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 2012, 2011, 2009 see our 2012 income tax calculator, 2011 income tax calculator, 2009 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.

The RRSP contribution limit is based on 2010 maximum contribution limits. This actual contribution limit may be higher if there are unusued RRSP contributions from prior years.

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211 Comments

  1. Louis 09/26/2009 at 8:46 am

    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,

  2. Richard Parkinson 09/26/2009 at 11:23 am

    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.

  3. Dan 09/28/2009 at 8:31 pm

    Hi
    Please advice on.., if these are tax deductable: a) Tooth implants, b) Hair transplant, c) College courses?
    Thanks
    Dan

  4. Richard Parkinson 09/29/2009 at 10:42 am

    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 link to cra-arc.gc.ca provides a list of allowable deductions and both dental and hair transplant surgery are included.

    You also want to consult link to cra-arc.gc.ca for an explanation on how to calculate your deduction / credit.

  5. Jennifer 10/01/2009 at 3:35 pm

    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!

  6. Steve 10/01/2009 at 5:28 pm

    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!

  7. Richard Parkinson 10/01/2009 at 6:57 pm

    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 link to cra-arc.gc.ca.

    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.

  8. Ernie Santos 10/08/2009 at 3:02 pm

    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

  9. Richard Parkinson 10/08/2009 at 11:45 pm

    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 link to cra-arc.gc.ca. 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.

  10. Kevin 10/27/2009 at 2:17 pm

    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

  11. Richard Parkinson 10/27/2009 at 4:30 pm

    This is a question where wording is everything, e.g. allowance vs. benefit. The definitive guide is available from the CRA link to cra-arc.gc.ca

    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.

  12. aymen 11/01/2009 at 12:16 am

    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

  13. Richard Parkinson 11/01/2009 at 12:52 pm

    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.

  14. Paul 11/03/2009 at 6:27 pm

    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

  15. John C 11/09/2009 at 5:31 pm

    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

  16. Richard Parkinson 11/09/2009 at 8:16 pm

    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.

  17. John Chan 11/09/2009 at 11:01 pm

    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

  18. Richard Parkinson 11/10/2009 at 11:31 am

    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 link to cra-arc.gc.ca

    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.

  19. Daniel 11/30/2009 at 4:59 am

    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

  20. Richard Parkinson 11/30/2009 at 11:41 am

    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.

  21. Shanene 12/10/2009 at 3:43 pm

    I'm just wondering if your tax calculator includes the Provincial tax or not?

  22. Richard Parkinson 12/10/2009 at 11:42 pm

    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.

  23. Liam McDaid 12/11/2009 at 6:06 pm

    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

  24. Richard Parkinson 12/12/2009 at 11:58 am

    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.

  25. Armin 12/31/2009 at 12:18 am

    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?

  26. puneet 12/31/2009 at 9:06 am

    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.

  27. puneet 12/31/2009 at 9:08 am

    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.

  28. Richard Parkinson 12/31/2009 at 12:32 pm

    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 link to cra-arc.gc.ca 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.

  29. Richard Parkinson 12/31/2009 at 12:45 pm

    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:

    link to cra-arc.gc.ca the interpretive bulletin that describes the rules, and

    link to cga-canada.org

    - 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."

  30. Jay 01/02/2010 at 1:13 pm

    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?

  31. Richard Parkinson 01/03/2010 at 12:41 am

    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.

  32. Lee 01/04/2010 at 2:11 am

    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

  33. Richard Parkinson 01/07/2010 at 8:53 am

    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.

    This document to read is available for download from link to cra-arc.gc.ca see page 16.

    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.

  34. Karim Souidi 01/08/2010 at 7:54 pm

    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

  35. Richard Parkinson 01/09/2010 at 2:19 pm

    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.

  36. jeremy pacula 01/14/2010 at 12:59 pm

    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?

  37. Richard Parkinson 01/15/2010 at 12:45 am

    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/clcltng/ei/, 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.

  38. Sean 01/16/2010 at 12:24 pm

    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.

  39. Richard Parkinson 01/16/2010 at 2:42 pm

    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 link to cra-arc.gc.ca . 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.

  40. nuradin 01/25/2010 at 6:19 pm

    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

  41. Richard Parkinson 01/26/2010 at 12:23 am

    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:

    link to servicecanada.gc.ca

    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.

  42. John Brinton 01/26/2010 at 3:31 pm

    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"!

  43. Richard Parkinson 01/26/2010 at 7:42 pm

    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:
    link to cra-arc.gc.ca
    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:
    link to cra-arc.gc.ca
    As you will see the rules are far too detailed to even summarize them in this forum. The following link identifies allowable business expenses:
    link to cra-arc.gc.ca
    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.

  44. Lee 01/31/2010 at 10:08 am

    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

  45. Richard Parkinson 01/31/2010 at 1:31 pm

    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.

  46. Anne Tolson 02/13/2010 at 4:42 pm

    Hello,
    I really appreciate your calculator. It's given me a good idea of the taxes I'll pay. But it would be great to have a tool that tells one how much they should contribute in RRSPs.
    I don't know if you can help me with this question... but I started a part-time job in 2009. I made $18,500 (gross) and my employer held back a total of $1,912 in federal and provincial taxes (I live in B.C.). I have tons of room in my RRSP. Is there an ideal contribution for me to make that would maximize the refund I might get?
    Thanks for any help you can provide.
    Anne

  47. Frederick Danguecan 02/18/2010 at 8:38 am

    Hello,

    Im new too taxes and this calculator. I'm single and living in ontario. I have grossed $38453.92 this year and have paid $6319.86 in federal taxes. with cpp and ei iv had a total of $8728.66 deducted from my pay. Will i get a refund or will i owe?

    Thanks so much!

    Frederick

  48. Richard Parkinson 02/18/2010 at 11:49 am

    According to our calculator, based on a taxable income of $38,454 in Ontario, just considering the deduction of your basic personal deduction, the highest tax payable should be $6,059. Out of interest, this same income for 2010 will only cost you $5,755, as most provinces have increased their personal deduction amount.
    Your contribution as an employee to CPP is 4.95% of your YMPE (Yearly Maximum Pensionable Earnings which was $46,300 in 2009) which would amount to approx. $1,884 (I am not a payroll administrator) of the total $8,729 deducted, leaving $6,845. No sure what the other deductions they have taken, e.g. any contribution to your group benefits plan could easily be $50 - $100 per month.

    As a general comment, your payroll department calculates deductions using a complex set of formulas and generally get it right to within a few dollars. The one time when it goes haywire is if you work a lot of overtime. Suppose you make $3,000 per month basic salary, which is $36,000 per year. The calculator for 2010 says your marginal tax rate is 20.05%. In one month you work a lot of overtime, and in that pay period your make an extra $1,000. I believe the way payroll works is, they assume you are making $4,000 per month all the time, and tax you accordingly. The calculator says for $48,000 per year your marginal tax rate would be 31.15%, so you pay 31.15% tax on that extra $1,000, which is why most people complain when they see their overtime cheque that most of it goes to taxes. If this extra $1,000 was a onetime event, bumping your basic income to $37,000 you would still be in the 20.05% marginal tax rate, and should expect to get approx. $100 refund for the extra tax you paid on your overtime.

    So unfortunately I doubt you will get much, if any of a refund. Sorry to be the bearer of bad news, as a big refund is always something to look forward to even though it is not prudent to be loaning the CRA free money.

    Lastly if you plan to regularly, i.e. monthly contribute say $100 per month to an RRSP, there is a form you can download from the CRA website link to cra-arc.gc.ca you can complete and give to your payroll department. They will then reduce your taxable income by this amount, giving you an extra 20% take home pay through the year, but no refund at tax time.

  49. Richard Parkinson 02/22/2010 at 1:33 pm

    Your question has an interesting answer. The general opinion now that the Tax Free Savings Account (TFSA) is available is for low income earners, e.g. marginal tax rate of 20% is that if you anticipate have a higher marginal tax rate in your retirement years, you are better off contributing to a TFSA. This has the benefit of also allowing you to build your RRSP contribution room for the day when you are making the big bucks or receive a windfall such as a severance package from an employer.

    However I created an Excel spreadsheet to answer this question on a more technical level, and discovered there is another answer, and it requires you to answer two questions:
    1. If you contribute to an RRSP, will you reinvest the refund, or spend it?
    2. If you contribute to a TFSA, will you consider the contribution amount before tax or after tax?
    In BC for 2009 and 2010 tax year, the basic personal exemptions are:
    Year Federal Provincial tax rate
    2009 $10,320 $9,323 15%
    2010 $10,382 $11,000 5.06%

    So for any income over $10,320 in 2009 and $11,000 in 2010 your marginal tax rate is 20.06% and stays there until the next tax bracket start at just over $35,700.
    With this in mind, with an income of $18,000, if the answer to the questions 1 & 2 are both yes, contributing to an RRSP will generate, after 10 years of contributing $1,000 per year at a 5% return, $12,315 in your RRSP portfolio vs. $10,558 for the TFSA. A no answer to these two questions will leave $10,473 in your RRSP portfolio vs. $13,207 in your TFSA. Unfortunately reality gets in the way, i.e. you will likely continually increase your income as you progress.

    One thing is for sure, you will never want to contribute more per year than necessary to drop your taxable income to zero. In order to do this you pretty much have to prepare your tax return, at least in draft form before the end of February to decide how much to contribute for the previous year, considering all of your tax deductions and credits. Remember our calculator only factors in your basic personal deduction. The reason why you don’t want to contribute more than the amount necessary to get to zero tax payable is if you do, you don’t get any benefit from it dollar wise, and you reduce your contribution room by any excess amount.

    Thanks

    Richard

  50. Rhonda 02/23/2010 at 12:34 pm

    I heard that a person can claim the interest paid on a mortgage. We live on our home and do not beliee this to be true here ibn Alberta Canada. I also heard that we can claim any interest paid on our savings account. Can you please clear this up for me.

  51. Richard Parkinson 02/23/2010 at 1:39 pm

    The quick answer to your question is no, neither mortgage interest or savings account interest is deductible from tax, unless you are prepared to do some tax planning using one of the organizations that specialize in these things. A Google search for “tax deductible mortgage” will lead you to lots of sites with advice on the pros and cons of these schemes. The basic premise for making your mortgage tax deductible is the concept of “borrowing to invest”. If you have $10,000 of cash in the bank, and invest it, there is not interest to write off, however if you were to take out a $10,000 line of credit, or second mortgage on your home as collateral, and use that money to invest, then you can deduct the interest on that portion of the loan as you are “borrowing to invest”.

    As a minimal starting point, you should have at least 25% equity in your home, higher is always better, and an excellent credit rating. Also realize that what you are essentially doing is going into debt, leveraging your assets to hopefully gain more net assets.

