Individual Tax in Ontario (2016)

An Ontarian has a taxable income of $107,000. Find the following:

(a) Total taxes payable

(b) Average tax rate

(c) Marginal tax rate

Question

Individual Tax in Ontario (2016)

An Ontarian has a taxable income of $107,000. Find the following:

(a) Total taxes payable

(b) Average tax rate

(c) Marginal tax rate

Accepted Answer

Data

Taxable income [latex]\$107,000[/latex]

2016 Federal Individual Rate			Tax per Level
On the first			[latex]\$45,282.00[/latex]	[latex]15\%[/latex]	[latex]\$6,792,30[/latex]
from	[latex]\$45,282.00[/latex]	to	[latex]\$90,563.00[/latex]	[latex]20.8\%[/latex]	[latex]\$9,282.60[/latex]
from	[latex]\$90,563.00 [/latex]	to	[latex]\$107,000.00[/latex]	[latex]26\%[/latex]	[latex]\$4,723.62[/latex]
[latex]\$20,348.52[/latex]
Less non-refundable tax credit			[latex]\$11,474.00 [/latex]	[latex]15\%[/latex]	[latex]\$1,721.10[/latex]
Basic federal tax = [latex]\$19,790.39 [/latex]
2016 Manitoba Provincial Tax
On the first			[latex]\$41,536.00 [/latex]	[latex]5.05\%[/latex]	[latex]\$2,097.57 [/latex]
from	[latex]\$41,536.00 [/latex]	to	[latex]\$83,075.00 [/latex]	[latex]9.15\%[/latex]	[latex]\$3,800.82 [/latex]
above	[latex]\$83,075.00 [/latex]			[latex]11.16\%[/latex]	[latex]\$2,670.03 [/latex]
Regular Ontario tax= [latex]\$8,568.42[/latex]
Ontario Surtax
On the amount the tax exceeds =[latex]\$4,484 [/latex]			[latex]\$4,084.42 [/latex]	[latex] @ 20\%[/latex]	[latex]\$816.88 [/latex]
On the amount the tax exceeds =[latex]\$5,739 [/latex]			[latex]\$2,829.42 [/latex]	[latex] @ 20\%[/latex]	[latex]\cancel {\$1,018.59} [/latex]
Ontario surtax= [latex]\$1,835.47[/latex]
Less non-refundable tax credit			[latex]\$10,011.00 [/latex]	[latex]5.05\%[/latex]	[latex]\$505.55 [/latex]
Total Federal & Provincial Taxes Payable=					[latex]\$28,525.76[/latex]
Average Tax Rate = Total Federal & Provincial Taxes Payable/Taxable Income =					[latex]26.66\%[/latex]
Marginal Tax Rate = Tax Payable on Next Dollar
[latex]=26\%+11.16\%×[1+(20\%+36\%)]=[/latex]					[latex]43.4\%[/latex]
After-tax income =78,474.24

2016 Federal Individual Rate			Tax per Level
On the first			$\$45,282.00$	$15\%$	$\$6,792,30$
from	$\$45,282.00$	to	$\$90,563.00$	$20.8\%$	$\$9,282.60$
from	$\$90,563.00$	to	$\$107,000.00$	$26\%$	$\$4,723.62$
$\$20,348.52$
Less non-refundable tax credit			$\$11,474.00$	$15\%$	$\$1,721.10$
Basic federal tax = $\$19,790.39$
2016 Manitoba Provincial Tax
On the first			$\$41,536.00$	$5.05\%$	$\$2,097.57$
from	$\$41,536.00$	to	$\$83,075.00$	$9.15\%$	$\$3,800.82$
above	$\$83,075.00$			$11.16\%$	$\$2,670.03$
Regular Ontario tax= $\$8,568.42$
Ontario Surtax
On the amount the tax exceeds = $\$4,484$			$\$4,084.42$	$@ 20\%$	$\$816.88$
On the amount the tax exceeds = $\$5,739$			$\$2,829.42$	$@ 20\%$	$\cancel {\$1,018.59}$
Ontario surtax= $\$1,835.47$
Less non-refundable tax credit			$\$10,011.00$	$5.05\%$	$\$505.55$
Total Federal & Provincial Taxes Payable=					$\$28,525.76$
Average Tax Rate = Total Federal & Provincial Taxes Payable/Taxable Income =					$26.66\%$
Marginal Tax Rate = Tax Payable on Next Dollar
$=26\%+11.16\%×[1+(20\%+36\%)]=$					$43.4\%$
After-tax income =78,474.24

Question 12.2: Individual Tax in Ontario (2016) An Ontarian has a taxable i...

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