-tax income” my take home income after ALL taxes are paid? If I understand correctly, I would be taxed 26% by the federal government and another 14% by BC. Is that correct? Thank you. This has been a big help and good information to help me make my decision.

  61. LSM Insurance 01/27/2009 at 9:21 am

    Hi David,

    The average tax rate is the average percentage of tax you are paying on your income. The marginal tax rate is the percentage of tax you are paying on your last dollar earned. Regarding the breakdown between provincial and federal taxes – unfortunately the calculator does not provide this but most Canadian tax prepaeration software programs would give you the breakdown or you could contact a local tax advisor.

    Regards … Lorne

  62. Robert Yachney 01/28/2009 at 5:42 pm

    do the 2009 tax calculator reflexed the new budget changes for 2009 thanks. alsois The TAXABLE payable calculation reducted by basic personal taxable refund?

  63. LSM Insurance 01/28/2009 at 5:45 pm

    Hi Robert,

    Thanks for the note. These figures have not been included yet. Regards … Lorne

  64. Lala 01/28/2009 at 10:42 pm

    Hello Mr. Marr,

    Amazing website you’ve got here. Very helpful.

    Here is my question. I’ve heard that in BC you dont pay any taxes on $70,000 dividend income. So I put $70,000 in the calculator and under “Marginal Rate for Eligible Dividend” it shows 0.00%. I just want to verify if its true or am I missing something.

    Can those dividends come from my own company or do they have to be from several other companies’ stocks?

    Thank you!

  65. LSM Insurance 01/29/2009 at 4:18 pm

    In British Columbia, a taxpayer with no other source of income could receive up to $70,000 of eligible dividends in 2008 before facing any tax on that income (too early to determine the impact of the 2009 budget actual). In other provinces, the level of tax-free eligible dividends varies, but most provinces offer little or no taxation on approximately the first $38,000 of eligible dividends as a minimum.

    It’s interesting, but the marginal tax rate on eligible dividends is now lower than the rate on capital gains in most provinces at most income levels. In fact, at lower income levels, the marginal tax rate on eligible dividends is often negative. That is, adding more eligible dividend income to your tax return can actually reduce your overall tax bill.

    Why? Because the dividend tax credit available will offset not only that dividend income, but the tax on other income as well. British Columbia has the deepest negative marginal tax rate in 2008 at negative 15.55 per cent for the lowest income earners. This means, for example, that if you live in B.C., are in the lowest tax bracket, and you add one dollar of eligible dividend income, you’ll actually pay 15.55 cents less in tax than without the dividend.

    Regarding your question about types of dividends that are eligible, the note under our calculator states:

    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.

    So dividends from your own company CCPC (Canadian Controlled Private Corporations) are considered ineligible dividends and are taxed less generously than for public companies. Also be aware that there is something called the federal Alternate Minimum Tax (AMT) that applies at all levels of actual eligible dividends in excess of approximately $49,000, when there is no other income.  Non-eligible dividends do not incur AMT at any level when they are the only income.


    Disclaimer

    I am not a tax specialist, and as you can see from the above, this question has a complex answer. Please consult with a tax specialist before taking any steps that may affect your tax payable.

  66. Victor 02/06/2009 at 1:59 pm

    Hi Lorne,

    I was just curious (after researching with no results), is interest charged on credit cards taxed? Are credit card companies’ interest charged to us also collecting consumption tax within the amount?

    I’m curious to know if this is something I can claim back as ITC or ITR.

    Thanks

    Victor

  67. Richard Parkinson 02/06/2009 at 2:56 pm

    One hesitates to provide a definitive answer to any question these days, however having said that, I am not aware that credit interest is taxed, and have not seen any entry on my credit card statements to indicate that it is. If it were, the statement would have to show it, and given that I have not seen it on my VISA or Amex statement, I feel quite confident it is not taxed.

    Regarding the credit card companies interest collecting consumption tax, I have no idea, and I suspect asking the credit card companies would elicit a “huh?”. Claiming back the input tax credit (ITC), an input tax refund (ITR)for this would first require confirmation that it occurs. Hopefully someone else will know.

  68. Nelly 02/17/2009 at 2:02 pm

    i think I dont know how to use this.

  69. LSM Insurance 02/17/2009 at 4:06 pm

    Hi Nelly,

    Thanks for the note. You just put your income in the taxable income box and press calculate. Alternatively you can call my office at 1 866 899 4849 and we can walk you through it.

    Regards … Lorne

  70. Jordan 02/27/2009 at 6:31 pm

    Hi Lorne,
    Calculating the income tax payable is really confusing me. This is how I see it, I made $49,500 last year. For the federal goverment I owe 15% for the first $37,885 and %22 for the remainder. So I calculate I would owe $8,238.05 for federal income tax. Where I get lost is how do I calculate the %10 provincial taxes I owe (I live in Alberta, because accoding to your calculator I should owe around $9,928. Please explain so I can sleep at night?? Thanks, I appreciate your time.