    Let’s do some math. You borrow $100,000 to invest at an interest rate of 4%, perhaps using a line of credit at your lending institution. The annual interest charge to service this debt is $4,000. Assuming you are in a 30% marginal tax rate, you would receive a tax refund of $1,200 annually. As long as the investment increases at a reasonable return rate, and interest rates don’t increase in years to come (they will), you will think this is a good plan. But what if the investment were to fall in value, to say $90,000 in year one. After 1 year, you still owe $100,000 but only have $91,200 to show for it. The purveyors of these plans can provide you spreadsheets showing how wonderful these plans are, but rarely show the negative possibilities.

    Now let’s add levering to this mix. The plan sponsor says to really make this exciting, you give them $100,000 and they loan you an additional $100,000 so now you have $200,000 invested, and more importantly at risk. A world disaster happens and now your $200,000 is worth $125,000. How much do you owe now? Still $200,000 and the interest payments are now 4% of $200,000 or $8,000 per year ($666 per month). Is this what you signed on for? I did something like this in 1984, borrowing $300,000 to invest in various schemes, e.g. a 30 acre Jojoba bean field in Arizona. About 6 months into the plan the credit union decided they didn’t want to continue with the company that got us into this, and a week before Christmas 1984, the guy came to me and asked if I was going to be able to save $10,000 per month for the next 2 years to service this commitment. When I said no, his response was “well then you are in trouble”. Etc. etc.

    You started off perhaps owing $100,000 on a net worth of $400,000 for a debt to equity ratio of 25%. Now a year later you owe $300,000 on a net worth $525,000 (your original $400,000 and the market value of your investment of $125,000) for a debt to equity ratio of 57%. Likely at this point you are going to look at your spouse as say “where is my shotgun, I’m going to pay a visit to my financial advisor?”

    I appreciate I have portrayed a very negative view of this, and smacks in the face of “but everyone else is doing it”. Just be cautious and remember your original objective. Is it just to save some tax, or is it to increase your net worth over a long term, i.e. 10 years, and you are prepared to take the risk. If the former, consider using a tax free savings acoount. If the latter, by all means go for it, just use an advisor who is experienced in borrowing to invest, and / or leveraging, and also someone who focuses on what can go wrong more than what can go right. I do speak from a bit of experience.

  52. Alex 02/24/2010 at 7:01 am

    If I mail a request for tax refund now can I get it before April 19 (that's when my birthday is and I sure can use it then)?

  53. Richard Parkinson 02/24/2010 at 11:58 am

    If possible e-file it. My understanding is that that e-filed returns are receiving their refunds in under 2 weeks. Certainly mailing as early as possible will get your return faster. I would be surprised if you were to mail it this week, that you would not receive the refund before the end of March.
    However this is a government agency we are dealing with and they continue to surprise us either positively or negatively. One thing for sure, the sooner you send it in, the sooner you will receive your refund.

  54. Eli 02/25/2010 at 11:51 pm

    Hello, great website it's very helpfull
    i have a question about the income tax in Alberta
    a lot of people told me that the rate is arround 10% but when i use this calculator i found it higher than BC rate, can i know please which province is with lower tax rate BC or AB?

    thank you

  55. Richard Parkinson 02/26/2010 at 3:43 pm

    The answer to your question is an interesting one, and it revolves around your taxable income. Canada’s tax system is called a progressive tax system in that as your income increases, your marginal and average tax rates also progressively increase.
    There are 13 provinces and territories in Canada, and the income tax you pay is divided into two parts, a federal table, that is the same for everyone, then there is a provincial table that varies by province, although some provinces share the same table.
    Rather than me providing a bunch of numbers in this reply, the best place to get the entire tax rates both federal and provincial is link to cra-arc.gc.ca
    Regarding BC and Alberta the federal portion is the same.

    Federal rates:

    • 15% on the first $40,726 of taxable income, +
    • 22% on the next $40,726 of taxable income (on the portion of taxable income between $40,726 and $81,452), +
    • 26% on the next $44,812 of taxable income (on the portion of taxable income between $81,452 and $126,264), +
    • 29% of taxable income over $126,264.
    So let’s look at just these two provinces for the differences.

    For Alberta, it is a flat rate as you understood, i.e.

    Alberta 10% of taxable income

    For BC it is”
    British Columbia
    5.06% on the first $35,716 of taxable income, +
    7.7% on the next $35,717, +
    10.5% on the next $10,581, +
    12.29% on the next $17,574, +
    14.7% on the amount over $99,588

    So for income below $35,717, we in BC pay considerably less. Until your taxable income in 2010 is over $121,600, BC has a lower tax rate than Alberta. It is a weighted average type calculation. I am sure there are other benefits to living in Alberta that offset the higher taxes you have to pay to live there.

    I hope this answers your question.

  56. Alex 02/27/2010 at 2:42 pm

    Love the site, interesting to read the Q & A's. I live in Ontario, and was unemployed for a lot of 2009. I earned a small amount, and did not collect EI or welfare. I was told that if you made less than a certain amount in a year, you can get a refund of around $500 from the government. Is this true, and if so how would I go about applying for this?

    Thank you for your time.

  57. Richard Parkinson 02/27/2010 at 8:07 pm

    I am unaware of any special government program that may be available in Ontario, but doubt there is one. As previous answers have described how payroll taxes work, I will focus on your question assuming the only money available would be from an income tax refund.

    For the 2009 tax year, Ontario's provincial basic personal exemption (BPE) is $8,881, while the federal BPE is $10,320. So for example if you just started working in December of 2009 at a annual salary of $48,000 per year ($4,000 per month), when you received your December payroll check, they would have deducted tax as if you were earning the $4,000 every month. Given $4,000 is less than the ON Provinicial BPE of $8,881, you would receive a refund of the entire amount of tax you paid.

    How you get this money is to file an income tax return for 2009. If there is some local Ontario program for your circumstances perhaps someone else will provide an answer.

  58. Jared 03/02/2010 at 12:00 am

    I enjoyed your previous calculator with the dividend income calculations, perhaps you might consider expanding this one to include dividends. Thanks for the managing this though, great help!

  59. Heather 03/02/2010 at 3:00 am

    I just wanted to say thanks for the calculator. I am having my taxes done, but wanted to see if there was a possibility of my having to pay or not. I earned money for more than half the year and then had to claim unemployment, so was a bit worried that I would have to pay. Thanks to the calculator I can breathe a sigh of relief because it looks as though I will probably receive a small return. Thanks for the info,Heather in BC.

  60. LSM Insurance 03/02/2010 at 9:39 am

    You're welcome - I'm glad you found it useful.

  61. Richard Parkinson 03/02/2010 at 11:06 am

    Just to add some sweetner, this calculator only takes into account your basic personal exemption. Most people have other deductions and tax credits that further reduce taxable income. Therefore consider our calculator results as worst case, i.e. showing the most you will pay.

    For example, if you contributed $1,000 to an RRSP, and are in the 20% marginal tax bracket, you will receive an additional $200 refund as you will have paid $200 more in tax payable, given this calculator doesn't take this into account.

    A fellow BC'er.

  62. Sam 03/02/2010 at 9:41 pm

    Hi,
    I started working in Toronto from July-2009 with an annual salary of $60,000. I used to get my salary after the normal tax deduction, CPP and EI contributions.
    As per your calculator, the tax comes out to be $12,291 but since my tax was calculated as per $60,000 pay and I have got salary for only 6 months i.e. $30,000 and tax on that as per your calculator is $4,005. That means I have paid extra Tax.
    I want to know whether at the end of the year, I can claim for Tax refund? Please let me know the procedure for Tax claim and how much can be claimed in my case.
    Thanks.

  63. M. K. 03/03/2010 at 5:13 pm

    Hi:

    Myself and my wife are self employed, living in Ontario. She earned around 35,000 last year of which 32,000 were not taxed at source. I earned around 15,000 of which 11750 I paid taxes of about 1200 and the rest amount of 3250 I have to pay taxes. We are also first time home buyers. The calculator shows me taxes of more than 5000. How much more can I reduce showing expense likes traveling, food, stationary, etc.

  64. berni chapman 03/04/2010 at 12:39 pm

    I am looking for advice on the following. Both my husband and i work for the federal govt. he is currently on a one year oversees tour with the UN. he has received conflicting advice that he should wait until his tour ends in august. however, i am not sure how that impacts our claim when i submit this year. Can you advise?

  65. Ray 03/05/2010 at 6:14 pm

    Hi Sam,

    Yes, you can claim for Tax refund at the end of the year, when you are preparing your return.

    Ray

  66. Kevin 03/08/2010 at 3:41 pm

    I live and work in British Columbia and I made self employed earnings as well as salaried income.
    I was told I could defer my self employed earnings for 3 years.
    Is this true.
    thanks

  67. Richard Parkinson 03/08/2010 at 4:39 pm

    I am not an accountant, so maybe there is some program available but I seriously doubt it. The CRA considers income as income, i.e. taxable in the year it is earned, e.g. tips for waiters or croupiers must be declared in the year received.

    Most of my income is from self employment, I use an accountant to prepare my taxes in BC, and he has never mentioned such a plan to me.

    I assume we are talking about income you plan to declare, as oposed to under the table income which you will never declare, and obviously not sanctioned by either this website or me.

    So my answer is no, it is not true. A quick call to the CRA would be in order, numbers below:

    T.I.P.S. (Tax Information Phone Service)
    This automated phone service provides information to individuals and businesses 1-800-267-6999

    Individual income tax enquiries
    Tax information for individuals, including personal income tax returns, instalments, RRSPs, and the Working Income Tax Benefit
    1-800-959-8281

    If you do find out about some program that does allow this, make sure to share it with this forum.

  68. Arleen 03/08/2010 at 11:09 pm

    I am a single mom have a nine year old son in the Philippines. He live with my mom and i regularly send money to support him. Can i deduct the amount i sent to the Philippines from my gross income?

  69. Richard Parkinson 03/09/2010 at 11:47 am

    As admiral as it is financial painful, that you send money for your son's support, the answer is no. Even if these payments were being made by you due to a marriage break-up which I assume is not the case, the budget of 1996 changed the rules as follows:

    Child support paid under orders or agreements that are made or varied after April 30, 1997 will no longer be taxed as income to the recipient, or deducted from income by the paying parent.

    The link for more detail is: link to fin.gc.ca

    So the message is even if you were being forced to pay this child support, it not deductible by the payer, nor taxed as income by the receiver.

    I am sorry the news was not what you were hoping for.

  70. Iwan 03/12/2010 at 5:07 pm

    I have two properties, one which I purchased a couple years ago and where I am living right now (A) and another which I lived for 3 years and rented out(B). I sold this property back in mid of last year and made some profit out of it. Is this profit taxable?

