Salary Deductions
 

Hi all,

I wonder if someone could give me an idea of salary deductions in Ontario? I've used the Wiki and been able to consider Income tax at my target salary range using an income tax calculator and I have also considered the Canadian Pension Plan and Employment Insurance deductions. (Btw, do those on a TWP have to pay these?)

What other deductions am I missing, if any? The company I have an interview with will likely offer a benefits package (as it is a local council), which I guess I will pay a little bit of tax on. What is the usual amount paid on a standard benefits package?

Any help gratefully received!
Wolstie

Re: Salary Deductions
 

The calculator at http://www.taxtips.ca/calculators/taxcalculator.htm is a little complicated as it gives you many options. However, it is the best one I know. This will take into account the OHIP.

Yes, you have to pay EI and CPP even if you are on a TWP.

Most of the benefit packages are tax free (the medical parts). It is quite common for the employee to be asked to pay a portion of the premiums, or to pay the premiums of the disability part (if any). You will have to check the terms with your employer.

Re: Salary Deductions
 

If you are just a normal employee then you can look here:
http://www.ey.com/CA/en/Services/Tax/Tax-Calculators

Edit: I should probably read the OP properly first, doh!

Re: Salary Deductions
 

Hi all,

Thanks for the replies, some very useful sites there. And I thought the UK tax system was complicated!

So, looks like I would pay Income Tax, EI and CPP. Thats exactly what I needed to know, cheers!

Wolstie

Re: Salary Deductions
 

Not sure what tax band I was in but I was on a pretty decent salary in the GTA in 06 & 07.
Reckon my bi-weekly take home (Canadians didnt understand ne saying fortnightly) was around 60-65% of my gross pay.

Also I've some pretty up to date living costs / comparisons from ex workmates.
PM if you need more details.

Re: Salary Deductions
 

It is important to note that in Canada you are given a variety of deductions which you can deduct against your income. This is often done at the end of the year, with your tax return. It is not uncommon for couples to recieve up to $10,000 a year in tax refunds. If you have kids (especially if they are in daycare) or a spouse that is not working you can claim a refund for these. Also if you are in school etc. You do need to complete a tax return as the government won't automatically do it for you. I would look into this as it may differ for those on a work permit.

Re: Salary Deductions
 

Child benefits don't kick in for families on TWP for the first 18 months. Otherwise taxes are the same whether you are a citizen, PR or here on a TWP.

Re: Salary Deductions
 

I don't think I have heard of anyone or couple getting a refund of $10,000 (which mean they overpayed taxes and gave the govt an interest free loan). More common is a thousand or so, unless there are a lot of allowances that were not claimed and source deducted.

The objective should be to not get a tax refund, then you've claimed everything you are entitled to and got all the interest for yourself.

You cannot claim a refund for daycare, but you can claim it as an expense against income. Don't confuse allowances with refunds. CTB is payable on previous years income and the amount is determined by the level of income and age of the children. Nor can you claim a refund for a non working spouse, but you do get an allowance on your income.

Re: Salary Deductions
 

Generally when Canadians refer to the term refund, it is taxes that will be refunded to them. You need to pay taxes in order to recieve a refund. Each child is worth 7500 per year at a person's highest tax rate. For many kids this will result in a tax refund of $4500.00 per year. (30% tax). Also don't forget RRSP deductions (This was the one that I wasn't certain would be available for people on WP. You are allowed to put away a maximum of 18% of your salary a year (there is an upper maximum) that again is taken off at the highest tax rate. If a couple put away $10000 per year (a very reasonable amount - possibly a bit on the low side for those looking for a half decent retirement) that would result in an additional $3000.00 tax refund. There are also a ton of other deductions available that can only be refunded once you have filed a return! (e.g. post secondary education costs for direct family members, donations and etc) The CTB is a tax credit; not a refund. Therefore you don't have to pay taxes in order to recieve it!

It is worth it to learn about allowances before you file!

Good Luck

Re: Salary Deductions
 

Wow, some on here must make a pretty penny. I could never imagine being able to save 10,000 a year, let alone it being a reasonable amount.

Granted I am not a couple though.

Thats close to 7 months salary at my last job.......:rofl:

Re: Salary Deductions
 

You don't seem to have a grasp of the Canadian tax system or terminology. Your post is a tad misleading. There is a big difference between refunds and allowances and tax credits. Where do you get this refund for children? Are you referring to the CTB? You only get a refund if you have over paid taxes.

It is well worth anyone consulting an accountant before endeavoring on the tax mine filed as there are a multitude of pit falls. For example the RRSP there is a penalty if you over contribute, your refund is based on your marginal rate in the year you claim it, although you can contribute and not claim in the same year if you are in a low tax situation one year and expect to be higher the next.

Post secondary education, donations etc. are not refunded, they can be claimed on your tax return as a credit and help reduce your taxable income.

The misnomer on this home repair tax credit is the tax payer gets money back. The expense is deducted off of taxes and reduces taxable income. The level of benefit is determined by the individuals marginal rate and low income earners and many low income self employed may get no benefit.

Re: Salary Deductions
 

This is not quite right. Each child will enable you to claim a federal tax credit of $2,089. Tax credits are always given at the basic rate, so the credit is worth $2,089 x 15% = $313.35 (more if your province has an equivalent credit). Technically, the credit is non-refundable but if you have paid other tax it counts towards that so the other tax can be refunded. A moot point in most circumstances.

In addition, you can claim up to $7,000 a year of childcare expenses if these are incurred to earn taxable income or to study. Childcare expenses are a deduction from income so will generate a refund at the taxpayers marginal rate. However, you can only claim credit for expenses actually paid, and only from the income of the lower paid spouse.

The amount you can contribute is a function of previous years' earnings so a newcomer to Canada is restricted in contributions for the first year. This is the same from a PR and a TWP, or even a citizen if they have not earned in Canada before. You can contribute up to $2,000 over your limit so you could do this in year one I suppose. I have also recently learned that the CRA effectively turn a blind eye if you are required to make RRSP contributions as part of your contract of employment.


True, but you have to file a tax return.

Re: Salary Deductions
 

RRSP's are a great way of lowering taxes, especially for higher earners. I knock about 10,000 per year off taxable income - based on 43 percent tax bracket it saves me about 4,000 per year in taxes. Although what needs to be clarified its really tax deferral, because withdrawls are taxed on your earnings that year. Presumably on retirement you will be in a lower tax band and will pay less tax (eg 43 to 20 percent). Also interest is not taxed and you have the benefit of investing the deferred tax until you start taking it out.

Is there anything similar in the UK?

Re: Salary Deductions
 

ISA's are the nearest I guess.

A general question, when it comes to "doing your taxes" who actually does it and do you need paid help ?

Is it similar to UK Self Assessment ?

Re: Salary Deductions
 

Pension contributions are normally taken out of your pay packet before tax in the UK.