  71. LSM Insurance 02/28/2009 at 10:14 am

    Hi Jordan,

    Thanks for the note. I recommend you consult with a tax advisor in your home province. Part of the challenge is I do not know the deductions you are declaring. Have a great day!

    Regards … Lorne

  72. Richard Parkinson 02/28/2009 at 10:56 am

    Jordan:
    One of the complications with these calculators is you said “I made $49,500 last year”. After you take into account the personal exemption which is $9,600 federal and $16,161 Provincial (AB), deductions for spouse, children, tax credits for medical, RRSP deductions, etc. etc. you arrive at taxable income. These calculators use taxable income for their basic calculaton. So $49,500 gross in your case might represent only $35,000 taxable income. This is the number you need to plug into this calculator. It should provide you with a number close to what you will actually see when you file your return.
    You may also want to buy one of the many tax return programs like Quicktax which will allow you to be accurate to the penny, and from which you can e-file.

  73. Sok 03/02/2009 at 10:15 am

    This is a great tool, I’m a “dependant” 22 yrs old living with my parents, going to school part time, Made 22000 last year, my dad make 40000 and my mom made probably 20000, I do contribute to rent during the summer (when work is busy), Will I owe? I’m very new to income tax, and thanks for this great tool.

  74. Sok 03/02/2009 at 10:19 am

    Oh yeah I have another sibling, but he is not working or going to school this year, he is 26, If you can guide me to any useful tools it would be great, I’m very new to understanding income tax as I never made over 15 grand annually before

  1. Richard Parkinson 03/02/2009 at 10:37 am

    It is a shame that they don’t provide more of this type of education in school. They didn’t 45 years ago when I went to high school, and it appears they still don’t.

    Try searching in Google for “basic income tax knowledge for Canada”, and you will find hundreds of useful sites to help you learn some of the basics. It realy is important these days to have a reasonable understanding of how things work.

    Regarding your tax bill, remember that this calculator uses your taxable income, which will be your $22,000 minus your personal exemption, etc. If your father contributes to your educational costs, he may qualify for a deduction for those costs, e.g. tuition, books, etc. Often it is worth the cost to go to an H&R Block type tax service the first time or two to get your return done professionally, then assuming your tax situation doesn’t change from year to year, you have the first one as a guide for future do-it-yourself returns. Also the annually updated tax prepartion software programs can be of great assistance.

  2. Sok 03/03/2009 at 10:04 am

    thank you so much for your guidance

  3. LSM Insurance 03/03/2009 at 10:21 am

    You’re welcome. We’re glad to help! Regards … Lorne

  4. Riz 03/08/2009 at 9:24 am

    Hi, I am actually hoping to move to Toronto from Dublin for a medical fellowship from july 2010 for two years. I was told that the salary is going to be appro 65,000 dollars per year. Now having a family of four including my kids 8 and 4 next year and my wife who is a home maker, I would like to ask that what would be roughly my take home salary in view of two children and wife who is at home. I mean am I eligible for some tax credits etc for kids etc like what we have in Ireland. Thanks

  5. LSM Insurance 03/08/2009 at 2:10 pm

    Hi Riz,

    Thanks for your comment. You would pay approximately $16,254 in Fed & ON tax, leaving a net of $50,768, and an average tax rate of 21.89%.

    I will send you a seperate email with more details surrounding your question. Regards … Lorne

  6. Natasha 03/10/2009 at 4:59 pm

    Hi!

    I’m working on a project and need to know how taxes will vary between provinces for the same income level. I assume this calculator work only for a single individual. Do you have any suggestions for how I could calculate the tax for a couple?

  7. Dave 03/12/2009 at 11:59 pm

    Hey, this is a great calculator but I have a question regarding my circumstance. I am Canadian Citizen and a full time University student in Ontario. Last year I made 7000 dollars income in addition to a 3200 dollar bursary which I’ve received regarding my financial situation. How likely am I to be exempt from paying taxes?

    Thanks

  8. LSM Insurance 03/13/2009 at 11:08 am

    Hi Dave,

    Thanks for the note and the kind words.

    By law, bursaries, scholarships, awards, prizes and tuition waiver amounts provided to students are shown as income in Box 28 of the T4A. Having said an income of $10,200 assuming no other deductions would only result in about $95 a tax. All the best! Lorne

  9. Carrie 03/20/2009 at 8:03 pm

    I want to figure out how much money I’ll get from the gov’t when I do my income tax with H&R Block. How would I figure that out? What’s the formula?? Thanks to anyone who write me back.

  10. singh 03/23/2009 at 10:37 am

    Well this chart only shows fedrel tax ???
    I guess the total tax would be fedrel + provincial. So way much from whatv stated!!

  11. LSM Insurance 03/23/2009 at 12:09 pm

    Hi Singh,

    Thanks for the note. The above chart shows Federal and Provicial taxes combined. The Federal tax is the same no matter where you live – the Provincial tax varies from province to province.

    Regards … Lorne

  12. Jo 03/24/2009 at 3:33 pm

    I had worked three months in US in 2008, and now I’m back in Ontario. How do I report my US income in my Canadian personal tax return. Is there anything else besides tax paid in US can be deductible in both federal and provincial level, such as social security and medicare…?