  71. patricia brock 03/15/2010 at 5:30 pm

    What would be the best site have capital gains tax explained and the situations it applies to, also how best to offset this tax. Purchased a condo last year, want to rent it out for maybe a year then sell it. Should i live in it for a certain number of months before selling it to avoid paying capital gains tax? thx

  72. Richard Parkinson 03/15/2010 at 7:38 pm

    I believe the best initial source for tax related issues is the CRA, after all it is their rules you have to adhere to. They have a useful 46 page document available for download from: link to cra-arc.gc.ca
    If you do a Google search on “capital gains tax on real estate” you will find more information than you want to know. The three words you need to understand is “Adjusted Cost Base” (ACB), which includes the original purchase price, and all costs related to the purchase of an item. The adjusted cost base of a rental property would include any repairs or renovations that cannot be expensed for tax purposes. Examples of this type of repair would be a new roof, new appliances, etc.

    As I understand the rules, let’s say you bought the condo for $300,000 in 2006, and live in it (personal use) for 2 years, at which time, in 2008 it is worth $330,000, and you decide to rent it out. The starting ACB for Capital gains calculation would be the $330,000 (you will want to have some proof of its 2008 market value). You rent it for 2 years, now in 2010 it is worth $350,000 and you decide to sell it. Your capital gain would be $20,000, of which 50% is taxable. Alternately you decide to move back into it for 2 years from 2010 to 2012, then sell it when the market value is $400,000. Your capital gain would still be $20,000 as I understand the rules. However you will need to keep scrupulous records, to be able to prove to the CRA the value at each transition point between personal use and revenue property.

    As always with tax advice, the definitive authority is the CRA, or an accountant

  73. Baha 03/16/2010 at 11:54 am

    Capital gains from disposal of capital assets are taxable starting 1972 (inclusion rate adjusted in 1990 to include 75% of capital gains in income). Capital gains can arise when the capital property is sold or deemed to have been sold. The inclusion rate determines how much of the realized capital gain should be included as income.

    However, you can get an exempt from paying taxes on the capital gains realized from selling your principal residence, a property that you owned throughout the year and you designated it as your principal residence, provided that this property must be ordinarily inhabited as a principal residence during the year by you, your spouse or former spouse or child. The exemption is reduced proportionally for every year this property was owned but not designated as a principal residence.

    Short time of living may be considered in determining if the property is ordinarily inhabited by you; but there are different rules that control your eligibility to this exemption.

    Also, your primary purpose for acquiring and selling your principal residence should not be aiming to make gains.

    After 1981, spouses have to designate one principal residence for them, for example you cannot designate one residence as your principal residence and your spouse designate another residence as a principal residence.

    I hope this gives you an idea about capital gains treatment.

  74. Income Tax 03/19/2010 at 3:08 am

    Wow it was much more easier to calculate from it. And for all of the provinces at same time!

  75. Peter Vandeweg 03/19/2010 at 10:53 am

    Hello

    First class tool to provide a quick accurate direction of taxes payable.
    Just one point of clarification required...please validate that the number indicated next to a Province includes both prevailing Provincial + Federal taxes and not just the Provincial tax.

    Many thanks

  76. LSM Insurance 03/19/2010 at 11:56 am

    Thanks for the kind words!

  77. LSM Insurance 03/19/2010 at 11:59 am

    Hi Peter,

    Thanks for the note. Yes the column next to province "Tax Payable" includes provincial and federal taxes. Regards ... Lorne

  78. Richard Parkinson 03/19/2010 at 12:33 pm

    Also it reflects the Basic Personal Amount (BPA) as they call it, while most of us know it as the personal exemption.

    You can prove this to yourself based on the following 2010 data for BC.

    Fed rate: 15.00% on first $40,970
    BPA $10,382

    BC Rate 5.06% on first $35,859
    BPA $11,000

    Now enter $10,350 as the taxable income in the calculator, and you will see it shows $0.00 tax payable, as this taxable income is below either of the federal or provincial BPA.

    Now $10,400 and it shows BC tax payable as $3.00 and the marginal tax rate as 15%, i.e. just federal as the BC BPA is more than $10,400.

    Now enter $11,500 and it shows tax payable as $192, and the marginal tax rate as 20.06%, i.e. the 15% federal and the 5.06% provinicial.

  79. Chantal 03/22/2010 at 6:52 pm

    I moved to BC in July 2009 from Quebec after a year of studying and trying it out(sept 2008). I claimed my 2008 income tax return in Quebec, but now am looking at my first BC one. I still own a home (duplex-2 unit apartment) in Quebec which I rent so I have a rental revenue from that, not to mention home expenses and pay municipal taxes. I also have a RRSP plan with my old union affiliation which I am keeping active with monthly contribution.
    So my question is, do I have to do a Quebec claim? or am I to tag this onto my BC claim somehow?

  80. Richard Parkinson 03/22/2010 at 9:37 pm

    You only have to file a return in BC if you live here now. You will treat the income and expenses for your rental property the same as you did in Quebec, except you will apply it to your BC return.

    The tax department doesn't care where the money comes from, they just want you to declare it on your home province return.

  81. Julie 03/28/2010 at 4:37 pm

    I really wished I had crossed your site earlier. See, I moved from BC to QC in september 2009, same company, same salary $60,000, different position. i am preparing my income tax and it looks like I will have to pay over $7,000 to Quebec taxes. I am freaking out. Thank you for all that you've added on your website. It is certainly giving me some wonderful advice to consider in the future.

  82. Tonya 03/29/2010 at 2:07 am

    I moved from ontario to alberta in April 09 and I just found out i can claim $0.51/km for my move.The distance was about 3800km and that equals $1938. So does that mean i GET that money back?? Or what does that mean for me?? Thanks for the help..

  83. Urooj 03/29/2010 at 3:54 am

    My Immigration to CAD is completed in the month of MAR 2010 and planning to land in July 2010. Can you please advise how much tax i have to pay on my world income if my yearly income is CAD $ 21000, will it be calculated on my last year income i,e 2009 or 2010 half month. and when it will be applicable to me, period from which month to which month? and in which month i have to pay lumsum amount? Please help

  84. Baha 03/29/2010 at 9:25 pm

    Hello,
    In reply to your question, an individual can be a part time resident if the person is entering Canada as an immigrant like you, and as long as the person did not have a residential ties to Canada prior coming to Canada.
    Part time residents will be taxed in Canada on their world income earned during the part of the year in which the person was resident in Canada only.
    Thanks,

  85. Marianne 04/04/2010 at 2:02 am

    I am a resident of Quebec, Canada. I am a teacher and actualy earn 48000$Can a year. I plan on teaching in Vermont or New Hampshire, United States. What will be the income tax for my salary (if I earn about the same amount) and how much are we imposed totally in Quebec-Can (federal and provincial) compared to those states-fed in US?

  86. Richard Parkinson 04/04/2010 at 11:04 am

    It will in part depend on your situation, i.e. do you plan to reside in Quebec, and just commute back and forth each day? If yes, I believe you will pay QC taxas before. However the US employer will be issuing you the quivalent of our T4s so you will have to file tax returns in the US as well, and sort out the tax treaty issues. Definitely you will need an accountant to help.

    Re the rates, the quick answer is less, but by how much is impossible to answer, given the myriad of other taxes you might have to pay.
    It seems their income tax rates are lower than ours in Canada, especially Quebec, which are among the highest in Canada.
    From a quick Google search, it appears the US structure is very similar to ours, i.e. progressive, i.e. the more you earn, the more you pay. Below are the federal rates and the state rates for Vermont and New Hampshire. Unfortunately there are quite a few other taxes you might have to pay that we don’t, i.e. they are included in ours. I came across this site that will give you some insight: link to en.wikipedia.org
    US Federal rates
    Single Filing Status
    (Tax Rate Schedule X)
    • 10% on income between $0 and $8,350
    • 15% on the income between $8,350 and $33,950; plus $835
    • 25% on the income between $33,950 and $82,250; plus $4,675
    • 28% on the income between $82,250 and $171,550; plus $16,750
    • 33% on the income between $171,550 and $372,950; plus $41,754
    • 35% on the income over $372,950; plus $108,216
    Married Filing Jointly or Qualifying Widow(er) Filing Status
    (Tax Rate Schedule Y-1)
    • 10% on the income between $0 and $16,700
    • 15% on the income between $16,700 and $67,900; plus $1,670
    • 25% on the income between $67,900 and $137,050; plus $9,350
    • 28% on the income between $137,050 and $208,850; plus $26,637.50
    • 33% on the income between $208,850 and $372,950; plus $46,741.50
    • 35% on the income over $372,950; plus $100,894.50
    How Vermont State income tax rates are structured

    The tax table below will show in detail the Vermont state income tax rates by income tax bracket(s). There are 5 income tax brackets for Vermont.

    If your income range is between $0 and $32,550, your tax rate on every dollar of income earned is 3.6%.
    If your income range is between $32,551 and $78,850, your tax rate on every dollar of income earned is 7.2%.

    How New Hampshire State income tax rates are structured

    The tax table below will show in detail the New Hampshire state income tax rates by income tax bracket(s). There are 1 income tax brackets for New Hampshire.

    If your income range is $0 and over, your tax rate on every dollar of income earned is 5%.

  87. Gerry 04/07/2010 at 10:51 pm

    Great site and calculator
    I am still a bit off on this though
    My current income is $62000.00 live in Manitoba
    Just finished building and selling a cottage, realizing a profit of $66000.00
    How much can I expect to be paying in capital gains
    Thanks much in advance

  88. Throstur 04/09/2010 at 3:37 pm

    Hi, I just moved to Ontario, Canada and I was wondering about the tax system here. I have completed the typical tax forms where I state my total deductible (spouse at home, # of children and etc). Will this deductible be effective immediately and will I see less tax paid next when I get paid or is it all calculated after the year when I do my taxes?

  89. Richard Parkinson 04/09/2010 at 4:34 pm

    It sounds like you have filled in the payroll tax forms from your employer. Based on that information they establish the taxes you pay at source, i.e. with each paycheque, they calculate your various federal, provincial, CPP, etc deductions to arrive at what you see as your take home amount.

    This is supposed to minimize the amount of any refund, i.e. you over paid, or further tax owing, you underpaid, when you file your 2010 tax return.

    You say you just moved to Ontario, so the tax filing for your 2009 tax year should be based on your province of residence on Dec. 31, 2009, not Ontario.

    Going forward your take home pay will be based on Ontario's rates rather than your previous province. If you came from BC, you should see going forward, a lower take home pay as Ontario's tax rates are higher than BC. If you have arrived from Quebec, you will see an increase in take home pay.

  90. megan 04/11/2010 at 1:04 pm

    I have just started a sole proprietorship in BC and am trying to determine how much income tax I should withhold for myself in 2010. My estimated annual income for 2010 is $60,000 so it looks like 29.7% is my tax rate. However, I'm unsure if personal exemptions are factored in already and also wonder about other eligible deductions reducing my income. I just don't want to be left in a position owing money when it's time to file in 2011 so I want to be sure I hold back enough but not too, too much. Any advice?

