dave@lsuc.uucp (David Sherman) (11/02/88)
Now that Tax Reform has simplified the tax brackets, it's
actually possible to make a quick stab at the amount of tax
you pay for the year. (Of course, what you pay *for* the year
isn't what you pay in April, since most people have source
deductions held back and remitted by their employer. In theory,
the source deductions should leave you with nothing owing in
either direction at the end of the year.)
The federal brackets are Real Easy:
First $27,500 17%
Next $27,500 26%
Anything over $55,000 29%
So if your income's $40,000, that's ($27500*.17) + ($12500*.26).
These figures apply to "taxable income", which nowadays might
be not a whole lot different from your actual income, since
most of the deductions have become credits. The most noticeable
deductions left are RRSP and pension contributions, and child care.
Then take off the credits which apply before calculating provincial tax.
These include:
- basic personal credit ($1,020)
- credit for dependent spouse ($850)
- credit each for dependent children ($65 for first two; then $130)
- old age credit ($550)
- severe physical or mental impairment credit ($550)
- full-time student status ($10/month)
- credit for CPP and UIC contributions (17% of amounts paid)
- credit for tuition fees paid (17%)
- credit for charitable donations (17% of first $250, 29% thereafter)
- credit for medical expenses over 3% of net income or over $1,500 (17%)
Take the remaining federal tax, and add the provincial tax, which is
51% of the federal tax for Ontario (other provinces' rates available
on request). Then add the federal surtax, which is 3% of the federal
tax, and the Ontario surtax if you're lucky enough to pay it -- it's
10% of the amount by which your Ontario tax exceeds $10,000. (Some of
the other provinces have surtaxes too.)
Finally, take the credits which are federal-only credits, such
as those for political contributions and the Child Tax Credit.
If anyone wants to hack up and post an awk program to do the above,
feel free. Of course, all of this is highly simplified, and won't
account for people with capital gains, dividend income, or anything
else that's unusual.
David Sherman
Tax Lawyer
Toronto
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