Tax Brackets Canada 2019

It’s a yearly rite of passage for Canadians to jump through hoops trying to figure out how much tax to pay. Normally, it’s an exhausting exercise. But we’ve gathered all of there relevant information in one place to help you get through everyone’s least favourite season. Here’s what you need to know.

How to Identify your Tax Bracket

How much tax you’ll pay is determined by where you live in Canada, and how much income you declare from all sources. Importantly, your provincial rate is determined by the province you are living in on December 31 of the tax year. So, if you move from Ontario to Nova Scotia in July, and you find yourself living in Nova Scotia on December 31, you would fall under the Nova Scotia provincial tax rates.

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How Tax Brackets Work

Your tax bracket is based on “taxable income”, which is your gross income from all sources, minus any tax deductions you may qualify for. In other words, it’s your net income after you’ve claimed all your eligible deductions.

Once you know what your taxable income is, you’ll then apply the relevant federal and provincial rates to your net taxable income. You should calculate your federal tax first, your provincial rate second, and then add the two together — and presto!

Your marginal tax rate is the combined federal and provincial taxes you pay on all sources of income at tax time. The tax rate varies by how much income you declare at the end of the year on your T1 General Income Tax Return (the form with the exciting sounding name that you fill out at tax time) and where you live in Canada.

Federal Tax Bracket Rates 2019

The following are the federal tax rates for 2019 according to the Canada Revenue Agency (CRA):

  • 15% on the first $47,630 of taxable income, and
  • 20.5% on the portion of taxable income over 47,630 up to $95,259 and
  • 26% on the portion of taxable income over $95,259 up to $147,667 and
  • 29% on the portion of taxable income over $147,667 up to $210,371 and
  • 33% of taxable income over $210,371

Provincial Tax Brackets Rates 2019 (in addition to federal tax)

Like we said, the province you are living in on December 31 will determine the provincial portion of your income tax. So, if you are planning skipping town to a province with lower taxes, do it before December 31 of the calendar year. The following are the provincial tax rates for 2019 (in addition to federal tax) according to the Canada Revenue Agency:

**Province** 
**Tax Rate**
 
British Columbia 
5.06% on the first $40,707 of taxable income
  
7.7% on the next $40,707-$81,416
  
10.5% on the next $81,416-$93,476
  
12.29% on the next $93,476-$113,503
  
14.7% on the next $113,503-$153,900
  
16.8% on the amount over $153,900
 
 
Alberta 
10% on the first $131,200
  
12% on the next $131,200-$157,464
  
13% on the next $157,464-$209,252
  
14% on the next $209,252-$314,928
  
15% on the amount over $314,928
 
 
Saskatchewan 
11% on the first $45,225 of taxable income,
  
12.75% on $45,225-$129,214
  
17.4% on the amount over $129,214
 
 
Manitoba 
10.8% on the first $32,670 of taxable income
  
12.75% on the next $32,670-$70,610
  
17.4% on the amount over $70,610
 
 
Ontario 
5.05% on the first $43,906 of taxable income
  
9.15% on the next $43,906-$87,813
  
11.16% on the next $87,813-$150,000
  
12.16% on the next $150,000-$220,000
  
13.16 % on the amount over $220,000
  
 
 
Quebec 
0% $0-$15,269
 
 15% $15,269.01-$43.790
  
20% More than $43,790.01, but not more than $87,575
  
24% More than $87,575.01, but not more than $106,555
  
25.75% More than $106,555
 
 
New Brunswick 
9.68% on the first $42,592 of taxable income
  
14.82% on the next $42,592-$85,184
  
16.52% on the next $85,184-$138,491
  
17.84% on the next $138,491-$157,718
  
20.3% on the amount over $157,718
 
 
Nova Scotia 
8.79% on the first $29,590 of taxable income
  
14.95% on the next $29,590-$59,180
  
16.67% on the next $59,180-$93,000
  
17.5% on the next $93,000-$150,000
  
21% on the amount over $150,000
 
 
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
 
 
Newfoundland and Labrador 
8.7% on the first $37,579 of taxable income
  
14.5% on the next $37,579-$75,181
  
15.8% on the next $75,181-$134,224
  
17.3% on the next $134,224-$187,913
  
18.3% on the amount over $187,913
 
 
Nunavut 
4% on the first $45,414 of taxable income
  
7% on the next $45,414-$90,829
  
9% on the next $90,889-$147,667
  
11.5% on the amount over $147,667
 
 
Yukon 
6.4% on the first $47,630 of taxable income
  
9% on the next $47,630-$95,259
  
10.9% on the next $95,259-$147,667
  
12.8% on the next $147,667-$500,000
  
15% on the amount over $500,000
 
 
Northwest Territories 
5.9% on the first $43,137 of taxable income
  
8.6% on the next $43,137-$86,277
  
12.2% on the next $86,277-$140,267
 
  
14.05% on the amount over $140,267

Remember: Your marginal tax rate is the total of both federal and provincial taxes on income.

