That's only for Ontario, because, well, I've spent way too much time on this already!
The concept of Effective Marginal Tax Rate (EMTR) has since surfaced, to describe the adjusted MTR when eligibility to social benefits is included.
By adding the Ontario Health Premium, we get the following mess for 2011:
Code: Select all
000000 - 009104 0% (Ontario Basic Amount ends)
009104 - 010527 5.05% (Federal Basic Amount ends)
010527 - 020000 20.05% (First Ontario Health Tax bracket begins)
020000 - 025000 26.05% (First Ontario Health Tax bracket ends)
025000 - 036000 20.05% (Return to first bracket)
036000 - 037775 26.05% (Second Ontario Health Tax bracket starts)
037775 - 038500 30.15% (Second Ontario tax bracket starts)
038500 - 041544 24.15% (Second Ontario Health Tax bracked ends)
041544 - 048000 31.15% (Third Ontario Health Tax bracket starts)
048000 - 048600 46.15% (Third Ontario Health Tax bracket ends)
048600 - 066514 31.15% (Second Federal tax bracket starts)
066514 - 072000 32.98% (First Ontario surtax rate starts)
072000 - 072600 57.98% (Fourth Ontario Health Tax bracket starts)
072600 - 075550 32.98% (Fourth Ontario Health Tax bracket ends)
075550 - 078361 35.39%
078361 - 083088 39.41%
083088 - 128800 43.41%
128800 - 200000 46.41%
200000 - 200600 71.41% (Last Ontario Health Tax bracket)
200600 - 46.41%
Age Amount
Federal: gets clawed back between 32,504 and 75,475, adding 2.25% to EMTR.
Provincial: gets clawed back between 33,091 and 62,725, adding 0.76% to EMTR.
This basically pushes the highest EMTR to 60.23% between $72,000 and $72,600.
Old Age Security Clawback
Starts at $67,668. Clawed back at 15% for taxable income above that amount until all OAS is clawed back around $109606 (assuming the maximum is paid). Because this amount is pre-tax, the EMTR impact is not 15%, but rather around 10% for the first few thousands (taxed at 32.98%) and 8.5% for the last few thousands (taxed at 43.41%). For the small Ontario Health Tax bracket between $72,000 and $72,600, after-tax clawback is equivalent to 5.97% (bringing the EMTR from 60.23% (including Age Amount clawback) to 66.2%.
These following EMTR adjustments are based on family income, which makes them difficult to integrated into the standard MTR/EMTR table. The EMTR quoted in this section are for single parents, single-earner families or families with the lowest-earning spouse making less than the spouse credit.
Canada Child Tax Benefit
It is $1,348 per child for the first 2, and $1,442 per child after the second. It is clawed-back based on family income above $40,970 at a rate of 2% (for families with 1 child) or 4% (for families with 2+ children).
The impact for families with 1 child is that the EMTR increases by 2% between $40,970 and $108,370. For families with 2 children, the EMTR increases by 4% for the same range, while families with more children continue to see their EMTR reduced by 4% until the benefit is expired (at $144,420, $180,470, $216,520 for 3,4,5 children).
For a single earner family with a $200+ income and 5+ children, this pushes the maximum EMTR to 75.41% for the mini-bracket between $200,000 - $200,600. If a parent is over 65, the EMTR can be pushed to 70.2% between $72,000 and $72,600 of personal income when combining CCTB, Age Amount and OAS clawbacks.
Note: the UCCB or RDSP income are not considered in calculating the CCTB clawback.
National Child Benefit Supplement
1 dependent: $2,088 clawed back at 12.2% between $23,855 and $40,970.
2 dependents: $3,936 clawed back at 23% between $23,855 and $40,970.
3 dependents: $5,694 clawed back at 33.3% between $23,855 and $40,970
4 or more: additional $1,758 clawed back at 33.3% after $40,950 (up to $46,224 at 4 dependents, or $51,500 at 5 dependents)
For a single-earner family with 3 children, that pushes the EMTR above 50% between $23,855 and $40,970, with a peak of 63.45% between $37,775 and $38,500. It's also just below 60% between $36,000 and $37,775 and between $23,855 and $25,000.
Note that if the single-earner with 3 children is above 65, the top clawback is pushed another 3% up after 32,000-33,000 (to a maximum of 66.46%).
GST/HST tax credit
There are several possibilities depending on marrital status and number of children, but the clawback is 5% starting at $32,506, and ending at $37,506 for a single, $42,506 for a couple, $47,746 for a family of 4 and $50,366 for a family of 5.
(Note, the above are 2010 thresholds, not 2011, they will go up a few hundred dollars)
Our top EMTR is now 68.45% betweem $37,775 and $38,500 for a single-earner with 3 children (71.46% if the single-earner is a senior).
Ontario Sales Tax Credit
Single: Clawed-back at 4% between $20,000 and $26,500.
Couple: Clawed-back at 4% between $25,000 and $38,000.
Family of 4: Clawed-back at 4% between $25,000 and $51,000 (up to 57,500 for our family of 5).
So we've now increased our EMTR to 72.45% for our family of 5 between $37,775 and $38,500 (75.46% if also a senior). Not that this highest EMTR threshold is small ($725), but our family of 5 will still average about 70% of taxes and lost benefits between roughly $36K and $46K.
Ontario Child Benefit
$1,100 per child, clawed back at 8% starting at $20,000. Our family of 5 now has an EMTR of 80.45% between $37,775 and $38,500 (and averaging over 75% between $36,000 and $46,000). Add 3% for a senior.
Ontario Energy and Property Tax Credit
Non refundable tax credit. Gets clawed back at 2% (maximum EMTR of 82.45% (or 85.45% for a senior)).
CPP & EI
Even if these are not considered as taxes, they’ll reduce the take home pay by 4% for CPP (after 20% credit) and 1.4% for EI. Combined with the maximum 80.45% So the marginal take home pay for head of a family of 5 in the worst EMTR bracket could be as little as 12% (or 9% if the single-earner is a working senior).
The following are less common (or less automatic) credits and benefits that may also get clawed back. If they don’t increase the maximum EMTR at the worst bracket, they may help increase the nearest tax brackets:
- The Child Disability Benefit start getting clawed back after $41,000. (2% for 1 child, 4% for 2+)
- The medical expense credit may be clawed back at 3% of the lowest earner's net income, which doesn't affect our single-earner family of 3+ children, but may affect others.
- GIS clawed back at 50%
- Caregiver amount for parents and grandparents is clawed back entirely between their income of $14,600 and $18,900.
- Infirm dependent amount clawed back entirely for adult children earning between $6,000 and $10,000.
So, a 65-year old man(*) with a stay at home wife, 3 children (including 1 disabled) who is delaying CPP will lose 93% of his pay cheque between $37,775 and $38,500, and probably an average of 85% of any earned income between $33,000 and $42,000.
(*): I'm not being chauvinistic. 65-year old men with minor children are much, much more common for biological reasons.