  13. V 03/29/2009 at 2:22 pm

    I’m wondering if and when I will be able to claim back a percentage of the income tax I paid? assuming I earn $38000 a year of taxable income?

    thanks in advance!

  14. V 03/29/2009 at 2:23 pm

    (I forgot to add I live in Ontario for the above question) Thanks!

  15. LSM Insurance 03/29/2009 at 4:28 pm

    Thanks for the note. Your tax refund you would depend on the amount of tax you paid during 2008 and your eligible deductions.

    Best Regards … Lorne

  16. Richard Parkinson 03/29/2009 at 4:45 pm

    If I understand your question, the answer is; within a short time after you file your return, especially if you e-file. I have seen refunds in as short as two weeks after filing.
    Your question allows me to identify another way to keep more of your tax money in your hands. If you are contributing regularly to an RRSP, e.g. monthly, you are in the 30% tax bracket, and are contributing $100 per month, approx. $30 will constitute a refund. Usually when you file your tax return, you would obtain a refund of 30% of $1,200 you contributed last year.
    However it is possible to arrange to have your payroll department take that monthly contribution into account when calculating your tax owing. This will allow your payroll department to incorporate your monthly RRSP contribution in the calculation of your pay cheque. Assume you are paid monthly, this would give you approx. $30 more monthly take home pay. Of course you would no longer receive the refund bonus tax filing time, because you are now receiving your refund as you pay. The benefit is more money stays with you, and you are not providing the government with free money for a year.

  17. Y Adam 03/30/2009 at 9:51 am

    Is CPP included in the calculation?

  18. LSM Insurance 03/30/2009 at 10:56 am

    Hi Adam,

    Thanks for the note. CPP would not be included in the calculation.

    CPP is not a tax. Best Regards … Lorne

  19. Gilbert 03/30/2009 at 6:19 pm

    Hi,

    Does your excellent calculator include recently announced peronal exemption increases by both the federal and Ontario provincial governements. Thank you!

    Gilbert :)

  20. LSM Insurance 03/30/2009 at 6:28 pm

    Hi Gilbert,

    We have to update this – thanks for the comment.

    Regards … Lorne

  21. Esther 04/06/2009 at 11:47 pm

    would you be able to explain to me the taxation of Seg funds?
    In a year when every fund was down, would I find myself paying income tax on a fund if it also was down?
    Could you also, if time allows you, to explain what a T3 slip is?

    thanks…hope i did not overdo the questions.. :)

  22. LSM Insurance 04/07/2009 at 8:22 am

    Hi Esther,

    Thanks for the note. Below is from Manulife’s website and should help answer your question. Please let us know if we can help further.

    A segregated fund is considered a trust for tax purposes. This is important for two reasons:

    1)The segregated fund will allocate all taxable income and realized capital gains to investors. This avoids having income taxed inside the fund at the top marginal rate.

    2)The fund acts as a conduit, that is income and capital gains retain their characteristics as they flow through to the investor and appear on the T3 in the same way they were realized in the fund. In other words, dividends will be reported as dividends, interest as interest and so on.

    The following are some unique tax advantages of segregated funds, as compared to mutual funds:

    Flow Through Of Capital Losses. A mutual fund does not flow through capital losses. Rather, losses are subtracted from the capital gains within the fund and only the net capital gains will be shown on the T3. In a year where losses are greater than gains, the excess losses are carried forward to offset gains in a future year.

    Segregated funds can flow through and report capital losses to investors. In a year, for example, where there are both capital gains and losses to report, investors will have an amount reported in the capital gains box (Box 21– same as a mutual fund) and an amount in the “Insurance Segregated Fund Capital Losses” (Box 37 — only available to segregated funds). The advantage to the segregated fund investor is that capital losses not used in the current year can be carried back three years or carried forward to future years. In other words, the fund doesn’t choose when to claim capital losses, the investor does.

    All Taxable Events Reported.With a mutual fund, only the distributions relating to fund activity are reflected on the investor’s T3. If an investor redeems any of their units, they must calculate the gain and loss and report these on their tax return. Another advantage related to segregated funds is that the insurer tracks the cost base for each investor and all taxable events are reflected on a T3. There is no additional accounting required by the investor.

    Probate Taxes And Other Estate FeesSegregated funds are insurance (annuity) contracts and, as such, a beneficiary can be named to receive any proceeds upon the death of the life insured (annuitant). This means that the proceeds are paid directly to the beneficiary and do not flow through the estate. These proceeds can be paid without delay and avoid probate taxes and many other fees associated with the settling of an estate, such as legal and accounting fees. Creditor protection may also be available where the named beneficiary is a member of the family class (spouse, parent, child or grandchild).

  23. Natalia 04/13/2009 at 7:15 pm

    Great website and easy to use calculator!! I have a question though and I’m hoping that you might know the answer: I have a son born in 1991, grade 12 student in private school. I understand that I cannot claim for private education but what about: music education (levels 8, 9 &10) at Royal Conservatory and cost of French exchange trip? Thank you in advance for your time. Regards, Natalia

  24. Richard Parkinson 04/13/2009 at 10:33 pm

    From a taxtips website, they provide the definitive answer to your first question:

    Generally, the cost of tuition for private school for elementary and secondary school students is not tax deductible. There are non-refundable tuition and education tax credits available for qualifying post-secondary education.

