How much you have to pay varies from province to province. In Ontario, this is calculated based on your yearly income. In Canada, anyone earning an income is required to file for taxes.
Depending on your earnings and how much you put into your taxes throughout the year, you may receive money back from the government or you may have to pay the government.
Let’s take a closer look at taxes in Ontario and how much they cost.
What are Taxes and why do we pay them?
To put things simply, taxes are fees initiated by the government. These are considered mandatory, and must be filed by anyone who is earning any type of income, regardless of age.
There are many different types of taxes that we pay in Ontario. These include tariff taxes, estate taxes, property taxes, sales taxes, corporate taxes, and income taxes.
These taxes are all used to help build and maintain infrastructures, and go towards funding services and government projects. They are considered a contribution to the betterment of the economy.
How much is tax in Ontario?
As we mentioned, there are several different types of taxes in Ontario. For the purpose of this article, however, we’d like to focus on income taxes.
Income taxes are taxes that are filed once per year and are based on your annual income. Anyone earning any type of income is required to file their end of year taxes, regardless of age.
But how are income taxes calculated? It depends on how much you make. In Ontario, you will fall into one of 5 tax brackets based on your annual income. The bracket that you fall into will determine exactly how much you are taxed.
Generally speaking, the more you make, the higher the tax bracket you will fall into.
- If you earn less than $45, 142 annually, you will be taxed 5.05% of taxable income
- If you earn between $45, 142 – $90, 278, you will be taxed 9.15% on portion of taxable income
- If you earn between $90, 287 – $150 000, you will be taxed 11.16% on portion of taxable income
- If you earn between $150 000 – $220 000, you will be taxed 12.16% on portion of taxable income
- If you earn more than $220, 000, you will be taxed 13.16% on portion of taxable income
*Note: these are 2021 tax rates.
How do you calculate your taxes?
Unfortunately, calculating your taxes is not as simple as determining which tax bracket you fall into. There are many other factors that also contribute to how much you will have to pay.
Your employer will provide you with a T4 slip that can be used to help you fill in your tax forms. With that being said, income isn’t the only consideration.
Other incomes, RRSP contributions, awards and gifts, tax benefits, and child support are just a few of the many considerations that determine how much your taxes will be.
If you aren’t sure how to file your taxes, it’s best to hire a tax consultant or use a Tax Software Program. Taxes can be difficult to understand and you want to make sure you file them properly to avoid penalties.