How to calculate tax income

[Lorki]

Maybe my math isn't good, which is bad. But i am curious. how to calculate income and how much do i need to pay for income tax.
Let's say i live in Vancouver or Toronto, and make $86k. How are calculation?

 

[scylla]

It's not a fixed % for your entire income amount.

Try the following web site for Ontario:

http://www.cra-arc.gc.ca/tx/ndvdls/fq/txrts-eng.html

And the following for BC:

http://www2.gov.bc.ca/gov/topic.page?id=E90F9F1717DB451BB7E4A6CC0BDC6F9F

 

[Lorki]

I don't understand this tax rates. I know they are different and goes up, as you make more money. But how to actually calculate?

 

[Rossei]

Maybe my math isn't good, which is bad. But i am curious. how to calculate income and how much do i need to pay for income tax.
Let's say i live in Vancouver or Toronto, and make $86k. How are calculation?

Everything is given in CRA website (as scylla mentioned).

In case you're still confused about the tax calculation; I will break down for you. I love doing so! 8). I'll use your example of $86,000 income for 2013 tax year in Ontario (Toronto or any other city in Ontario would be same).

First, there are 2 types of income taxes that you have to pay: Federal tax and Provincial tax. On top of these, you also have to pay for Canada Pension Plan (CPP) and Employment Insurance (EI).

FEDERAL TAX:
Bracket 1: $43,561 x 15% = $6,534.15
Bracket 2: ($86,000 - $43,561) x 22% = $9,336.58
Total = $15,870.73

PROVINCIAL (ONTARIO) TAX:
Bracket 1: $39,723 x 5.05% = $2,006.01
Bracket 2: $39,725 x 9.15% = $3,634.83
Bracket 3: ($86,000 - $39,725 - $39,723) x 11.16% = $ 731.20
Total = $6,372.04

CPP:
$47,600 x 4.95% = $2,356.20

EI:
$47,400 x 1.88% = $ 891.12

TOTAL DEDUCTION = INCOME TAX + CPP + EI
= (FEDERAL TAX + PROVINCIAL TAX) + CPP + EI
= ($15,870.73 + $6,372.04) + $2,356.20 + $891.12
= $22,242.78 + $2,356.20 + $891.12
= $25,490.09

Thus your net income would stand at around $60k, even though your gross income is $86k.

 

[Lorki]

FEDERAL TAX:
Bracket 1: $43,561 x 15% = $6,534.15
Bracket 2: ($86,000 - $43,561) x 22% = $9,336.58
Total = $15,870.73

I am trying to do the same math, but i get different results.

I probably do mistake with calculating 15% and 22%.

Does it need to break like 43.561 X 0.15% for example??

 

[scylla]

Does it need to break like 43.561 X 0.15% for example??

You pay 15% tax on the first $43,561.00 you make. 15% of $43,561.00 is $6,534.15.

Does this answer your question?

 

[Rossei]

Does it need to break like 43.561 X 0.15% for example??

2 mistakes. You entered a decimal after 43 and 0.15% means 0.0015.

Mathematically,
43561 x 0.15 = 6534.15

In text it means,
15% of $43,561 is equal to $6,534.

 

[fkl]

Everything is given in CRA website (as scylla mentioned).

In case you're still confused about the tax calculation; I will break down for you. I love doing so! 8). I'll use your example of $86,000 income for 2013 tax year in Ontario (Toronto or any other city in Ontario would be same).

First, there are 2 types of income taxes that you have to pay: Federal tax and Provincial tax. On top of these, you also have to pay for Canada Pension Plan (CPP) and Employment Insurance (EI).

FEDERAL TAX:
Bracket 1: $43,561 x 15% = $6,534.15
Bracket 2: ($86,000 - $43,561) x 22% = $9,336.58
Total = $15,870.73

PROVINCIAL (ONTARIO) TAX:
Bracket 1: $39,723 x 5.05% = $2,006.01
Bracket 2: $39,725 x 9.15% = $3,634.83
Bracket 3: ($86,000 - $39,725 - $39,723) x 11.16% = $ 731.20
Total = $6,372.04

CPP:
$47,600 x 4.95% = $2,356.20

EI:
$47,400 x 1.88% = $ 891.12

TOTAL DEDUCTION = INCOME TAX + CPP + EI
= (FEDERAL TAX + PROVINCIAL TAX) + CPP + EI
= ($15,870.73 + $6,372.04) + $2,356.20 + $891.12
= $22,242.78 + $2,356.20 + $891.12
= $25,490.09

Thus your net income would stand at around $60k, even though your gross income is $86k.

Very helpful. Thank you. It gives an over all idea of real take home money rather than just listing basic taxes. +1

 

[yuvs]

useful ... +1 for your efforts...

Everything is given in CRA website (as scylla mentioned).

In case you're still confused about the tax calculation; I will break down for you. I love doing so! 8). I'll use your example of $86,000 income for 2013 tax year in Ontario (Toronto or any other city in Ontario would be same).

First, there are 2 types of income taxes that you have to pay: Federal tax and Provincial tax. On top of these, you also have to pay for Canada Pension Plan (CPP) and Employment Insurance (EI).

FEDERAL TAX:
Bracket 1: $43,561 x 15% = $6,534.15
Bracket 2: ($86,000 - $43,561) x 22% = $9,336.58
Total = $15,870.73

PROVINCIAL (ONTARIO) TAX:
Bracket 1: $39,723 x 5.05% = $2,006.01
Bracket 2: $39,725 x 9.15% = $3,634.83
Bracket 3: ($86,000 - $39,725 - $39,723) x 11.16% = $ 731.20
Total = $6,372.04

CPP:
$47,600 x 4.95% = $2,356.20

EI:
$47,400 x 1.88% = $ 891.12

TOTAL DEDUCTION = INCOME TAX + CPP + EI
= (FEDERAL TAX + PROVINCIAL TAX) + CPP + EI
= ($15,870.73 + $6,372.04) + $2,356.20 + $891.12
= $22,242.78 + $2,356.20 + $891.12
= $25,490.09

Thus your net income would stand at around $60k, even though your gross income is $86k.