Your income tax is the government’s way of collecting money to pay for the programs we all use, like health and education. The amount you pay depends on your marginal tax rate and your taxable income. In general, the more you earn, the higher your marginal tax rate will be. That means you’ll pay a higher percentage of income tax on your last dollar earned than you do on your first dollar earned. To get a sense of how much you might pay in Ontario, take a look at this table:
Income Taxes In Ontario
The income tax you pay depends on your marital status and province. When you file your taxes, the Canada Revenue Agency (CRA) uses a formula to determine how much you owe in federal income tax. They then apply provincial income tax rates to that total amount, which results in your total bill.
The CRA typically sends you an annual notice with an overview of how much they think they will receive from each source. This overview includes employment or self-employment earnings; interest; dividends; rental income; pension or retirement benefits received as compensation for services performed outside Canada by non-residents; other types of investment income; and government payments such as Old Age Security payments or Employment Insurance benefits.
For example, A single person with no dependents living in Ontario who works full time throughout the year will pay approximately $7,000 CAD ($5,250 US) per year in taxes at current rates if their taxable income is between $35,000 CAD ($27,500 US) and $80,000 CAD ($62,500 US).
How To Use Your Tax Return
You can use your tax return to calculate your taxes in a few easy steps.
- Find out what you owe by using our tax calculator.
- Enter the amount you paid on line 150 of last year’s return and any other amounts that may apply (such as RRSP/RPP contributions, unused tuition fees and union dues)
- Add up all the deductions from your T4s that you can deduct from your income.
- Subtract any taxable benefits from employment insurance payments to calculate if it is less than $841 (if not, then keep going!) This will let me know how much I have left over after paying into my pension plan each month!
Learn how to calculate your taxes in Ontario.
To learn more about how to file your income tax return in Ontario, including how to use it and what you can do if you owe money, check out the Canada Revenue Agency’s website.
When you’re ready to file your taxes, get started by gathering up all of the information that’s required for filing an income tax return. That includes:
- The total amount of interest and other investment income you received during the year
- Your RRSP contributions from previous years (if applicable)
- All of your deductible expenses from previous years (if applicable)
Once you’ve gathered this information, it’s time to fill out Form ON-BEN. If you have dependents or are married or living common-law with someone who has children living with them most of the time (or whose income will be reported on your return), then please also complete Form ON-BENDEDEVIDENCE OF IDENTIFICATION AND RESIDENCE OF HOUSEHOLD MEMBERS TO THE TAX ROYALTY APPLICANTS.
Conclusion
As you can see, calculating your taxes in Ontario isn’t as difficult as it may seem. One final note: don’t forget that you are also required to pay the federal government income tax. For more information on this and all other topics related to Canadian tax law, we highly recommend that you consult a qualified accountant or financial expert.**