Example of tax calculation

Meet a fictional chap named John who lives in British Columbia. John has been contributing to a Wealthsimple RRSP to reduce his taxable income. After his RRSP contribution and other tax deductions and tax credits, he has taxable income of $55,000. Here’s what his tax calculation might look like:

John’s Federal tax bill The first $47, 630 is taxed at 15% (the lowest bracket), which works out to $7144.50. He has $7370 remaining, ($55,000-$47,630) — that amount will be taxed at a higher rate of $20.5% which works out to $1,510.85. This means his total federal tax owing is $7144.50 + $1,510.85 = $8655.35.

John’s provincial tax bill (using BC rates as example) Remember, John’s provincial rate is based on his province of residence as of December 31 of the calendar year. John’s first $40,707 will be taxed at 5.06%, which works out to $2,059.77. The remaining $14,293 ($55,000-$40,707) will be taxed at 7.7% which works out to $1100.56. His total provincial tax is $3160.33.

John’s total tax bill

John’s combined federal and provincial taxes owing is $8655.35 + $3160.33 = $11,815.68.

Tax Credits and Tax deductions

Tax credits and tax deductions can reduce either your income or the amount of tax you owe.

Tax credits

Both federal and provincial tax credits exist, and you’ll be glad to hear they help you pay less tax. There are two types: Non-refundable and refundable

Non-refundable

A non-refundable tax credit reduces the amount of tax payable. In order to claim a non-refundable tax credit, you must actually owe taxes — in other words, you must have earned enough income to owe income tax. Non-refundable tax credits can reduce your tax owing to zero, but if you have more tax credits than tax owing, you do not receive a refund for any surplus amount. Let’s make that more concrete: if you owe $2500 in taxes and have non-refundable tax credits for $2700, your taxes will be reduced to zero, but you will not receive the extra $200.

Some non-refundable tax credits include:

  • Personal exemption amount (anyone who owes tax is entitled to claim this exemption)
  • Exemption for taxpayers over age 65
  • Exemption for taxpayers with children
  • Exemption for people receiving a pension
  • Exemption for people with a certified disability
  • Exemption for people who are caregivers to someone with a disability

Some other non-refundable tax credits include tuition, medical expenses, Employment Insurance and Canada Pension Plan deductions, interest paid on student loans and adoption expenses. Most provinces have tax credits to reduce the provincial tax owing.

Refundable Tax Credits

Refundable tax credits are paid to anyone who qualifies for them, whether they had income or not. Usually they’re paid out over the year. The most well-known non-refundable tax credit is the GST/HST payment that people with a combined family income of less than $42,000 receive .

Tax deductions

Tax deductions don’t work like many people suppose. Instead of reducing the amount of taxes you need to pay, a tax deduction actually reduces the amount of your gross income, which can put you in a lower tax bracket and reduce the amount of taxes you will owe.

The most common tax deductions are:

  • Pension Adjustment. You get credit for any pension contributions made in the calendar year on your behalf. Your employer will list the Pension Adjustment amount in box 52 on your T-4 slip that lists your income and income tax deducted for the year.
  • Union and professional dues
  • Child care expenses
  • Registered Retirement Savings Plan (RRSP) contributions up to the maximum allowable amount per year. Your financial institution will provide you with a contribution receipt, and you can find out how much RRSP contribution room you have by looking on your Notice of Assessment (the summary form that you receive after you have filed your previous year’s taxes), by looking on your tax account or by calling CRA at 1-800-959-8281. You can also learn more about RRSP contribution limits.
  • Donations to charitable organizations or political parties

If you owe income tax, the Canada Revenue Agency will let you work out a payment plan if you cannot pay the taxes all at once. You will be charged interest on any balance you still owe. But be careful: if you owe income tax and don’t pay, and you don’t make an attempt to work out a payment plan, CRA can seize any refundable tax credits you may be eligible for, and they may take you to court and seize the contents of your bank account. Here’s more information about potential consequences for non-payment of taxes.

If you want to reduce your tax bill, Wealthsimple has a number of financial products such as RRSPs, that can help you reduce the amount of income tax you pay.

Wealthsimple provides state of the art technology, low fees and the kind of personalized, friendly service you might have not thought imaginable from a low-priced investment service. Get started today!

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