Income Tax Rates : 2011 : Canada >>>

[qorax]

What are the Income Tax rates in Canada for 2011?

These are the rates that an individual will use when completing their 2011 income tax and benefit return. The information may change during the year to reflect updates to the law.
- Federal tax rates for 2011 +
- Provincial/territorial tax rates for 2011


Federal tax rates for 2011 are:

- 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.

Federal tax on taxable income "manual calculation" chart
There's a chart in the CRA website which reproduces the first calculation that has to be made on Page-2 of Schedule-1 of the tax package to calculate net federal tax. Page-1 is used to calculate federal non-refundable tax credits.


Provincial/Territorial tax rates for 2011 are:

- Under the current tax on income method, tax for all provinces (except Quebec) and territories is calculated the same way as federal tax.
- Form 428 is used to calculate this provincial or territorial tax.
- Provincial or territorial specific non-refundable tax credits are also calculated on Form 428.
- For complete details, see the Provincial or Territorial information and forms in your 2011 tax package.

Here's the combined chart...

Newfoundland and Labrador
- 7.7% on the first $31,904 of taxable income, +
- 12.5% on the next $31,903, +
- 13.3% on the amount over $63,807

Prince Edward Island
- 9.8% on the first $31,984 of taxable income, +
- 13.8% on the next $31,985, +
- 16.7% on the amount over $63,969

Nova Scotia
- 8.79% on the first $29,590 of taxable income, +
- 14.95% on the next $29,590, +
- 16.67% on the next $33,820 +
- 17.5% on the next $57,000
- 21% on the amount over $150,000

New Brunswick
- 9.1% on the first $37,150 of taxable income, +
- 12.1% on the next $37,150, +
- 12.4% on the next $46,496, +
- 14.3% on the amount over $120,796

Ontario
- 5.05% on the first $37,774 of taxable income, +
- 9.15% on the next $37,776, +
- 11.16% on the amount over $75,550

Manitoba
- 10.8% on the first $31,000 of taxable income, +
- 12.75% on the next $36,000, +
- 17.4% on the amount over $67,000

Saskatchewan
- 11% on the first $40,919 of taxable income, +
- 13% on the next $75,992, +
- 15% on the amount over $116,911

Alberta
- 10% of taxable income [Flat Rate]

British Columbia
- 5.06% on the first $36,146 of taxable income, +
- 7.7% on the next $36,147, +
- 10.5% on the next $10,708, +
- 12.29% on the next $17,786, +
- 14.7% on the amount over $100,787

Yukon
- 7.04% on the first $41,544 of taxable income, +
- 9.68% on the next $41,544, +
- 11.44% on the next $45,712, +
- 12.76% on the amount over $128,800

Northwest Territories
- 5.9% on the first $37,626 of taxable income, +
- 8.6% on the next $37,627, +
- 12.2% on the next $47,092, +
- 14.05% on the amount over $122,345

Nunavut
- 4% on the first $39,612 of taxable income, +
- 7% on the next $39,612, +
- 9% on the next $49,576, +
- 11.5% on the amount over $128,800

Quebec
- 16% on the first $39,060 of taxable income, +
- 20% on $39,060 to $78,120, +
- 24% on the amount over $78,120
___________________________________________________________________________________________________________



Did I hear...
Oh _ _ _ _ , What the _ _ _ _ Eh?

Qorax

 

[eemmoo1]

Did I hear...
Oh _ _ _ _ , What the _ _ _ _ Eh?

 

[Kanamen]

Very Informative Captain

 

[yukon]

The necessary Evil...
The catch here is we can take many rebates to get down the taxable income, right ??!

 

[qorax]

Income Tax : 2010 : Canada

And this was last year's rates:

(a) The Federal rates for 2010 were:
- 15% on the first $40,970 of taxable income, +
- 22% on the next $40,971 of taxable income (on the portion of taxable income between $40,970 and $81,941), +
- 26% on the next $45,080 of taxable income (on the portion of taxable income between $81,941 and $127,021), +
- 29% of taxable income over $127,021.

(b) The Provincial [Ontario] rates for 2010 were:
- 5.05% on the first $37,106 of taxable income, +
- 9.15% on the next $37,108, +
- 11.16% on the amount over $74,214

NOTE:
- Tax rates are subject to change each financial year.
- Our Income Tax is divided into two layers: (a)Federal and (b)Provincial.
- Both taxes are applied to the taxable income.

Qorax

 

[qorax]

The necessary Evil...
The catch here is we can take many rebates to get down the taxable income, right ??!

Right;
Here's ten of them...