    A portion of the private school tuition fees, if it relates to child care services, may qualify as child care costs.

    There are special circumstances in which all or a portion of the fees paid to a private school may be considered a donation, and qualify for the charitable donations tax credit. Two types of schools may be able to provide charitable donation receipts for all or a portion of fees:

    those which exclusively teach religion, and

    those which operate in a dual capacity, providing both academic and religious education.

    For more information on this topic, see the Canada Revenue Agency information circular IC75-23 Tuition Fees and Charitable Donations Paid to Privately Supported Secular and Religious Schools. link to cra-arc.gc.ca. You will also be wise to consult a tax accountant who is ultimately more familiar with the tax laws than I am.

    Tuition fees may be eligible for the medical expense tax credit, (Income Tax Act s. 118.2(2)(e)). In order to qualify, a medical practitioner must certify in writing that the equipment, facilities or personnel provided by the school are required because of the student’s mental or physical impairment. The requirement for a written certification is included in Bill C-10, retroactive to December 21, 2002.

    Regarding the music education, another site states:

    In Canada, there is NO TAX on music lessons. Music lessons hold tax exempt status under both Provincial and Federal governments, (no G.S.T. or P.S.T). If you know of someone charging tax on lessons, it is a misrepresentation of Revenue Canada’s Income Tax Act regarding Education Tax Exemption.

    Claiming lessons as a personal tax deduction is only available through a music school which holds the certification of a, “Certified Educational Institute.” This title is very specific and is offered to only a select few organizations. It is a title which authorizes an educational center amendments to the Income Tax Act for the purpose of allowing students enrolled in a Federally qualified educational program to receive Tax deductions. These deductions are authorized through a roll number filed in Ottawa. The roll number is checked against any Tax deduction claims made by a student for tuition, books or extra curricular material(s). The qualification of, “Certified Educational Institute,” is for tax registry associated to a specific curriculum only. It holds no association to the qualification of instructors teaching any programs at a certified institute.

    DO “YOU” QUALIFY FOR A TAX DEDUCTION?
    Generally an individual may qualify for a tuition tax credit if…

    The student is 18 yrs. of age and is enhancing or working toward a professional career as a musician. They student must be enrolled at a, “Certified Educational Institute.” A signed “Tuition Certification Letter,” from the institution must accompany the claim. The student must have spent over $100.00 to qualify. Please contact Revenue Canada Taxation for an up-to-date Interpretation Bulletin regarding tax deductions at Certified Educational Institutions.

    Regarding the French Exchange trip, I do not know, and could not find any specific reference to whether it would be deductible or not. What is clear is if it is regard to earning income as part of your business, i.e. a job related trip then it would be, however I am doubtful that it is for a student, given the answers to your previous questions. Sorry I could not be the bearer of good news.

  25. LSM Insurance 04/14/2009 at 8:08 am

    Richard – Thanks for sharing your insights.

  26. Kevin 04/22/2009 at 1:34 pm

    Hello,
    I live in British Columbia and bought a cabin for recreational use. My question is can I deduct the 1% Transfer Tax I paid and fees paid to the Notary from my total income.
    thanks

  27. Derek Lewinson 04/23/2009 at 6:43 am

    Perfect! Been looking for something like this for years!

  28. LSM Insurance 04/23/2009 at 8:46 am

    Derek – Thanks for the kind words. Best Regards … Lorne

  29. Richard Parkinson 04/23/2009 at 9:54 am

    Regarding the deductibility of the transfer tax in BC.

    For those outside of BC, we have a property transfer tax when a property is purchased that is 1% of the first $200,000 and 2% of the remainder. There are more details to it, but a Google search for BC property transfer tax will lead you to more information than you want to know.

    The answer is NO, it is not deductible, any more than it is for your principal residence. It is not deductible even for a rental property. However with a rental property it would be added proportionately to the value of the building, which in subsequent years would be included in any Captial Cost Allowance calculation.

    While we are on the subject of rental properties, be aware there are rules about what is deductible and what is not. Repairs and maintenance items are, but improvements are not, e.g. replacing all of the windows, or adding a deck, would not be deductible.

    Lastly for those who have both a principal residence and a recreational property, there is something called the 1 plus rule that can save some tax on disposition. If someone asks, I can provide some insight.

  30. LSM Insurance 04/23/2009 at 11:03 am

    Thanks for sharing Richard.

  31. Kevin 04/23/2009 at 11:29 am

    thanks for the info on the transfer tax question…
    a great web site

  32. Calvin 04/23/2009 at 1:02 pm

    I have a question that I wish tax gurus out there can provide some comments. I paid tax in BC and Alberta in 2008 (in AB Dec 31 2008), will CRA calculate my provincial tax using BC tax rate and/or AB rate? (since there is a big difference.) Also, will I get from both BC and AB? Many thanks.

