Canadian Employment Taxes

[FinPro]

Hello Everyone,

I believe it is important for every one immigrating to Canada to know about the taxes one is going to pay from one's pay check. It might be one of the factors which may decide where one wanna settle. These are only Employment taxes, there will be additional taxes and the overall picture may change once u add those taxes. Therefore, more research is advisable.

For Employment taxes, a summary of Fed Tax and of Proivinces of AB, BC & ON is given. For more details, a link is given at the end of the post. Rates are valid for 2006.

Federal Tax Rate ( Common for all provinces):
15.25% on the first $36,378 of taxable income;
22% on the next $36,378 of taxable income;
26% on the next $45,529 of taxable income; and
29% of taxable income over $118,285.
+

CPP (Canadian Pension Plan - Fed Tax): 4.95%
+
Employment Insurance: $1.87 for every $100

Provincial Taxes:
Ontario
6.05% on the first $34,758 of taxable income, +
9.15% on the next $34,759, +
11.16% on the amount over $69,517

British Columbia
6.05% on the first $33,755 of taxable income, +
9.15% on the next $33,756, +
11.7% on the next $10,000, +
13.7% on the next $16,610, +
14.7% on the amount over $94,121

Alberta
10% of taxable income - One Flat rate.

For more details please check the following link:
http://www.cra-arc.gc.ca/tax/allrates/menu-e.html

Regards
FinPro

[ap8329]

Dear FinPro,

This is really helpful, very important information for potential immigrants.
Do you know what are the exemptions or tax credits available in Canada.

For example, to calculate the taxable income, some deductions or exemptions might be there as we have in the US, can you please elaborate on those?

Thanks

[FinPro]

ap8329,

there are tax credits like child tax benefit, refund of gst etc but this is too wide a topic to cover. Therefore, please visit the Canadian Revenue Agency's website mentioned in the original post to get more information.

[nsnewbie]

If you're going to compare taxes, you should look at a few other things...Many people, even Canadians, make the mistake of looking only at relative tax rates and come to the very erroneous conclusion that you pay much more in Canada: It simply isn't so, in my experience.

I moved here (Nova Scotia) from the US (Minnesota) about six months ago and have been making direct comparisons between my pay receipts here and from the US. Yes, its true: I pay more in taxes here...at first glance. The thing is, my take-home pay is about the same. That is, in the US, while I paid less in taxes, I had to pay a good bit more for Social Security than I do for the Canadian Pension system, and I had a good chunk withheld as my share of my employers health care plan (which is "free" in Canada, actually paid for by those higher taxes). In fact, when I add in the annual deductible and co-payments for my families health care in the US, the amount of money I get to keep is actually a bit more here in Canada.

[Eduardo Picazo]

Hi nsnewbie

Excellent feedback my friend!! This is the kind of expertise advises we really need since most of us are complete out of Canadian Taxes impact at the end of the paycheck

Regards
Eduardo