Quote:
Originally Posted by hill
Thanks for the link. I was off less than 1%. Since I have no dependents, no mortgages I do not fall in to "average rates" column. Unless I got it all wrong. Would that put me in the "marginal rates" column? I did not know that they don't pay for RX.
|
Yes, you misunderstood. Our income tax works is based on a certain percentage of tax being charged on a certain income band.
The federal rates for 2009 are as follows:
•15% on the first $40,726 of taxable income, +
•22% on the next $40,726 of taxable income (on the portion of taxable income between $40,726 and $81,452), +
•26% on the next $44,812 of taxable income (on the portion of taxable income between $81,452 and $126,264), +
•29% of taxable income over $126,264.
The rates for the province of Ontario for 2009 are as follows:
6.05% on the first $36,848 of taxable income, +
9.15% on the next $36,850, +
11.16% on the amount over $73,698
Additionally, there is a certain portion of your income that is tax exempt, both federally and provincially. It is in the area of $10,000 but I don't remember the exact amoutn.
So if you made $75,000 and lived in Ontario, your tax would look something like this:
Federal tax: 0 on the first 10,000.
15% on the amount between $10,000 and $40, 726 = $4608.90
22% on the amount between $40,726 and $75,000 = $7540.28
Total Federal tax = $12149.18
Provincial tax: 0 on the first 10,000
6.05% on the amount from 10,000 to 36,848 = 1624.30
9.15% on the amount from 36,848 to 73,698 = 3371.78
11.16% on the amount between 73,698 and 75,000 = 145.30
Total Ontario tax = 5141.38
Total Tax = $12149.18 + 5141.38 = 17290.56
Total tax (17290.56) divided into total income (75000) = 23.05% average tax rate.
Everyone falls into the average. It is the combination of all your tiered tax amounts divided into your total income to come up with an average taxation rate.