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Tax in Alberta

Tax in Alberta

Old Jun 30th 2011, 8:25 pm
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Default Tax in Alberta

Hi

I am guessing someone has asked this question loads of times but I can't find a thread about it...

Can someone please explain how much a person is taxed in Alberta on their wages?(specifically Calgary). I presume it has brackets like over here? Is there more than one tax?

Can you explain it in laymans terms with no abbreviations otherwise I will have to post asking what the abbreviations mean!

I presume there is an equivalent to Council Tax on properties too.

Is there anything else that is charged (like council tax) that a Brit who is new to the process wouldn't think of??? Like private health care insurance? do most of you have it?

Thanks Guys. This site is proving invaluable!

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Old Jun 30th 2011, 8:56 pm
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Default Re: Tax in Alberta

This might help ... http://britishexpats.com/forum/showthread.php?t=722330

There is no council tax. There is a property tax payable by property owners. If you are a tenant it is included in the rent.

Health insurance in AB is free. You can buy additional private insurance to cover things not in the provincial plan (prescriptions, dentistry and eye care mainly). IMO this is of questionable value unless your employer is paying the majority of the premiums.
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Old Jun 30th 2011, 8:59 pm
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Default Re: Tax in Alberta

There is a large and pretty comprehensive section in the wiki on Taxation,

http://britishexpats.com/wiki/Category:Taxes-Canada

For an idea of income tax in Alberta check out www.taxtips.ca

Council tax is property tax here, owners pay it based on assesed value of the property, Renters usually dont, its covered by the landlord in the rent presuambly.

Also there is a wiki on canadian abbreviations.... they become a habit for some of us after a while.
http://britishexpats.com/wiki/Canadian_Abbreviations

Guess what, there is a wiki on health insurance and general healthcare topics too

Last edited by iaink; Jun 30th 2011 at 9:02 pm.
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Old Jun 30th 2011, 9:06 pm
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Default Re: Tax in Alberta

Thanks for that... Here is the quote that you showed me the link to. I understand all of it until the last bit

Alberta tax rate for 2011 is: 10% of taxable income
"

How does this relate to the personal allowance rate and the federal tax bit of the quote?

This next bit I understand about personal allowance (if it's the same as here - as in your first $16,977 and $10,527 can be earnt without paying tax - yes??)

Technically same here but you have a tax free limit and tax rate set provincially and federally.

Alberta 2011 basic personal allowance is $16,977
Federal 2011 basic personal allowance is $10,527

Federal tax rates for 2011 is:

15% on the first $41,544 of taxable income, +
22% on the next $41,544 of taxable income (on the portion of taxable income between $41,544 and $83,088), +
26% on the next $45,712 of taxable income (on the portion of taxable income between $83,088 and $128,800), +
29% of taxable income over $128,800.
Hope someone can actually follow what I am asking here!

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Old Jun 30th 2011, 9:12 pm
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Default Re: Tax in Alberta

Iain

Thanks so much for the link to the wiki. I am still finding my way around the site!! Will have a right good read of it!

Still would like an answer to my last question tho about the 10% bit...

Thanks Guys
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Old Jun 30th 2011, 9:13 pm
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Default Re: Tax in Alberta

Originally Posted by Geordie Lass View Post
Thanks for that... Here is the quote that you showed me the link to. I understand all of it until the last bit

"

How does this relate to the personal allowance rate and the federal tax bit of the quote?

This next bit I understand about personal allowance (if it's the same as here - as in your first $16,977 and $10,527 can be earnt without paying tax - yes??)



Hope someone can actually follow what I am asking here!

x
For most employees Taxable income is what you are paid in broad terms. There are a few things you might be able to deduct, but last year my total income, net income and taxable income were all one and the same thing.
If you are self employed it might be a different story

Easiest thing to do is to go to the calculator and enter a specualtive income, make sure you set it for AB and see what it throws out. As online calulators go its the most accurate.
http://www.taxtips.ca/calculators/taxcalculator.htm

10% is just the alberta provincial income tax rate paid on income over the allowance. Its a flat rate regardless of income above the allowance. You also pay federal income tax, which is tiered depending on income.

Last edited by iaink; Jun 30th 2011 at 9:15 pm.
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Old Jun 30th 2011, 9:31 pm
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Default Re: Tax in Alberta

Originally Posted by Geordie Lass View Post

How does this relate to the personal allowance rate and the federal tax bit of the quote?

This next bit I understand about personal allowance (if it's the same as here - as in your first $16,977 and $10,527 can be earnt without paying tax - yes??)
The calculation of taxable income is common to federal and provincial taxes but the actual tax owing is calculated separately. Also note that it is not a personal allowance as in the UK but a tax credit. However, the effect is similar.

Say you earn $10,000. Federal tax due is 15% or $1,500 and provincial tax is 10% or $1,000. Total tax due $2,500. However, you get a federal tax credit of $10,527 x 15% ($1,579) and a provincial tax credit of $16,977 x 10% ($1,698).

Federal tax due: $1,500 - credit $1,579 = $0
Provincial tax due $1,000 - credit $1,698 = $0

The credits are non-refundable so you use them or lose them. However, if your income is below the personal amounts you do not pay tax.

Now say you earn $15,000 a year. Federal tax due is 15% or $2,250 and provincial tax is 10% or $1,500. Total tax due $3,750. The non-refundable tax credits are still $10,527 x 15% ($1,579) and $16,977 x 10% ($1,698).

Federal tax due: $2,250 - credit $1,579 = $671.
Provincial tax due $1,500 - credit $1,698 = $0.

You owe $671. You cannot offset your unused provincial credit against federal taxes.

A final example is say you earn $70,000. Federal tax is at progressive rates so is calculated as follows (2010 rates):

First $40,970 at 15% = $6,146
Remaining $29,030 at 22% = $6,387
Less non-refundable tax credit = ($1,579)
Federal tax due = $10,954.

The provincial tax is at a flat rate:

$70,000 x 10% = $7,000
Less non-refundable tax credit = ($1,698)
Provincial tax due = $5,302.

The total tax due is 10,954+5302 = $16,256 or 23.2% of income.

There are also CPP and EI premiums (NI equivalent) that take nearly 7% of earnings but these top out at about $3,000 a year in the high $40K of earnings.

There are many more non-refundable tax credits that reduce the the amount of tax you pay, especially if you are a family.
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Old Jun 30th 2011, 9:47 pm
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Default Re: Tax in Alberta

Hey guys

Thanks soooooooo much for all your help! It is so much appreciated and so much easier to ask you guys than search online.

The examples were very very helpful so thanks a lot for those. Much easier to get your head around if someone types it out like that. So thanks for bothering to do that - it was really kind!



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