  33. Calvin 04/23/2009 at 1:03 pm

    I meant ‘get refund’ in the last question…

  34. Richard Parkinson 04/23/2009 at 1:25 pm

    Sorry I forgot to specifically comment that the fees for notary etc. for a recreational property are not deductible either, but assume you deduced that from my previous answer.

  35. Richard Parkinson 04/23/2009 at 5:43 pm

    I always like to refer to the definitive reference wherever possible, which for tax related questions is the Canada Revenue Agency (CRA).
    The quick answer is that under normal conditions, a person files a tax return for the province in which they are residing on December 31 of the taxation year. Sometimes, a person may be considered to be a resident of a province even if they have temporarily relocated to another province. This could happen if the person was employed in a temporary job, or was a student in a province where they do not normally reside. A person will be determined to be resident in the province in which they have the most significant residential ties.
    The CRA have published a “General Income Tax & Benefit Guide”, available at:
    link to cra-arc.gc.ca
    This 55 page document is handy to have on hand, as it answers many questions you may have from time to time. In this guide it states:
    Which tax package should you use?
    Generally, you have to use the package for the province or territory where you resided on December 31, 2008. However, there are exceptions (see next section) such as if you had residential ties (see definition on this page) in another place. You should have received the package you need based on our records.
    If you resided in Quebec on December 31, 2008, use the package for residents of Quebec to calculate your federal tax only. You will also need to file a Quebec provincial return.
    Residential ties – These ties include where your home (owned or leased) and personal property are, and where your spouse or common-law partner or dependants reside.
    Other ties that may be relevant include social ties, driver’s licence, bank accounts or credit cards, and provincial or territorial hospitalization insurance. For more details, see Interpretation Bulletin IT-221, Determination of an Individual’s Residence Status. ( link to cra-arc.gc.ca )

    Exceptions
    In the following situations, you should use the package indicated:
    A. If, on December 31, 2008, you had residential ties (see definition on this page) in more than one province or territory, use the package for the province or territory where you have your most important residential ties.
    For example, if you usually reside in Ontario, but were going to school in Alberta or staying in a ski chalet in Quebec, you would use the package for Ontario.

    Regarding the “get refund” assuming you file in BC, I don’t know the answer, nor know where to find it quickly. But I would guess that the income earned and taxed at source in Alberta would be lumped in with the BC income, and taxed as if in BC. So you may have paid more tax at source in Alberta, which may give you some small refund. A question life this makes me glad that I am not a software programmer writing the software to calculate taxes.

  36. Anne 04/27/2009 at 2:20 pm

    Hi Lorne and Richard,

    I was wondering if you could share with me info on how one could maximize gains from sale of equity (most of the time it does not happen these days), held less than a year, when filing my return for 2009. Thus far for the year this has been my sole source of income. Thanks for your help.

  37. LSM Insurance 04/28/2009 at 8:26 am

    Hi Anne,

    This will depends on your individual situation. We will send you a separate email shortly and we can discuss this in more detail. Regards …

  38. Chris 04/29/2009 at 7:42 pm

    Hi. I have a question about the CRA Moving Expenses Deduction. Last year I moved for the purpose of obtaining work. With respect to the $8,000 Property Purchase Tax (PTT) payable on the purchase of my new home in BC, I have heard that the CRA has rejected claims for this as a valid deduction. As the CRA’s materials appear to indicate otherwise, including in the description of eligible expenses “any taxes paid (other than GST/HST or property taxes) for the transfer or registration of title to the new residence”, I wondered what experience others have had in claiming this as a deduction?

  39. LSM Insurance 04/30/2009 at 8:46 am

    Hi Chris,

    You may want to refer to the link below from a CRA document:

    link to cra-arc.gc.ca – which says on page 3:

    “legal fees in respect of the purchase of the taxpayer’s new residence, and any tax, fee or duty (other than GST/HST or value-added tax) imposed on the transfer or registration of title to the new residence, where the old residence is sold by the taxpayer or spouse as a result of the move.”

    It appears that most moving companies have taken the liberal interpretation that the transfer tax is deductible as part of the moving expenses deduction, and the CRA’s own interpretive bulletins seem to support this. However the only way to be sure is to contact the CRA in writing, identifying the specific circumstances of the tax payer’s details and obtain an official opinion.

    Regards …

  40. Chris 04/30/2009 at 1:24 pm

    Thank you.

  41. BORA 05/14/2009 at 6:53 am

    Hi,
    Could you pls. let me know when is the last date for Income tax return filing in ontario canada.

  42. LSM Insurance 05/14/2009 at 8:14 am

    Hi Bora,

    Please see below. Regards … Lorne

    Personal income tax returns, except for those of self-employed individuals, are due by April 30th, as is any amount owing. Penalties and interest may be charged for late returns or late payments. The filing due date has been extended to June 1, 2009, for taxpayers affected by flooding in Manitoba. See the news release.