Top Ten tax-saving Strategies

Canadians may be heavily taxed, but here are steps you can take to keep more of what you earn:

1. Take the RRSP tax-deferral route.
Contributing to an RRSP is one great way of reducing your annual tax bill. Say your marginal tax rate is 40%, $10,000 to contribute & sufficient RRSP contribution room. Putting that money into your RRSP makes it fully deductible from income, reducing your tax bill by up to $4,000 (40% of $10,000). Plus there's another major tax benefit: Every dollar of investment income earned inside your RRSP is tax-deferred as long as it stays in the plan.

2. Arrange your investments to be tax-efficient.
If you invest both inside and outside an RRSP, your CGA can help you create a portfolio that takes all tax implications into consideration. The key is in how different types of income are taxed.

Dividends and capital gains usually receive preferential tax treatment, while interest income does not. But this preferential tax treatment doesn't apply to earnings in an RRSP. As a result, it generally makes sense to hold interest-bearing investments inside your RRSP, where they will be fully tax deferred, and investments that produce dividends and capital gains outside your RRSP so you can benefit from the preferential tax treatment they receive*. Investors Group also has non-registered investment products specifically designed to defer tax even when drawing an income from the investment to fund lifestyle expenses.

3. Consider income-splitting with your spouse.
You can reduce your tax bill significantly by implementing income-splitting strategies if your spouse is in a lower income bracket. Here are three strategies worth considering:

A. Spousal RRSP. If you are the main breadwinner in your family, you'll probably generate most of the retirement income—which may be taxed at high rates. By setting up a Spousal RRSP, you can transfer a portion of that income into your spouse's hands to be taxed at lower rates when it's withdrawn by your spouse.

B. Who pays, who invests. Have the higher income spouse pay all household expenses so that the lower-income spouse uses his or her earnings for investment purposes. The investment income will be taxed at the lower-income spouse's rate.

C. A prescribed rate loan. Gifts of interest free loans from a higher income spouse to a lower income spouse result in investment income being attributed back to the higher income spouse. However, if the gift or interest free loan is replaced by a loan that bears interest at the current prescribed rate, the attribution rules no longer apply and the investment income is taxed in the hands of the lower income spouse.

4. Maximize family income by employing family members.
If you run your own business, consider whether it's possible to hire your spouse or children as employees. As long as the salary paid for the services performed is reasonable, it will be taxed in their hands and you will get the deduction.

By transferring some of your taxable income to your children or a spouse, who earn little or no taxable income, you can shrink your family's overall tax bill. The attribution rules limit income-splitting with children under 18. If you give investments to a child under 18, for example, all interest and dividends on the original gift will be attributed back to you and taxed in your hands. This doesn't apply to capital gains, however, nor to income earned on income. Keep in mind that the attribution rules usually do not apply to children 18 or older.

5. Retirement has its tax benefits.
If you are retired, be sure to take advantage of the following:

A. Splitting CPP/QPP benefits. This easy to implement strategy results in quick tax savings. If your spouse's marginal tax rate is lower than yours, consider splitting your CPP or QPP benefits between you and your spouse.

B. Pension Income Tax Credit. One retired spouse may be unable to claim the federal tax credit available on up to $2,000 of pension income because he or she has no RRSP or pension income. However, interest income from an annuity may qualify for this credit if you are 65 or older. If your income is too low to take advantage of the pension credit, it can be transferred to your spouse who can use it to reduce his or her taxes, or vice-versa if your spouse is also 65 or older.

C. Pension income splitting. Up to 50% of any income you receive that qualifies for the pension income tax credit can be allocated to your spouse for tax purposes. Payments from a Registered Pension Plan qualify for this income splitting at any age, while RRIF payments qualify for pension income splitting starting at age 65.

6. Grow your investments faster through a Tax-Free Savings Account
Invest after-tax dollars into a Tax-Free Savings Account (TFSA) and you will not be taxed on earned interest, dividends or capital gains even when withdrawn. Another important feature for retirees is that earnings within the account and subsequent withdrawals do not affect income-tested benefits such as Old Age Security, the Canada Child Tax Benefit or Guaranteed Income Supplement.

7. Consider an RESP.
While contributions to a Registered Education Savings Plan (RESP) aren't deductible, the investment earnings accumulate on a tax-deferred basis. In addition, the federal government will pay a Canada Education Savings Grant (CES Grant)* into the RESP subject to certain conditions.

When your child starts post-secondary school, your contributions can be withdrawn by you from the RESP, tax-free. The RESP investment earnings and CES Grants will be taxed in the hands of your child.