  91. Richard Parkinson 04/11/2010 at 2:57 pm

    The calculator shows for $60,000 of taxable income, the average tax rate is 19.82% and the marginal is 29.7%. Your basic personal exemption is included in these numbers but no other deductions. As a sole proprietor, I am sure you will have more deductions to reduce it further.

    If we use a worst case assumption that you have no other deductions than your $11,000 BC personal exemption and $10,382 federal your tax payable is estimated to be $11,891 which your average tax rate is 19.82%. So for budgetary purposes if you were to save 20% of everything you earn into a tax account, you will probably have a bit left over at tax time.

    You will also want to read the CRA details on paying by installments. Their website should answer all of your questions, visit: link to cra-arc.gc.ca

    Paying installments is important as the penalty for not paying them is quite severe. This is explained on their page: link to cra-arc.gc.ca.

  92. Sam R. 04/12/2010 at 6:12 am

    Hello,
    I am an engineering student in BC who worked a co-op job in 2008 and made approximately $10,000. I spent all of 2009 on a co-op job and made $65,000. This year (2010) I likely won't make more than $10,000. I will also make it clear that I was in school for most of 2008 and will be for 2010.

    What my question boils down to is: Is there seriously no tax averaging? I made a relatively large amount of money in 2009 - but nearly none in 2008 or 2010 yet I will be taxed heavily for 2009. What really gets me is the fact that if I had worked this job for 6 months in 2009 and 6 months in another year my taxes would be approximately four thousand dollars less. Please confirm and advise on any alternatives.

    I truly appreciate your time and consideration,
    Sam R.

  93. Robert 04/14/2010 at 11:18 pm

    Folks,
    I was living in US in 2008 and showed that I was a non resident of canada to CRA. I moved back to Canada on Sept 1, 2009 and worked for 4 months in Ontario. Do I need to show my US income for tax purposes to canada earned during the first 8 months?....or can I just show the income for the 4 months I lived in Canada (since I became a canadian resident only during the last 4 months). Ofcourse if I am showing part year residency, I would assume that my federal/provincial credits would be 1/3 of the full amount allowed?. I have unused RRSP contribution of $15000 from previous years. I did put in a couple of thousand in RRSP this year for 2009. Can I claim that as deduction?

    Thanks in advance for your help.

  94. Bahaa 04/16/2010 at 1:07 pm

    In helping you to answer your question, first of all as you returned to Canada during the year and developed a residential ties to Canada, this means that you developed a residency for the year. In order to determine if you were a resident or deemed resident during the years, there is a lot of factors that needs to be considered before you can decide about your residency status, such factors include your ties to Canada, such as your ownership of house or residence during the year, you have family is living in Canada during the year, frequency of your visits to Canada during the year and many others. Also you are required to pay tax on income received from canadian source even if you are a non resident.

    People who were partial resident of Canada during the year, can claim only partial tax credits for that year proportioned to their length of residency during that year and will be taxed on their world income earned after they became residents of canada.

  95. Lori 04/18/2010 at 10:50 pm

    A tax company made an error in my tax refund about 4 years ago. I told them about it, but the consultant didn't agree. Canada Revenue said they were incorrect and should have made a claim. Is it possible to correct the error and still claim the amount they missed?

  96. Dona 04/19/2010 at 7:38 am

    i'm working as a student for a summer job in august, and i calculated that i would approximately earn $2194.5 that month, how much taxes do i need to pay ?

    thanks !

  97. Cindy 04/21/2010 at 12:45 pm

    Hello, Does the tax calculator factor in "other" income? I withdrew $31,000 from an RRSP and was taxed $9500. Can I expect to get any of this back when I file my taxes. This is the only income I will have to claim with no other deductions.
    BC resident.

  98. Richard Parkinson 04/21/2010 at 7:58 pm

    The only deduction our calculator considers is your basic personal exemption. As you discovered when you withdraw money from your RRSP the institution is required to withold tax based on the following criteria

    Withdrawal Amount % Tax Withheld
    From $0 to $5,000 10% (5% in Quebec)
    From $5,001 to $15,000 20% (10% in Quebec)
    Greater than $15,000 30% (15% in Quebec)

    So 30% of $31,000 is $9,300. This $31,000 will be added to your income in the tax year you withdrew it. So you can figure out whether you will owe more tax or get some back by using the calculator as follows:

    Enter your current income before the RRSP amount to determine your tax payable, and tax rates. Now add the $31,000 of RRSP money and use the calculator again. Now compare the tax payable numbers, to determine whether it is more or less than the amount witheld.

    Good luck.

  99. Dylan 04/23/2010 at 3:50 pm

    Hey love the site. Great tools and advice.

    In regards to the “Canadian Income Tax Calculator 2010” what’s the difference between Average Tax Rate and Marginal Tax Rate

    Thank you for your time

  100. LSM Insurance 04/23/2010 at 4:07 pm

    Thanks for the note and the kind words.

    The average tax rate is your average rate of tax based on your entire income. The marginal rate is the tax rate on your last dollar earned.

  101. Chris 04/24/2010 at 1:59 pm

    Hi There,
    I'm an Ontario resident about to hire a nanny. We will be paying her net $400/weekand $320/week (alternating weeks) starting April 26th. We will be paying her taxes, so I'm trying to figure out the gross amount. Using the government site, the rate we are paying on the $400 is 24% & on the $320, it's 19.8%. I don't want to overpay so there is a return at the end of the year, help! I can't figure it out.

  102. Bahaa 04/26/2010 at 2:25 pm

    My Suggestion to you is to estimate the annual salary and to go to the payroll online calculator and apply the amount of weekly payment to it, so you will get the required decutions amount.

  103. craig schoen 04/28/2010 at 2:26 pm

    Great tool.

    Very easy to estimate what you will pay in taxes using different scenarios, and easy to find.

  104. LSM Insurance 04/28/2010 at 2:52 pm

    Thanks for the kind words.

  105. Shar 05/01/2010 at 3:42 pm

    Hi can I use this tool to find out how much my income would be after taxes? so if I make $40,000K...in ontario after taxes would be $33k?

  106. Richard Parkinson 05/01/2010 at 4:29 pm

    Yes, given after tax income is one of the results shown by the calculator. Remember this calculator only takes into account your basic personal exemption, so if you have any other deductions or credits to further reduce your tax payable, then your after tax income will be better than this calculator shows, i.e. this calculator shows you a worst case scenario. Your tax bill shouldn't be any worst than this.

  107. Jesse 05/10/2010 at 2:28 pm

    Hi there,

    I am going from a full-time permenant position to a contract position; how will this affect my tax rate? Will I have a lower tax rate? I am assuming my taxes will not be withheld by the company.

    Thanks,
    Jesse

  108. Richard Parkinson 05/10/2010 at 2:56 pm

    Assuming you make the same annual income there will be no difference in the tax you will pay or the tax rates. However depending on your status, i.e. will you be a sole proprietor, or a contract employee, you may be able to deduct expenses you have not been able to as an employee.

    If the company is not deducting income tax from your pay, then you will need to make quarterly installments (the CRA website has lots of information about this). One other surpirse may be as a contractor you will be responsible for the full CPP contribution if your employer no longers pays their share, i.e. 9.9% of the first $47,200 rather than the 4.95% you were paying as an employee, with your employer paying the other 4.9%

  109. Barbara 05/28/2010 at 1:31 pm

    I have a question if you are able to answer. I just started a new job, I live in Nova Scotia. If my annual income is $35,000 - $45, 000 how much extra should I ask my employer to take out of my bi-monthly paychecks so that I will get the max return?

    Please email me an answer, as I don't have a home computer and just check my email at work.

    Best regards,
    Barbara

  110. greegan 06/02/2010 at 4:13 pm

    To Barbara,
    This all come down to what you can claim on your TD1 form. If you have a chance to view the PDFs on the CRA website, find the NS tax tables. Cross reference your BI-WEEKLY (I emphasize this because no company in Canada may pay their employees less frequently than monthly unless its under a specific contract agreement) salary with the claim code the TD1 form will help identify, and this amount will be the "middle" amount you will have deducted from your cheque.
    CPP contributions for the year will be (2010 at least) $3500 annually. EI will be 1.73% (again for 2010) of your "insurable income".
    If you want to be sure not to get stuck at the end of the year for taxes, save an extra 25% of what the tables deduct for IT. Think of it this way, why pay extra to the government vs putting it into the bank and gaining interest on the money that you may or may not owe the government?

    Just another 2 cents worth.

    g

  111. greegan 06/03/2010 at 1:32 pm

    correction to my above statement regarding CPP contributions...
    your EXEMPTION is $3500/your pay period (no rounding), subtract this amount from your "pensionable earnings" then multiply by 4.95% and that will be your CPP contribution for said pay period. sorry

  112. Cath. 06/03/2010 at 11:12 pm

    I will receive aprox. $25,000 from an estate for being the executor. I'm told that I will be issued a T4 for this. The lawyer wants to know if I want them to deduct income tax, cpp,and ei now or wait till I file my tax return in April 2010. I do not have any other income to be added. This is in Ontario, how much would the income tax, cpp, ei be on this.

  113. Smith 06/06/2010 at 6:52 pm

    I am new in Canada live in Toronto , Ontario , and just been employed earning $4,400 per month after tax , and after tax deductible from my monthly salary do I have to pay another tax again at the end of the month. Thank you

  114. Richard Parkinson 06/07/2010 at 10:25 am

    I am not sure what you are asking. In Canada, as an employee, your employer will generate a payroll cheque or direct deposit to you with several deductions taken into account, including income tax based on your annual income, Canada Pension Plan (CPP), etc. So when you receive your payroll cheque / deposit, it is already net of taxes.
    At tax filing time, each April of the following year, e.g. April 30, 2011, you file a tax return, and if the employer's payrol department has done their job correctly, you should have either a small refund, or have to pay a small amount, should be less than $100 either way. If you work a lot of overtime, you should receive a refund.
    Lastly since you are starting in mid year, it is likely that your employer will be deducting taxes as if you have worked the full year, so you will be overpaying your tax, suggesting you may receive a larger refund next year. You may want to talk to your payroll department for clarification on how they are setting your tax deductions for 2010.

  115. Conor 06/09/2010 at 12:40 am

    Hi,
    I was a deemed resident of BC, Canada for 2009 as i spent more than 183 days there. I am actually a citizen of Australia and returned there but did not work for the last four months of the year. I only earnt a total of $10,594 in canada. The tax that i paid out of my pay cheques was a total of $1016.06 and the canadian revenue agency just sent me a letter saying i owe them a further $1500 because i 'included less than 90% of my world income in calculating my net income so they have readjusted my federal non-refundable tax credits . Does this sound right to you!??!

