Xref: utzoo can.general:1277 ont.general:935
Newsgroups: can.general,ont.general
Path: utzoo!lsuc!dave
From: dave@lsuc.on.ca (David Sherman)
Subject: income tax tips #23: new personal income tax rates
Date: Mon, 12-Jun-89 13:30:56 EDT
Message-ID: <1989Jun12.133058.28912@lsuc.on.ca>
Distribution: can
Organization: Law Society of Upper Canada, Toronto

What with the recent federal budget (April 27, more or less:-)
and Ontario budget (May 17), it might be useful to remind people
of what the current tax brackets and rates are.

First, here are the raw numbers for 1989:
Federal tax on taxable income (after all deductions): 17% on
first $27,803; 26% on excess up to $55,605; 29% on excess.
Federal surtax: 4% of federal tax. (Will be 5% in 1990.)
Ontario tax (1989): 52% of federal tax. (Will be 53% in 1990.)
Additional federal surtax: 1.5% of federal tax over $15,000.
(Will be 3% in 1990.)  So the total federal surtax is 5.5% for
income over about $72,000.  Additional Ontario surtax: 10% of
Ontario tax over $10,000.  This brings the total Ontario tax to
52x1.1 = 57.2% of federal tax for incomes over about $80,000.

Other provinces' provincial tax rates vary, but all except
Quebec are calculated as a percentage of federal tax.
Some provinces also have a so-called "flat tax" on net income,
and other surtaxes.

What does this mean in terms of tax brackets?  You can use the
table below to figure out your marginal tax rate (ie., for purposes
of calculating what you get our of one more dollar earned, or what
one more dollar of deduction is worth to you).  To calculate what
it means in terms of tax payable, you need to factor in all deductions
and credits, of course.  This table is for Ontario residents.

	Taxable income		Total tax (federal + Ontario)
	==============          =============================
	$0      - $27,803	          26.52%
	$27,803 - $55,605	$ 7,373 + 40.56% on excess over $27,803
	$55,605 - $72,105*	$18,649 + 45.24% on excess over $55,605
	$72,105 - $80,694*	$26,114 + 45.675% on excess over $72,105
	$80,694 and up		$30,037 + 47.183% on excess over $80,694

NOTE: the $72,105 applies for a single taxpayer with no other credits.
Because the surtax applies to federal tax after credits, someone
with more credits (e.g., dependents, charitable donations, old age,
tuition, UIC and CPP) will have lower tax and the extra surtax on
federal tax over $15,000 will kick in later.  The extra Ontario
surtax will also kick in later than $80,694 for the same reason.

The bottom line is still that the marginal rate stays under 50%,
meaning that even with a high income you'll keep over half of
extra money you earn.

David Sherman
-- 
Moderator, mail.yiddish
{ uunet!attcan  att  utzoo }!lsuc!dave          dave@lsuc.on.ca