8. Consider 'freezing' your estate
Estate freezes are designed to redirect future growth in the value of an asset, plus the accompanying tax liability, to others. Selling or giving the assets to your children is the simplest type of freeze. They now own the asset and will pay tax on future increases in value. If the asset you give to your child is a capital asset, you will be faced with a disposition for tax purposes, and possibly a significant tax bill. The income attribution rules plus certain tax rules involving trusts can make this a complex issue. Advice from a qualified professional is essential when you are considering any type of estate planning, particularly estate freezes.

9. Defer tax with life insurance.
Permanent life insurance products, such as Whole and Universal Life policies, can also provide investment options. Typically, the tax on earnings is deferred until there is a payout.

10. Other savings opportunities
You can ask the Canada Revenue Agency to allow your employer to reduce withholdings if you have contributed to an RRSP early in the year, made large charitable donations, or incurred substantial medical expenses.

Child care expenses, alimony and taxable child support also may lower your income and reduce your withholding taxes.

Qorax

*CES Grant is administered by HRSDC. Ask your CGA about provincial programs in your area.

 

[omm]

Impressive Alberta flatRate.
Ontario not bad.


OMM

 

[qorax]

IT "Checklist" for Deductions

Generally there r many schemes/methods which'd provide some tax relief to us. However, we r prone to oversight & lack the knowledge or tact. Thus, it's always advisable to hire a CGA to file-in our annual IT returns. And their fee is negligible too... usually a CGA would charge us around $20-40 for this service - depending on the quantity of work.

If you answer YES to any of these questions, you may be entitled to an additional deduction.

1. Do you have any carry over deductions from prior years such as RRSP's, Donations, Unused tuition fees or student loan interest, Home office expenses, LSVC credits, Net Capital losses or Non Capital losses?

2. Did you contribute to an RRSP in the year or within 60 days of the next year?

3. Did you make any payments to a union or professional organization?

4. Did you make any payments for childcare?

5. Did you make any attendant care expenses?

6. Did you invest in any companies that have gone bankrupt?

7. Did you sell any investments at a loss?

8. Did you move and change employment or self employment?

9. Did you pay for a safe deposit box?

10. Did you pay interest on any loan taken out for investment purposes?

11. Did you pay for investment accounting?

12. Did you pay alimony or support payments?

13. Did you use your vehicle to travel for your work?

14. Did you have an office at home?

15. Did you pay legal fees to enforce payment of alimony or maintenance?

16. Did you pay legal fees to enforce payment of wages?

17. Did you repay any Employment Insurance?

18. Did you receive an allowance for a clergyman's residence?

19. Did you receive an allowance from your employer for auto expenses?

20. Did you live in a remote Northern location and receive travel allowances?

21. Are you a partner in a same sex relationship?

22. Are you married or living common law?

23. Are you single and did you support a dependent?

24. Are you or your spouse/partner over 65?

25. Did you or your spouse/partner receive pension income?

26. Are you or your spouse/partner disabled?

27. Are any of your dependents disabled?

28. Did you pay interest on your student loan?

29. Did you or your spouse/partner or dependents pay tuition fees?

30. Did you have any medical expenses?

31. Did you make payments to a health plan at work or privately?

32. Did you make any donations to a registered charity?

33. Did you make any donations to a registered political party?

34. Did you make any labor sponsored funds?

35. Did you have any self employed income?

36. Did you hire an assistant?

37. Did you pay for supplies used in your work?

38. Were you paid in part by commissions?

Qorax

 

[barsindoo]

Good information. It shall be used wisely! Cheers 8)

 

[francaise]

that's really an informative post

 

[Olga64]

Great info, thanks

 

[charkei]

Hi Mr. Qorax. I worked in Mcdonalds here in Toronto as a crew and I have a part time job of caregiving on weekends on a private employer. My question is, should I declare my earnings on my part time job? I was paid by check and I wasn't paid for taxes from it. Thank you so much. I am hoping for a reply.

 

[qorax]

Hi Mr. Qorax. I worked in Mcdonalds here in Toronto as a crew and I have a part time job of caregiving on weekends on a private employer. My question is, should I declare my earnings on my part time job? I was paid by check and I wasn't paid for taxes from it. Thank you so much. I am hoping for a reply.

Regulations suggest that u 'declare' that PT income too in ur Annual Tax filing... but in reality many don't. Ur call.

 

[domingo]

For self-employed/business owners the best route is to get advice from a good tax consultant on managing taxes efficiently.

 

[charkei]

Regulations suggest that u 'declare' that PT income too in ur Annual Tax filing... but in reality many don't. Ur call.

I am planning not to declare my part time income coz I believe that the tax I pay from McDonalds is already enough. But I am just wondering if the government will know that I have that part time income? I was recieving a check from it and my private employer is declaring that money that his paying this such amount. Thank you so much, i am hoping for your reply.