    If you are filing online, Canada Revenue Agency (CRA) allows a grace period for taxpayers who may experience delays in submitting their return online. For 2008, taxpayers have until midnight (local time) on Tuesday, May 6 to transmit their return. Any amount owing is still expected to be paid by April 30th to avoid any penalties. See the CRA home page for more information. You can NetFile your tax return online until September 30th, but it will be considered late if filed after the due date.

    Self-employed individuals have until June 15th to file their personal tax returns, but any amounts owing must still be paid by April 30th.

  43. Samuel 05/30/2009 at 1:10 pm

    Hi
    I am coming back to Montreal next academic year and will make 85000 as before, but I now have a family of 4, with 2 kids age 1 and 3 and their stay at home mom. What can I anticipate as net income in Quebec?
    Many thanks, best

    Samuel
    Thanks

  44. LSM Insurance 05/30/2009 at 5:42 pm

    Hi Samuel,

    Thanks for the note the calculator can give you a good estimate but it would depend on your deductions and eligible expenses.

    Best Regards …

  45. David 06/26/2009 at 1:01 am

    If I am a Citizen of Canada and have income from commercial property (rent) in the USA, will I have to pay income tax to both Canada & USA from all income earned?

  46. michel 07/30/2009 at 3:17 pm

    Hello,
    I earn approximately 70,000 a year before taxes. I have 3 children. My wife is a stay at home mom and we are wondering how much she would have to earn yearly to make things worthwhile. Leaving home will mean less deductions etc

    Any comments would be appreciated

  47. LSM Insurance 07/30/2009 at 4:25 pm

    Hi Michel,

    This calculator at the attached link should help link to lsminsurance.ca

    Best Regards … Lorne

  48. Richard Parkinson 07/30/2009 at 4:45 pm

    The child care calculator Lorne suggested is an excellent start. Typically people find that after the expenses, especially daycare, are taken into account, plus the loss of the dependent spousal deduction, 75% of the gross income is lost, leaving 25% of real income. Of course it depends on many factors, e.g. the potential income of the employment seeker, and daycare cost. In Quebec daycare is $7 per day, making it more affordable than almost anywhere else.
    If you have some basic Excel skills, it can help you do the math as well. Out of interest I Google searched on variations of “wife work or not”, hoping to find an on-line calculator that someone might have developed, but was unsuccessful.

  49. paul 08/06/2009 at 1:48 pm

    hi, i becane a PR in canada in April 2009, my wife live here and goes to school. I returned to my home country because i have one year more on my contract.
    I have a saving of 30,000. and my annual income is 30000.
    I would be greatful if u can tell me how much tax i have to pay on my saving and my income.

    Thank you

  50. James 08/21/2009 at 4:52 pm

    If I am reading this correctly for my situation:

    $68,344 (Gross)
    - 10,375 (Fed standard deduction)
    - 7,778 (NL standard deduction)
    __________________________________
    = $50,191 (Taxable Income)

    According to this calculator, my after tax income is $39,307. This comes out to 42.5% of my income is lost to taxes. This seems very high. Does this make any sense? Is $39,307 the actual amount of money I will hold in my hands after taxes?

  51. Richard Parkinson 08/22/2009 at 11:05 am

    Thanks for your question. The good news is you missed an important part of calculating the deduction. Just as the tax on your gross is a percentage of it, e.g. the first federal level of tax payable is 15% of $40,726, your deduction is also a percentage. so in your calculation the federal minus is:
    15% of 10375 = $1,548.00
    7.7% of $7,778 = $ 598.91
    Total exemption (BPA) = $2,146.91

    If you use the tables from the CRA link to cra-arc.gc.ca you will find that the tax payable on your gross amount before deduction of the Basic Personal Amount(BPA as they call it)is $19,516.80. So the correct math is:

    Gross income $68,344

    Total Tax Payable: $19,516.80
    BPA deduction: $ 2,146.91
    Net tax payable: $17,369.90

    Net Income: $50,594.10

    which agrees the the calculator (round down). Trust me tax calculation is complicated, and it took me many hours of research and Excel time to figure it out. I have compared my calculations with three other sites and we are all in agreement, so I am confident of the math.
    Remember your actual tax payable will likely also include deductions for a spouse, children, RRSP contributions, and various other tax credits. The calculation is the worst case scenario for most people, small consolation though.

  52. LSM Insurance 08/22/2009 at 11:51 am

    Richard – Thanks for your input. Regards …

  53. Dennis 08/25/2009 at 12:22 pm

    Love it. Best thing ever to work out different employment option scenarios. Thanks for the service!

  54. LSM Insurance 08/25/2009 at 2:40 pm

    Thanks Dennis. I appreciate the kind words.

  55. Jerry 08/28/2009 at 7:50 am

    1. Does your calculator take into account CPP and EI contributions as well as OHIP premiums in Ontario?
    2. I plan to be out of country for a significant part of the year and work outside of the country.
    I intend to rent out my residence but still keep Canadian residency status. All my Canadian status in tact, Ie driver’s licence, bank accounts,address etc. Will be coming back regularly ( every few months). Would I be considered a resident of Ontario for tax purposes. I would have a Canadian income still from other sources. (not government pensions)

  56. Richard 08/28/2009 at 7:52 am

    Re question 1, the calculator does not take CPP & EI into account as these are just too many deductions and credits that not everyone is entitled to, that influence what you ultimately pay. Consider the results of this calculator as pessimistic, i.e. the worst case scenario of what you will have to pay.