  116. Sachin 06/10/2010 at 3:38 am

    I have recently immigrated to toronto (ON) and my package is 85,000 (Annual). Can you please help me in understanding my total tax and How much I will get in-hand monthly.

    Also, Is there any way to save tax in Canada.

    Thanks
    -BR

  117. Richard Parkinson 06/10/2010 at 11:15 am

    I suspect your question is likely related to take home pay from your payroll cheque. This is a complex answer, as payroll tax deductions include a myriad of other deductions, e.g. employment insurance Canada Pension Plan, union dues, health plan contributions, etc. The best source for this information is your payroll department as they can advise you precisely what is taken off your cheque on issue.

    Regarding saving tax in Canada, contributing to an RRSP, and or Spousal RRSP is the best approach for employees. Beyond that there are quite a few investment strategies, e.g. flow through shares, borrowing to invest, tax sheltered schemes. As a former business owner making the big bucks, I have looked at several, and tried a few. Others seem to have been successful at it, but my experience was overall negative, so be cautious. Many years ago I committed to invest $300,000 over 2 years in various tax shelter schemes, i.e. apartment buildings, a retirement home, Jojoba fields in Arizona, etc. A local credit union was supposed to fund the promissory notes, but after 4 months decided they didn’t want to be involved any more. My advisor came to me 2 weeks before Christmas to ask if I could save $10,000 per month for the next 1.5 years to cover the promissory notes I had committed to. Fortunately another bank stepped in, but it highlights the high risk of anything that is designed to aggressively save tax.

    Conclusion: it is possible to save tax in Canada beyond the basics that are available to everyone, or to small business people. Be very cautious of any other scheme that looks good from a computer printout projection. Pay the money to have your accountant vet it for viability. You don’t want that fateful call from the CRA, where the caller says “You have been selected for an audit”.

  118. Damean 06/20/2010 at 7:39 pm

    Hi,

    I was just wondering if the calculator takes Federal income tax as well? As well, I'm a new Resident of Canada and have a student loan out from another country. Is that expense deductible here?

  119. Richard Parkinson 06/21/2010 at 9:49 am

    Yes, the calculator includes both federal and provincial tax rates. The only deduction is your basic personal exemption. Check this blog for some of my previous answers for more detail.

    Regarding your student loan question, it is my understanding that:

    In order for the interest to be eligible, the loan must have been obtained under the Canada Student Loans Act, the Canada Student Financial Assistance Act, or a similar provincial or territorial government law for post-secondary education. So I believe the answer is no, it is not deductible in Canada.

  120. Deb Joardar 06/21/2010 at 3:06 pm

    My present base salary is CAD 60,000 and it is supposed to go up to 64,000. Is there any form provided by CRA where I can declare that I will invest that additional 4000.00 in RRSP and ask my employer not to deduct tax on the increase of that additional 4000.00. That way my base salary for taxable purpose remains the same at 60K.

  121. Richard Parkinson 06/21/2010 at 3:31 pm

    Yes, the CRA has a form available, which allows you to identify an RRSP contribution so that the payroll department takes this into account when determining your tax payable, at:

    link to cra-arc.gc.ca

    You complete this form, and give it to your payroll department.

  122. ASH 06/23/2010 at 7:36 pm

    HI THERE , EXCELLENT WEBSITE . JUST A QUICK QUESTION , I RECENTLY HAVE INCORPORATED MYSELF IN ONTARIO . I WOULD LIKE TO KNOW HOW MUCH TAXES I WILL BE PAYING IF I MAKE ALL MY INCOME AS A CORPORATE , LET'S ASSUME I MAKE $90.000/YEAR .
    THANKS A LOT

    ASH

  123. Richard Parkinson 06/24/2010 at 10:59 am

    2010 Corporate Income Tax Rates
    General Small Business Business Limit
    Federal (1)18% 11% $500,000
    Ontario (2)14%/12% 5.5%/4.5% $500,000

    1. A surtax of 4.25% applies to CCPCs whose adjusted taxable income, including all associated corporations, exceeds the small business limit. The surtax fully claws back the small business deduction when the adjusted taxable income is greater than or equal to $1.5 million. See Ontario surtax re Ontario small business deduction on the CRA website. link to cra-arc.gc.ca
    2. The Ontario 2009 budget eliminates this surtax effective July 1, 2010.
    Ontario 2009 budget reduces general rate to
    i. 12% effective July 1, 2010
    ii. 11.5% effective July 1, 2011
    iii. 11% effective July 1, 2012
    iv. 10% effective July 1, 2013
    Ontario 2009 budget reduces small business rate to 4.5% effective July 1, 2010.
    2010 rates

    Combined tax rate Combined tax for
    Big Business Small business Personal Highest
    Marginal tax rate
    32.00% 16.50% 46.41%

    Remember this is what the corporation pays on it's income. You will need to discuss with your accountant how you can get paid with the minimal amount of tax, e.g. the company pays you an annual dividend. Remember however there are lots of consequences when you get fancy with tax savings, e.g., your qualification for CPP, T4'd income is what lenders prefer to use for loans, Life insurance companies use earned income for disability insurance coverage qualification, etc. Make sure you investigate all of the ramifications of getting creative, as for every savings in tax there will be either a short term or long term negative.

  124. Joe 06/24/2010 at 10:08 pm

    Hello,
    This is a great site. Thank you for it. My question is this:

    I did some additional work for my employer separate from my regular duties. I was paid an additional $1464 for it. After taxes I was left with only $870. That's an tax rate of about 40%. I was astounded. Is this correct? My yearly salary is 90K. A few younger colleagues of mine who did the same work kept about $940 of their extra pay. Their yearly salaries are 60K

    Thank you.

  125. Richard Parkinson 06/25/2010 at 12:26 pm

    You are the victim of the rules as I understand them. When the payroll department pays overtime, they use the tax tables for the amount assuming you make that amount every pay period, so if in one pay period you made an extra $1500, and you are paid every two weeks, you are taxed as if you will be making $39,000 more per year ($1,500 * 26 pay periods).

    As you likely know, the marginal tax rates increase at each rate band, so giving you are in a higher bracket to begin with, would explain why you have paid more tax than your associates. The good nes is that you should receive a refund next year when you file as you have perhaps paid 10% more tax on the overtime / bonus than you needed to. If you are so inclined, you can play with the numbers using the actual tax rates, available from the CRA at: link to cra-arc.gc.ca

    I have provided more detailed descriptions of this process in previous answers, so you may want to review answers to questions earlier this year in this blog.

  126. Brandi 07/03/2010 at 11:54 pm

    Hi there...I have received a pre-retirement death benefit from my Dad of $335,000....$99,000 was taken off in tax. does this count as income? (we are in BC) I am splitting this with my brother, but do not want to be dinged for another 28,000 in tax, worst-case scenario....I can put up to $39,000 into RRSPs, is that going to make a big difference? thanks a lot!!

  127. Richard Parkinson 07/04/2010 at 11:00 am

    I assume that by saying pre-retirement this it was his RRSP, that was paid to his estate, rather than rolling over to a spouse, however the amount of tax is lower than I would of expected for BC, as on a terminal tax return, most of this RRSP income would be taxed at the highest BC marginal tax rate of 43.7%. $99,000 is only 29% of $335,000 so the numbers don’t add up. I would need to understand more precisely what this money was and how it was taxed.

    If this was the death benefit from a life insurance policy there would be no tax payable, as life insurance proceeds are tax free.

    Also the lump sum amount to you is not taxable, however from the day you take control of it, the income it generates will be, in your hands. For example let’s say you put $335,000 into a money market account generating annual interest income at 2%. That represents $6,700 per year ($18.36 per day) of income that would be considered income in your hands and would be fully taxable.
    Putting surplus funds into an RRSP is always a good idea; however you wouldn’t want to put any more into your RRSP in one year than it makes sense to, in order to maximize the benefit. For example if your annual income is $40,000, with personal deductions etc. your taxable income would be approx. $25,000. Putting any more than this amount into your RRSP would be wasting the tax saving benefit of it. Better to spread it out over 2-5 years, I have a calculator that figures this out. Also you will want to maximize contributions to a Tax Free Savings Account, if you haven’t started one yet.

    You need to be very careful with what you do with this money, and choose an advisor wisely.

  128. Marlene 07/11/2010 at 10:26 pm

    I want to know if the money I paid my lawyer to prepare my Seperation Agreement (Marital Seperation) is tax deductible. Thanks.

  129. Richard Parkinson 07/12/2010 at 3:20 pm

    I quick Google search using "are lawyer fees tax deductible" yielded many sites, excerpts from two of them seem fairly clear, that they are not, except for an action for child support.

    A general tax rule is that personal and living expenses are generally not deductible. That is the reason that legal fees incurred, for example, for a division of matrimonial property, to get a separation or divorce, or to get a discharge from bankruptcy, are not deductible.

    However If you are seeking child support from you former spouse, you are entitled to a CRA tax deduction of those legal fees against your income tax payable thanks to Trignani v. The Queen [2010] TCC 209. A court ruling on April 9, 2010 notes that as long as the person seeking, or pursuing child support against the other parent does not abandon their claim for child support before the relevant legal services were provided; and, that it has not been determined by a court that you do not have a pre-existing right to child support because that right was extinguished by a court order, then you are entitled to the deduction in computing your income.

  130. M. PATTINSON 07/14/2010 at 3:41 pm

    Hi, My brother and I were left a cabin at the lake by my mom. I have a house at the lake and my brother would like to buy my half of the cabin,what are the tax implications?

  131. graham cobb 08/09/2010 at 7:29 am

    if interest is only paid after 5 years is it considered income each year prior>

  132. ji vrantsis 08/09/2010 at 1:13 pm

    Can you explain what marginal tax rate meens. I will be making $100,000 a year and see the tax rate of 27.65% and the marginal tax rate of 43.41%

  133. Richard Parkinson 08/13/2010 at 2:00 am

    Re interest paid after 5 years, e.g. a GIC.

    This is known as the accrual method. The CRA says:

    "interest is considered to be earned on a daily
    basis, regardless of when the interest debt becomes receivable or is received."

    Most institutions will send you a T5 slip if the interest is greater than $10, and you are required to include this interest as income each year, even though you haven't received the money.

  134. Richard Parkinson 08/13/2010 at 2:23 am

    Re marginal vs. Average tax rate.

    The CRA publishes the tax rates on their website at link to cra-arc.gc.ca.

    Tax rates in Canada are a combination of Federal, which are the same for all 13 provinces and territories, then each province and territory have their own rates which are in addition to the Federal rates.

