sean1169

can anybody gime me an idea of how much income tax do you pay do you pay fereal tax + province tax, do employers deduct it from salary, where you would pay it and what percentage do you pay?

christmasoompa

Did the Wiki article on tax and the links to various website on it not answer your question? http://britishexpats.com/wiki/Income_Tax_Rates-Canada

Tangram

Ooooh snap !

expatdoris

Hi,
I looked at those, very interesting. I understand the basic principles of the taxation system except the Basic Personal Amount, what does that mean?

Just being a bit thick I suppose, is that a personal allowance you would have in UK that is free from tax? I know many of you fill/file tax returns, I hope you might tell me without having to go through pages and pages of terribly exciting data.

Aviator

They are the same.

Everyone should file a tax return who has income or receives benefits.

expatdoris

Brilliant, so to confirm, in Alberta, for 2011, I get $16977 before I pay tax and then I pay the balance on a sliding scale according to the table;

and I will get $10527 free of tax from the feds and then i pay 15% on the balance up to $127k (If only). Is this a/an eureka moment?

Tangram

Do hope so.

iaink

try the calculators here http://www.taxtips.ca/calculators/taxcalculator.htm


They are very accurate, but of course any number of personal factors weigh into the tax you pay, so make sure your employer has an accurate form TD1 unless you want them to deduct based on the worst case scenario.

expatdoris

Thanks IainK.

cheeky_monkey

You can transfer your partners allowance if your married etc to you if they do not work.

JonboyE

Not quite.

For Alberta tax you get a credit equivalent to the tax due on the first $16,977 of income. Thereafter all income is taxed at 10%.

For federal tax you get a credit equivalent to the tax due on the first $10,527 of income. Thereafter your income is taxed at progressive rates: 15% 22% 26% and 29%.

For example, say you earn $100,000.

Alberta tax is $100,000 @ 10% = $10,000 less $16,977 @ 10% = 1697.70. Net provincial tax is 10,000 - 1697.70 = $8,302.30. You also get a tax credit for CPP and EI premiums and this is $3, 005 @ 10% and this reduces the provincial tax to $8,002.

For federal tax the first $41,544 is taxed at 15% = $6,231.60. The next $41,544 is taxed at 22% = $9,139.68. The balance up to $100,000 is taxed at 26% so $16,912 @ 26% = $4,397.12. (The top rate of 29% kicks in at $128,800.) Therefore federal tax due is 6,231.60 + 9,139.68 + 4,397.12 = $19,768.40. The federal personal tax credit is $10,527 @ 15% = $1,579.05. There are additional federal tax credits for employed people, and for CPP and EI premiums paid. These amount to $4,070 @ 15% = $610.50. Therefore net federal tax is $19,768.40 - 1,579.05 - 610.50 = $17,579.

So, the total tax due on $100,000 is 8,002 + 17,579 = $25,581.

You also have to factor in EI and CPP premiums which total $3,004.36 in 2011 so from your $100,000 in income the governments take a total of $28,585 or 28.60%.

This assumes a single person with no dependents and no other tax credits. There are a whole raft of credits that mean many people pay less.

Editha

Actually, if your income is too low to pay tax, there is no duty to file a return.

expatdoris

Quite simple really! Thanks, you are the best. Seriously, you have made it look quite simple, even I understand it. Cheers. Doris.

iaink

If your income is that low you would be well advised to file because without the official return you miss out on all kinds of benefits and rebates.

Editha

Agreed, but it isn't compulsory.

One way in which Canada's taxation is different to the UK's, is that there is still joint taxation for couples, and the higher earner can use the lower earner's allowances. I'm retired, but I've put off claiming all my pension entitlements and put my savings into long term investments, so that my income is kept low. This reduces my husband's income tax by about $1,800 p.a.

Even so, I still don't have to file a return to get the rebate for my husband. He can just put the figures for my unused allowances on his return. However, I choose to do so. I have to work out my tax liability in order to work out my husband's, so I might as well send them the forms.