    This calculator only deducts your Basic Personal Exemption from your specified taxable income. Remember the deduction is your province’s percentage of the exemption, not the actual exemption. See my answer to a previous question.

    Re question 2, the country you are planning to work in is important as some, like the USA, have tax treaties with Canada while others do not.

    The Service Canada website: link to hrsdc.gc.ca identifies who contributes to CPP. In this page they state:

    ” Do you plan to work abroad?

    If you plan to work abroad, keep your pay stubs and tax slips. Canada currently has agreements with over 40 countries that may make you eligible for social security benefits in Canada and/or the other country.”

    For tax purposes, you are considered a resident for tax purposes of the province you are residing in on December 31, of the taxation year. So if you were visiting family in Ontario over Christmas, you would be considered residing in Ontario.

    The problem with your questions is there are numerous variables, e.g. the country you plan to work in, the actual number of days you are abroad, i.e. more than 183 days becomes an important influence. You should probably consult with a tax accountant for the full opinion on your situation. You don’t want to find yourself in tax trouble in either Canada, the foreign country, or at worst, both countries.

    Years ago I co-owned a Cdn. company with a US branch, based in Washington state. Every year we had to file a US return, and pay Washington state taxes, Social Security, etc. knowing full well, we would never reap the benefits from them. Some countries such as Indonesia have a withholding tax of 20% on all income earned in the country, deducted before you get your deposit.

    Hope this helps.

  57. 401k 09/09/2009 at 12:10 am

    That is an amazing calculator, I input $120,000 as the income and the taxes for BC are $33,896 and taxes for Ontario are $36,719… Why this difference of almost $3000? That’s like $300 a month and is a significant chunk of money from people’s budgets!!

  58. LSM Insurance 09/09/2009 at 8:25 am

    Thanks for the note. Yes different provinces have different tax rates. There are a variety of factors that go into a provinces tax rate. Regards … Lorne

  59. Richard Parkinson 09/09/2009 at 10:33 am

    It interesting that the tax rates vary so widely across the country. There are 13 provinces and territories in Canada today, which for $120,000 Nunavut is the place to live for the lowest tax payable at $31,158, vs. Quebec with the highest at $41,761. Of course there are many influences on a regional basis why there are these rate differences. The federal rates are the same for all thirteen, it is the indivdual provinces and territories that are different. You can find the details at the CRA website: link to cra-arc.gc.ca.
    Ontario and BC are in the process of harmonizing their taxes with the federal government, which is going to further influence these rates in the future.

  60. LSM Insurance 09/09/2009 at 12:38 pm

    Richard – Thanks for sharing!

  61. scott 09/11/2009 at 6:30 am

    Great tool. THis helps me know if im saving enough for my end of the year tax filing :)

    Looks like I’m doing ok so far! :)

  62. LSM Insurance 09/11/2009 at 8:32 am

    Hi Scott, Thanks for the note – glad to hear things are going well.

  63. Chuck 09/12/2009 at 11:15 pm

    This is a great online tool ! Well done.

  64. LSM Insurance 09/13/2009 at 9:12 am

    Thanks Chuck! I’m glad you like it.

  65. alana 09/17/2009 at 8:59 am

    Hi
    Great site.
    1. Just to confirm, the calculator reduces the net income I put in by the Basic Personal Exemption only.
    2. My question is this, How do I determine the maximum to take in T4 salary vs taking CCPC dividends out and paying personal tax and the corporate tax at 16.5%? When I calculate the dividend monies as income (average tax rate) would I still have to add on the 16.5% corporate tax that was already paid on the monies?
    I can’t seem to work it out correctly. The T4 income always works out better on the average tax rate???
    Thanks

  66. Richard Parkinson 09/17/2009 at 12:11 pm

    Here are hopefully the answers you were seeking.

    1. Yes, the calculator calculates the tax based on your input number, then subtracts the Basic Personal Amount (BPA) as we better know as our personal exemption. Therefore, given that most people will have additional deductions and credits, consider this number a worst case scenario.

    2. The answer to the question, “do I pay myself salary or dividends”, or in what proportions is not clear cut.
    For the sake of simplicity we will
    • ignore GST issues
    • assume that the corporation is located in Ontario and the owner resides in Ontario
    • assume that the corporation qualifies for the small business deduction
    For our purposes, let’s assume the corporation has a net income of $100,000 dollars available for distribution to the owner, and that he owner has no other sources of income.

    Salary:
    The corporation pays out its entire net income of $100,000 as salary expense to its shareholder – amount of tax paid by the corporation is $0.00
    The shareholder would report income of $97,731 ($100,000 less the company’s contribution to CPP of $2,269) and incur a tax liability of $27,052 – approximately $1,282 more than just dividends.