    The Canadian tax system is called progressive, in that the more you make the higher your tax rates are. Lets just consider the Federal tax rates:

    •15% on the first $40,970 of taxable income, +
    •22% on the next $40,971 of taxable income (on the portion of taxable income between $40,970 and $81,941), +
    •26% on the next $45,080 of taxable income (on the portion of taxable income between $81,941 and $127,021), +
    •29% of taxable income over $127,021.

    So if you are making less than $40,970 of taxable income, your average tax rate and marginal tax rate are the same, i.e. 15%

    Now lets suppose you make $60,000 of taxable income. Now you would pay 15% on the first $40,970 and 22% on the remaining $19,030 of taxable income. Your marginal tax rate is the 22% rate on any income over $40,920 to the next tier which starts at $81,942. For example if you received a $5,000 bonus, the tax rate on that bonus would be at the marginal rate of 22% in this example.

    To keep the math as simple as possible, for an income of $60,000 the average tax rate is the weighted average of ((40970*0.15)+(19030*0.22))/60000, which equals 17.72%. The federal marginal tax rate for any income over $40,971 to $81,942 would be 22%. When your income exceeds this threshold, the federal tax rate for income between $81,942 - $127,021 is 29%. Of course the more income you have at the higher rates, your average tax rate also increases.

    The above is meant to illustrate the concept of average vs. marginal tax rates, and ignores personal deductions, tax credits etc.

  135. Gomer Pyle 08/13/2010 at 12:08 pm

    Just plugged in my EI benefit (max allowed) $457/week still paying 20%. Hope the illegal refugees enjoy spending my hard earned (30) years working taxes.

  136. Harry Douglas 08/16/2010 at 5:29 am

    Hi
    I am moving to canada from the united kingdom and will like to find out a little more information about the taxes in Canada. I have been offered a position with a salaray of $74.000. What I will like to find out is how much is my take home pay after all deductions. Like in the UK I will be deducted money for income tax and National Insurance. The position will be base in Ontario.

  137. Richard Parkinson 08/17/2010 at 8:20 pm

    Your question is impossible to answer, as there are so many variables to consider. Our calculator gives you the worst case scenario in that the only deduction it takes into account is your basic personal deduction both federally and in Ontario. After that there are dozens of possible deductions as identified at our Inland Revenue equivalent called the Canada Revenue Agency (CRA). They have more than you wil ever want to know about taxes, and in particular link to cra-arc.gc.ca has information on deductions, tax credits, etc.

    Other influences on your take home pay will be whether you are dedcuting your non income earning spouse, children, etc., group benefits plans, Canada Pension Plan, Employment insurance, and the list goes on.

    You may want to buy a copy of a tax preparation program, e.g. Turbo Tax and enter your information to get an idea.

  138. Tim P 08/19/2010 at 12:24 am

    Hello, I am about to start a consulting contract which will pay me 135k per year. To maximize tax benefits should I register a sole proprietor business or incorporate? I was leaning towards incorporating and paying myself 4,000 per month to take care of mortgage payments and other living expenses. Should I do that as salary or dividend payment to maximize tax savings? I'm confused and my accountant is on vacation for a few weeks....

  139. Richard Parkinson 08/20/2010 at 11:45 am

    The best answer to your question should come from the accountant you plan to use. Back in 1982, another fellow and I decided to become consultants, and had the same question. We were advised to incorporate, and we did so.

    We had a very conservative accountant which we liked as opposed to one that was always getting fancy and testing the edge of the tax laws. What I can tell you is that every year we would meet with him to say “we keep hearing about all these high income earners who don’t pay any tax, how do we become one of these people? “. The answer was always the same, if you want to put yourself on the edge of bankruptcy with tax shelters, and questionable investments, it is possible, however, it is a house of cards that if one thing goes haywire, you are going to have many sleepless nights. The downside of being conservative is having the write a check to the CRA for $44,000 for tax owing, in addition to the $72,000 in tax already paid by instalments.
    You can obtain a lot of information to review with your accountant by using Google and searching Canadian sites for the following phrases:

    “sole proprietor or incorporate for tax purposes”
    “negatives of receiving dividend income vs. salary”

    One of the things we did was pay our wives about $85,000 per year for their contributions to the company. This allowed them to receive maximum CPP benefits in retirement, which they are, and also to contribute the maximum RRSP amount each year, effectively doubling our family RRSP pension possibilities.

    The rules have changed recently making dividend income to shareholders / employees less attractive than it was in our day, but beware of the negatives. In our day, we would bonus down the net left into the company to under the small business threshold, however I believe this is no longer desirable. Clearly you need an accountant who regularly works with small business people and is familiar with the myriad of rules to council you.

  140. Bee 08/23/2010 at 11:26 pm

    Hi, I received my income tax and found that I didn't get anything back. Someone told me if you make less than $25,000 a year I am entitled to the money deducted from my paycheck. I found their website unhelpful because I had trouble understanding. It would be great if someone could help me. Thanks!

  141. Richard Parkinson 08/24/2010 at 1:04 pm

    Unfortunately whoever told you that was incorrect. A good place to start is to review some of the answers to previous questions on this blog, which go into more detail.

    The Canada Revenue Agency CRA piblishes the tax rates at: link to cra-arc.gc.ca

    You don't say which province or territory you reside in, but you can check for the details on the CRA website.

    To determine your tax payable is a complex task as there is a myriad of deductions and credits you may be eligible to deduct. To keep it simple, our calculator only takes into account the basic personal exemption, which everone is entitled to. This is $10,382 federally and varies by province, e.g. it is $11,000 in BC.

    So once your taxable income, gross taxable income $25,000 minus $10,382 federal exemption at the minimum, the remaining $14,618 is taxable at the 15% federal tax rate. Once your taxable income exceeds the $11,000 for the BC exemption rate, you are subject to an additional 5.06% tax on that. So for the approx. $14,000 of income the tax rates are applied to in BC, your tax payable would be 20.06% of $14,000 or $2,884. To test this enter $25,000 of taxable income into our calculator, and you will see it shows the tax payable in BC at $2,900. So if your employer deducted $2,900 in taxes at source you wouldn't have to pay any more, but no refund either.

  142. Amelia 08/24/2010 at 3:45 pm

    First of all thank you for this great site.

    I have a question regarding a dividend payment from my company. The company that I work for and am a share holder in has offered me a property instead of a cash dividend. How do I calculate the percentage of tax that I will pay the government on this property? Is it relative to my income? Or is there a fixed rate?

    I reside and work in Quebec.

    Thank you!

  143. SEAN 08/30/2010 at 1:25 pm

    I am a new resident to canada and commence working in August, earning a monthly salary of $6,250.00

    Can you advise what would be my take home after tax deductions.. thanks

  144. Kathy 08/31/2010 at 3:09 pm

    I am a stay at home mom, my husband claims me as a dependent. I would like to start a home based business such as Tupperware. How would that affect my husbands income tax refund, and how much could I make before I would need to pay income tax.

  145. Qusai 09/05/2010 at 3:23 pm

    first of all. Thank you for this great website. I have a question. I moved to Canada at the end of 2008 to Waterloo, ON. I worked there for 10 months as a postdoctoral fellow at the University of Waterloo. My salary was taxable. Then in September 2009 I got a better job at the McGill University in Montreal, QC. My salary in Montreal is non-taxable as long as I pay postdoctoral tuition fees for McGill university.
    I decided last week to get my income tax return for 2009 done (well, I know I am little bit late). In spite of claiming all moving expenses, surprisingly, the tax man told me that I have to pay money not get money back. The reason for the payment is that Ontario charges less taxes than Quebec. Well, thats true but the Quebec government does not charge the postdoctoral fellows any taxes on their income which means I have to get all the taxes I paid in Ontario back. Am I right?

  146. Amanda 09/08/2010 at 12:32 am

    Hi, thank you for such an informative site! I was wondering if you could help...I am a married mother of two (under age 5) and I have a dayhome in which I made $27000 in 09. My husband made $60000 in 09....Could you give me a rough idea of the taxes i will be required to pay on my income? We are residents of Alberta and I don't have much for write-offs.
    Thanks a bunch!

  147. Enny 09/12/2010 at 10:03 pm

    Hi, thanks for this web site. pls I have a question. i live in Quebec and would like to start a part time cleaning business and would be working full time. The cleaning business would be on weekends since i would be working during the week. My question is this: As a sole proprietor would i have to pay Ei, Qpp, Qpip and all other deductions like i pay on my regular job? It would just be me for now till i can afford to hire employees. I know, i have to pay the federal and province taxes on the income from the business but how would this be done? would i have to file 2 income taxes, one for my business and one for my regular job? i am looking at about 6000$ gross for the ist year of the business and my salary of 29000$.

    Thanks alot.

  148. Dave 09/15/2010 at 6:49 pm

    If someone is able to help me out I thank them in advance.... Thank you!

    I started my own sole proprietor business in May of this year (2010) after being unemployed since mid 2009.

    So far this year the business has grossed almost $12,000.00.

    I have been setting aside 30% of that total thus far to cover income taxes and CPP contributions.

    Am I putting aside the proper amount, assuming 30% is going to ensure I do not have pay further taxes?

  149. Richard Parkinson 09/15/2010 at 7:59 pm

    I applaud your forsight in setting a side account for tax. The Canada Revenue Agency CRA piblishes the tax rates at: link to cra-arc.gc.ca

    If you read some of my previous answers you will see an explanation of how the tax rates are applied. Remember that the tax payable this calculator shows is worst case scenario, i.e. assumes the only deduction you have is your Basic Personal Exemption, which is $10,382 federally and varies by provinces / territory, e.g. $11,000 in BC.
    What you want to focus on is your average tax rate rather than your marginal rate. For income in the $20k range, you will notice that the average tax rate is approx. half your marginal rate. So saving 30% is probably more than you need to save, probably 20% would suffice for an income in the low 20s. At least saving it in your account means you are getting the interest.
    Also watch out that you pay installments when asked, or premptively as the penalties for owing more than $3,000 in tax payable are quite harsh.

  150. john mcginty 09/22/2010 at 2:18 am

    hi, i reside in BC but my pay cheques come from Nova scotia. Does this effect my tax in BC as nova scotia pays more tax than BC? The company i work for has its office in Quebec but the payroll dept. is in Nova Scotia. On my tax forms do i put my province of work in ns?

  151. Richard Parkinson 09/22/2010 at 10:40 am

    You will pay income tax based on your province of residence, i.e. BC. Their payroll department should also be deducting your tax based on the BC schedule. Given BC's rates are a lot lower than NS, you should definitely check with them to ensure they are taking your BC residency into account. If they aren't you need to request they do so, as clearly they are not the only company with employees spread accross Canada.

  152. Cathy B 09/24/2010 at 1:46 am

    My husband has a proprietorship. I have my own job with another company. I am being given a bonus from my work of $18K. Would I pay less tax if I take the bonus as an individual (me) or should I put it through my husband's business?

