Today a client asked us an interesting question which we would like to share with you all.
Taxes are collected by all levels of the government including Federal, Provincial and Municipal. Income taxes are collected by Revenue Canada and then redistributed to pay for all public services. Our system is not a flat tax. Canadians are taxed on their “ability to pay” and their marginal tax rate.
Federal tax rates for 2009 are:
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.
Employment insurance (EI) and Canada Pension Plan (CPP) is not a tax. They are collected separately as a percentage of your income.
EI – 1.73% max $747.36
CPP – 4.95% max $2163.15
