While Canadian corporate tax rates remain competitive (enter Burger King) personal income tax rates for high income earners in Ontario have increased and more individuals will subject to a top rate of nearly 50%. In addition, the highest personal tax bracket in 2014 (49.53%) will apply to individuals earning over $220,000 (down from $509,000 in 2013). This means income earned in 2014 in excess of $220,000 but below $509,000 will be subject to an additional 3.12% of tax relative to 2013. The chart below illustrates these changes:
Ex 1. An individual earning $500,000 in 2014 will pay $9,800 more than they did in 2013.
Ex 2. An individual earning $300,000 in 2014 will pay $3,600 more than they did in 2013.
Ex 3. An individual earning $200,000 in 2014 will pay $800 more than they did in 2013.
Various strategies (like income splitting) may help you lower your family’s overall tax liability. Please contact a Stern Cohen LLP advisor to discuss what tax planning opportunities may be available to you.
*Our examples assume an individual resident in Ontario has earned the same amount of taxable income in 2014 and 2013. All amounts have been rounded.