  153. Richard Parkinson 09/24/2010 at 12:09 pm

    A sole proprietorship is the simplest form of a business organization to start and to maintain. It is a non-incorporated business entirely owned by one person. Its liabilities are the personal liabilities of the business owner.
    The business owner undertakes the risks of the business for all assets owned. It does not matter whether the assets were for personal use or part of your business. You include the income and expenses of the business on your personal tax return.
    So from a tax persepctive, as I understand it, a sole proprietorship is no different than an individual.
    Also your company is going to issue you a tax receipt for the $18k, so you will have to claim it for the 2010 tax year. I know of no way to transfer this to your spouse, or business for that matter, other than to deposit it into a spousal RRSP, assuming you/he have the contribution room. At least this way you are deferring the tax in the short term, but it also means you also don't have access to the money. Also remember that if you put the money into an RRSP, and then change your mind, there is a 30% witholding tax on the withdrawal.

  154. lily 09/28/2010 at 9:53 am

    hey,
    i'm a full time university student in the province of Ontario and i will be starting a part-time job in October, making minimum wage for about 10 hrs a week, which will give me about $102 a week. If my annual income is then $6500-7500, (because will work more hours in the summer) then do i have to file my taxes if there is no tax that will be deducted?
    thanks

  155. Richard Parkinson 09/28/2010 at 10:29 am

    You should file, even if you have little to no income in the year, because it’s the only way to receive all the benefits that are available to you.
    If you are 19 or over, you are eligible for the annual GST/HST credit. To obtain this money, which is paid in quarterly instalments, you have to apply for it by filing a tax return and completing the GST/HST application section of your return. If you are turning 19 before April 1, 2011, make sure you apply for the credit on your 2009 tax return.
    Some provinces provide tax credits for low-income taxpayers, which are paid in the form of a tax refund. As a student, you probably qualify, so check out what’s offered in your province. You may be able to get a tax refund even if you never paid any tax!
    Given your projected income is less than your basic personal exemption, you can probably recover most of the tax, and some of the CPP premiums, that may be deducted from your payroll cheques. If your net income is low enough, you may even be able to save your parents some taxes. To maximize the savings, take advantage of as many deductions as you can, but do not waste any that are available to you. The tuition fees, the education amount and the textbook tax credit that you do not need this year, can be transferred. If you prefer, they can also be carried forward through your tax return, so that you can use them in a future year when your income is higher.
    Also any income you earn provides future contribution room for RRSPs and TFSA plans. So while you likely can’t afford to allocate any funds to these now, you can take advantage of the extra contribution room later when you are making the big bucks.

  156. Christian 09/29/2010 at 11:02 am

    This is a tremendously interesting forum so I thought I'd post a question to the clearly knowledgeable audience myself.
    I have decided to support my brother financially until the end of the year but I am in need of additional take home pay from now till the end of the year to do so(although my salary is significant at around $200k I still need more). Is there any legal way for me to reduce/withhold income tax payments for the remainder of this year and then "catch up" when it is time to file for the 2010 tax year (my Jan bonus will easily cover the underpayment amount)? If yes, what forms do I need to give to my payroll department etc. Thanks for your help!

  157. Mike 01/06/2011 at 12:13 am

    Hello,

    First of all, thank you for the great site. It is definitely a great forum to share information.

    I am a single income earner in the family. I would like to know whether I can claim my spouse basic personal amount that can reduce my overall income tax.

    Thank you.

  158. Bev 01/09/2011 at 2:15 pm

    Hi, great website, but I'm still wondering, if my net income as an Alberta resident is 65K, how many dollars would I have to put in an R.R.S.P. in order to not pay any income tax? i appreciate your time in this matter. Thanking you in advance.
    bbb

  159. Richard Parkinson 01/10/2011 at 11:47 am

    It depends on whether you have any carry forward room, i.e. from previous years where you haven't used all of your contribution room.

    The first hurdle is in any one year the maximum you can contribute is 18% of your income which for $65,000 is $11,700. Carry forward room comes from not contributing the maximum each year. This amount would reduce your taxable payable from $14,691 to $10,947.

    Assuming you had no other deductions beyond your basic personal exemption, you would have to contribute $54,618 to an RRSP to pay zero tax in 2010 tax year. Remember you would need the available contribution room, which you can find on last year's notice of assessment.

  160. Arun 01/10/2011 at 9:34 pm

    Based on $55,000 annual income for single person living in Ontario, how much tax return you can get. How to calculate the return. Also, for coulple without children having annual income of $70,000, how much tax return you can get. How to calculate the value. Much appreciated if you can answer me

    Thanks

  161. Shane 01/12/2011 at 3:44 am

    Excellent tool! I like the tradeoffs you've made to keep it simple. I've seen other tools that give you the impression that you're filing a return. This one gives good estimates easily, with no qualms about what it's doing. Thanks

  162. Michael Storoszko 01/12/2011 at 9:44 am

    Hi David,

    If there is a two parent union, the person with the lower net income (including zero income) must claim the child care expenses unless one of the situations in Part C or in Part D of the Form T778, Child Care Expenses Deduction, applies.
    I hope this has answered your question.

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

  163. Michael Storoszko 01/12/2011 at 9:49 am

    Hi Arun,

    I'm not exactly certain what you are asking... but if you are asking how much of a tax refund you would receive, I need to know the amount of tax that has been taken on your paycheque to make this calculation.

    I hope this has answered your question.

    Regards,
    M H Storoszko, CGA
    Storoszko & Associates
    Tax Specialists
    http://www.storoszko.net

  164. LSM Insurance 01/12/2011 at 9:52 am

    Thanks for the note Shane!

  165. Ren 01/22/2011 at 1:56 pm

    I have a full time job and make 32 000 and a part time job which I make 10 000, for the last several years. Each year I have had to pay the government money a couple od thousand a year. What can I do to avoid this. I have yet to buy RSPS, is this a good option and if so how what is the minium contribution I can make to prevent paying tax.

  166. Hi Ren,

    Based on the information you provided (you didn't indicate your age or family status, etc.), it appears your part time employer is not taking sufficient amounts of income tax from your pay.

    To avoid having a year end tax bill, you can request either or both your employers to deduct more tax from your paycheque by completing a TD1 form (available from your payroll office).

    If you wish to contribute to an RSP, for every $1,000 you contribute you would receive a tax credit of $310. So, to prevent paying $2,000 in tax, you would need to make a contribution of $6,500.

    I hope this has answered your question.

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

  167. Mike 01/24/2011 at 12:04 am

    My situation, I am retired, 58 years old, and have a combined annual income of around $25,000 made up of LIF payments, RSP withdrawals, and some combination of investment monthly income trust distributions, and monthly/quarterly dividends from other stocks. What could I expect to pay in total income tax based on 2010 schedules/tables? I am married and own a home free and clear. I also receive a smattering of government hand outs like HST and GST rebate cheques like many other lower income Canadians.
    If I enter $25000 into the tax calculator, it comes up with a figure around $3000 in tax owed. However, I think that after applying my basic personal exemption, my actual "taxable income" would be around $15000, and if I enter that figure into the calculator my tax owed is considerably less. Which figure should I enter into the tax calculator to get the true tax owed estimate?

    TY,
    Mike.

  168. Richard Parkinson 01/24/2011 at 11:58 am

    The Basic Exemption is already factored into this calculator.

    The Basic personal exemption federally is $10,382 for 2010 and $10,527 for 2011. Income above this is taxed at 15%, and below this would be zero. You can prove to yourself that it is included by entering $10,300 as the taxable income, and for BC it will slow zero tax payable. Then try $10,800 and you will see for those provinces with a BPA greated than $10,800 the tax rate is 15%. If higher, it means the provincial rate is lower than the data entry test.

    I suspect the accountant will provide the other answers.

  169. Hi Mike,

    To simply answer your question, you enter your actual income ($25,000). The calculator above takes into account the basic personal exemption when calculating the tax payable.

    Just as in the actual tax return, calculating taxable income does not include consideration of the personal exemption. The personal exemption comes into play when calculating the income tax payable, not taxable income.

    Please note that the above calculator provides a general estimate, and that each individual would have different tax situations which would reflect in actual tax payable amounts differing from the amount calculated above.

    Based on the limited information provided (you did not include your partner's income, eligibility for provincial tax credits, or other tax credit eligibility, etc.), I estimate your tax payable to be approximately $3,300.

    I hope this has answered your question.

    Regards,
    Storoszko & Associates
    Tax Specialists
    link to storoszko.net
    647 367 3477

  170. jon baetiong 02/07/2011 at 6:35 pm

    hi, i eranes a total of 18000 this past 2010 and was just wondering how much should i pay approximately

  171. Hi Jon,

    Based on the calculator above, you are tax payable for about $1,600.

    I hope this has answered your question.
    Regards,
    Storoszko & Associates
    Tax Specialists
    http://www.storoszko.net
    647 367 3477

  172. saw 02/17/2011 at 1:36 am

    HI,I was self-employee in 2010 and i made $35000 in the wohle year. Would you tell me how much i have to pay the tax?

    Thank you.
    Saw

  173. Hi Saw,

    Based on the limited information provided, assumptions were made (residency, etc.), you would be in a tax payable position of approximately $8,441 including CPP.

    I hope this has answered your question.

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

  174. Marc 02/26/2011 at 5:01 pm

    Great site! I will be getting a lump sum severance package of $90,500 in Ontario and want to know how much tax will be deduducted at source? Are there any other deductions like CPP or EI? Also, if I place half of it into an RRSP will the tax rate change to half that amount? Thank you.

  175. Hi Marc,

    Based on the limited information provided, it is estimated that there would be approximately $23,460 withheld for tax and if your payroll department also deducts CPP and EI an additional $2,910 for a total of $26,370 in withholdings.

    If you request to have half of the severance package payment transferred directly to a RSP, the tax would be reduced to approximately $7,410 for a total of $10,320 in withholdings.

    I hope this has answered your question.

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

  176. Brad 02/28/2011 at 11:17 am

    Hi..i earned $20,000 in 2010 and had $4000 deducted from me with income tax, ei, and cpp combined..i had a basic return and filed as single, just wondering what my return would be?..tks

  177. Bo 02/28/2011 at 1:28 pm

    Hi, In 2010 i earned in total $30,000 as a self-employee. Could you tell me how much i have to pay the tax please?
    Thank you,
    Bo

  178. Hi Brad,

    Based on the limited information provided, assumptions were made i.e. residency, etc.

    It is estimated that you would be in a tax refund position of approximately $1,300.

    I hope this has answered your question.

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

  179. Hi Bo,

    Based on the limited information provided, assumptions were made i.e. residency, etc.

    Your tax liability is estimated to be approximately $6,400 including CPP contributions.

    I hope this has answered your question.