    Dividends:
    If the corporation pays a dividend equal to its net after tax profit, it would incur a tax liability of $16,500 (16.5% for 2009) and would, therefore, have $83,500 available for distribution to its shareholder.
    The shareholder would report income of $121,075 ($83,500 x 1.45 [gross up]) and would incur, based on 2009 tax rates, a tax liability of approx $9,270, based on an average tax rate of 8%, after the dividend tax credit is included..
    Total taxes paid between the corporation and shareholder $25,770.
    But also consider the ramifications of doing this:
    1. Dividends are not insurable earnings for purposes of future CPP benefits.
    2. Dividends are not considered “earned income” for purposes of calculating RRSP contribution limits.
    3. Many private insurers do not consider dividends to be insurable for the purposes of obtaining disability insurance.
    4. Personal service businesses, e.g. an incorporated individual doing business with only one client, (see link to cra-arc.gc.ca) do not qualify for the small business deduction which would effectively double the amount of corporate income tax payable.

    So for 2009, you can earn about $66,000 in dividend income without paying any tax, so advantage dividends. As you can see with $100,000 of income, dividend income is still slightly better, but at the expensive of other things that may not be worth it. Definitely seek the council of a tax professional.

  67. Winn 05/21/2010 at 1:46 pm

    I want to move to Ontario in July. I have the option to stay north (NWT) I make 100K which place will offer the best deductions to get money back. I also want to know how much RRSP I need to stay in the black. If I move to Ontario I will communite to/from the north.

  68. Richard Parkinson 05/21/2010 at 5:47 pm

    This calculator shows that NWT has lower taxes than ON, however I suspect cost of living in NWT is higher so it probably balances out, i.e. it looks life ON gasoline is 15-20 cents less than in NWT.

    Your best bet is to create your own spreadsheet using the tax tables from the CRA – link to cra-arc.gc.ca

    For 2010 the RRSP contribution limit is $22,000 or 18% of your income, but you also may have some spare contribution room.

    It will be a matter of playing with the numbers to determine the right amount of RRSP contribution each year to minimize your tax payable.

    Remember this calculator only considers your basic personal exemption which is $10,382 federally, $12,740 in NWT and $8,943 in Ontario. This difference on provinceial rate is a major influence on why Ontario’s tax rate is higher than NWT.

  69. marcus macdonald 01/23/2011 at 1:56 am

    I have private insurance due to a disability and am wondering if you could give me some suggestions with respects to deductions in assisting me in not paying so much tax on the amount. RRSp’s unfortunately cannot be included this year. Are there any other possible deductions I can take advantage off? Thank you

  70. Hi Marcus,

    Based on the information you provided (you did not indicate if the private insurance benefit is taxable or tax-free, or your disability status, etc.), you may be eligible to obtain and claim the Disability Tax Credit which will provide you with tax credits for tax savings.

    To see if you qualify and to apply for the Disability Tax Credit, you need to have this form completed: link to cra-arc.gc.ca

    Depending on your disability, you may also be eligible for savings through the registered Disability Savings Plan. More information about the RDSP can be found here: link to cra-arc.gc.ca

    If you qualify for the Disability tax Credit, I suggest you contact a tax specialist to review your tax savings.

    I hope this has answered your question.

    Regards,
    Storoszko & Associates
    Tax Specialists
    http://www.storoszko.net
    Tel: 647 367-3477

  71. Eric 04/30/2011 at 6:36 pm

    whats the minimum amount of income you can make , before you have to file income taxes in Canada.

  72. Hi Eric,

    The purpose of filing a tax return is not only to report taxable income, but to also apply for tax credits and benefits.

    To answer your question: $25.

    By filing your tax return you also apply for GST rebates, provincial tax rebates, and other tax benefits.

    I hope this has answered your question.

    Regards,
    Storoszko & Associates
    Tax Specialists
    http://www.storoszko.net
    Tel: 647 367-3477

  73. janelle b 05/26/2011 at 7:19 pm

    Hi there. I’m a 19 year old college student in ontario I live with just my mother and 5 year old sister. I didn’t file my taxes when I had my first job from 08 to 09 I made about 7000 $ and still haven’t filed. The calculator shows 0$ when I enter this in so does that mean I don’t owe fedreal tax money for those years?

  74. Hi Janelle,

    Technically, you ar correct that you would not be tax payable for those years, as any income over $10,000 is taxable.

    But paying taxes is not the only reason for filing a tax return. By filing a tax return, even though you do not have taxable income or any income entitles you to file for tax credits and benefits.

    For example in Ontario, you could have transferred your tuition and books credit to your mom to reduce her taxes. You could also have applied for a rebate of the Ontario Retail Sales Tax you paid and also the GST rebate.

    By not filing your tax return for 2008, 2009, 2010 you may have missed out on collecting approximately $1,000 in rebates.

    Also by reporting your income on your tax return, no matter how little also allows you to build up tax credit room for an RSP.

    I hope this has answered your question.

    Regards,
    Storoszko & Associates
    Tax Specialists
    http://www.storoszko.net
    Tel: 647 367-3477

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