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

  180. Gabriel 03/10/2011 at 11:20 pm

    Hi,

    I have been a full time student since I started working in January 2010 until December 2010. I live in BC. During the period of my studies, I earned $28,300. Am I going to pay some taxes?

    There was a typo in my previous post.

  181. Hi Gabriel,

    Based on the limited information provided, I am unable to determine if you are eligible for a tax refund, but your tax liability would be approximately $3,000.

    From this information you would be able to determine if you are refundable or payable.

    I hope this has answered your question.

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

  182. AbuRafay 03/13/2011 at 6:35 am

    Hi,

    I became Permanent Resident of Ontario in May'2010 with my wife and 2 kids (both below 3 years). From that day i am doing different cash jobs on hourly basis. Now I want to know "Do i have to pay any taxes or how i can file my income tax return." As i don't know the procedure and pls also tell me if i can do it online?

    Regards,

  183. Hi AbuRafay,

    Yes, you are required to file your income tax return to report the income you received regardless of source and payment method i.e. cash or cheque, etc.

    Any tax payable will depend on the total taxable income less your tax credits.

    Tax filing can be done on online, but since this is your first tax return, it is recommended that you visit a tax preparation service to ensure you file your tax return correctly.

    I hope this has answered your question.

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

  184. AbuRafay 03/14/2011 at 3:09 am

    Thanks for ur quick reply..please tell me what is the importance of T4Slip and is it really required to file tax returns...bcoz i don't have this T4slip...pls tell me how can i get this one...what is the procedure..

    I appreciate your reply...
    Regards,

  185. Hi AbuRafay,

    A T4 slip is a record or your earnings and deductions including income tax paid.

    You obtain it from your employer.

    You do not need a T4 slip to file a tax return.

    I hope this has answered your question.

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

  186. Farah 03/15/2011 at 4:36 pm

    Hi,
    I live and work in Ontario, and i bought a rental property in Quebec during 2010, when i file 2010 tax return, Do i need to file Quebec tax too or just Federal

  187. Hi Farah,

    Tax returns are filed based on residency. If you are resident in Ontario on Dec 31 you would file based on this.... so you would be required to file an Ontario based tax return.

    I hope this has answered your question.

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

  188. Jaime 04/03/2011 at 8:24 pm

    I had earn a total of $30,000 including my employer and contracting job thru home based work. Should i need to file income thru T2125 and standard or individual income tax return? My federal and provincial tax deducted was $2747.93 as total amount. I went to your calculation I need something like $3,000 plus as tax deducted. I did print a copy of T2125 but I have no guide to look for? If I file only thru T1 form is that sufficient to file my tax or need the T2125? Kinda confused?

  189. Hi Jaime,

    A T2125 is used to report self employment net income.

    If you have an employer, you would receive a T4 this income is not reported on T2125.

    If you earned self employment income through sub-contract work, this is reported on T2125.

    The T2125 form is part of the T1 tax return.

    You can obtain more information about how to complete the T2125 here: link to cra-arc.gc.ca

    I hope this has answered your question.

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

  190. Jaime 04/04/2011 at 10:26 pm

    I look at the T1 tax return there's no T2125 form , you said that I can file T1 and T2125 . I did got my T4 in my employer but kinda confused how to file the T2125 form. Oh I forgot that I didn't file contract work in 2009 , but I did filed my regular work in 2009 but not the home based business. Can I still file this 2009 earnings (home based work) in 2010 tax return? Am I in trouble? How should I do with it? Thanks.

  191. Hi Jaime,

    If you have the paper T1 form, the T2125 is not included standard. You need to obtain the T2125 from the CR web site. The link provided in the previous response will provide you with details to obtain and complete the T2125.

    If you did not include 2009 self employment income on your 2009 tax return, you cannot include this income with your 2010 self employment income. You must file a T1ADJ request form to report the 2009 self employment income in 2009. You can obtain the T1ADJ here: link to cra-arc.gc.ca

    I hope this has answered your question.

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

  192. Colette 04/15/2011 at 8:42 pm

    Hi there

    I love this site. Thank you for all the information provided.

    I really don't understand how the tax system works at all :)

    I live in Ontario, single.
    I made $47,966 in 2010 and $8,357 was deducted for income tax...and CPP $2,163 and EI $747 deductions

    I am wondering whether I would be paying in or receiving a refund this year.

    Kindest regards,
    Colette

  193. Hi Colette,

    Based on the information provided, it is estimated that you would be in a tax refund position of approximately $100.

    I hope this has answered your question.

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

  194. Denise 05/10/2011 at 9:32 am

    Between my husband and I we take in about $150K and pay out more than $40K in income tax yet we never get anything back - in fact- we always owe? We have one child who is 15. what am i missing?

  195. Hi Denise,

    Based on the limited information provided, it seems tax deducted at source may be insufficient for your incomes.

    Are you taking advantage of all tax credits available to you? RSP contributions?

    I hope this has answered your question.

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

  196. Veronique 05/29/2011 at 3:22 pm

    HI there

    I will be moving from Ontario to Quebec to a house that my husband and I will be renting.However, we will both be working in Ontario. I know that I will probably owe more because of this. Somebody recommended I put money aside in RRSP's to get more of a tax break. Would that make sense

    Also I make 43000$ a year and was told to expect to pay at least 2500$ in taxes

  197. Hi Veronique,

    Yes, you are correct in that you will be paying additional tax as a resident of Quebec over that you've paid as a resident of Ontario.

    And, yes, you are correct that maximising your RSP contribution would give you the greatest tax break.

    When you do make the move, be sure to advise your payroll offices of your change of address and let them know that you require additional tax withheld at source (off your paycheque) so you and your husband will not be surprised with a large tax payable when you file your tax returns.

    I hope this has answered your question.

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

  198. Veronique 05/30/2011 at 8:56 am

    Hi

    So you would recommend doing both the RSP and the pay deductions?

    thanks
    Veronique

  199. Hi Veronique,

    Yes, contribute to an RSP to reduce your income tax payable and increase your tax withheld on your paycheque.

    I hope this has answered your question.

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

  200. Girish 08/07/2011 at 1:18 pm

    Hi,
    I am in Mississuaga earning about 50K CAD/year.
    I am paying a Rent of 450CAD/Month. May i know how much IT return i can get by using the Rent Paid.

    Thanks
    Girish

  201. Hello,

    Unfortunately, there is no deduction or tax credit available to you for rent paid.

    I hope this has answered your question.

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

  202. Deepesh Mazumder 09/07/2011 at 9:38 pm

    Hi,
    I stay in toronto and earning CAD 65000/year.I will be leaving Canada for job purpose before 31st december.Will that make any change to the (federal non-refundable) basic personal amount calculated for me and my spouse(line 300 and line 303)for 2011 tax refund purpose.

    Thanks in advance,
    Deepesh

  203. Hi Deepesh,

    Any changes to the exemption amounts would depend on your tax status as of Dec 31st.

    Upon leaving Canada, will you be terminating your residency by definition for tax purposes? If so, yes; if not, no.

    I hope this has answered your question.

    Regards,
    Storoszko & Associates
    Tax Specialists
    http://www.storoszko.net
    647 367 3477
    Twitter: link to twitter.com

  204. ted pearson 11/08/2011 at 11:18 am

    How would I get the results of income splitting by Province?

  205. Hello Ted,

    Using the above calculator, because there are many variations of income splitting (i.e. pension, rsp, family, etc.) you would need to do it manually. Otherwise you would need to obtain a software programme to do this for you.

    I hope this has answered your question.

    Regards,
    Storoszko & Associates
    Tax Specialists
    http://www.storoszko.net
    647 367 3477
    Twitter: link to twitter.com

  206. Richard Adler 05/07/2012 at 3:13 pm

    I'm thinking of moving my mother company from Ontario to Alberta....what savings if any would there be % or use !00,000 of net income by such a move. This is an invstment company pay the highest rate of tax.

    Also, moving certain investments from my mother (as a loan) will decrease her income and allow her to receive OAS, but the corporate tax (she remains in Ontario) is higher so there is a trade off.....complicating this is the RDTOH account which may reduce taxes payable (corporately) so is is a good idea to move these investments to the company (assuming it remains in Ontario)? RA

  207. Tan 05/08/2012 at 1:06 am

    Dear Sir,

    Thanks for your earlier and useful response. A few follow-up questions are:

    1. How do you calculate the market price of a property that you have inherited from your parents?
    2. Should you decide to sell it, how do you calculate capital gain for the purpose of paying capital gained tax?

    Best regards,
    JT

  208. Hi Richard,

    Your question is beyond the usual topic for this forum, but I will provide you with short response.

    Investment income earned by a corporation is roughly taxed at the top personal rate. In Ontario, this is 46.4% in Alberta it’s 39%. Moving the corporation to Alberta would see a net savings of 7.4%.

    The clawback is a bit of a challenge because we have to assess the cost of moving the assets to the corporation, the tax differential in the corporation, the long-term tax issues with drawing from the corporation and whether it’s worth it to save $6,480. It may or may not be.

    The bigger issue is moving the corporation. If it’s a federally incorporated business, you can register an office in Alberta (there must be an office there to do this). The corporation may come under scrutiny for the move and there is a risk of reassessment.

    If the corporation is not a federal corporation, the issue gets a little more complex and then there will be a need to look at other alternatives.

    I suggest you contact a Certified Tax Planner for more information.

    I hope this has answered your question.

    Regards,
    Storoszko & Associates
    Tax Specialists
    http://www.storoszko.net
    647 367 3477
    Twitter: @Storoszko_Assoc

  209. Hi JT,

    Answers to your questions:
    1) the value is determined by the estate at probate
    2) the capital gain is the difference between the value received at sale and the value at acquisition.

    I hope this has answered your question.

    Regards,
    Storoszko & Associates
    Tax Specialists
    http://www.storoszko.net
    647 367 3477
    Twitter: @Storoszko_Assoc

  210. lynn 08/11/2012 at 3:14 pm

    hi.how much do i have to pay for my income tax if i earned 25,391 in 2010 ?and i forgot to fill out my interest and other investment income.[line 121] it's $2.060.I've paid them $2440.36 before.
    now with $2.060 from my interest how much do i have to pay more?MY TOTAL INCOME IS 25,395+2.060=27.451
    THANKS A LOT

  211. Hi Lynn,

    If you forgot to include income information from 2010, CRA would have done a cross review by this time and would have issued you a reassessment to let you know of the amount due.

    If CRA has not contacted you, best to advise them of the error for you to avoid legal problems in the future.

    An exact calculation cannot be made here as the amount due will include late filing interest and possibly penalties.

    I hope this has answered your question.

    Regards,
    Storoszko & Associates
    Tax Specialists
    http://www.storoszko.net
    647 367 3477
    Twitter: @Storoszko_Assoc

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