Frequently Asked Questions

Please note that the rates quoted on this page are subject to change each year.

Personal Income Tax

- What is the lowest income tax rate in Ontario?
The lowest income tax rate in Ontario is 22% of taxable income under $35,000.

- What is the highest income tax rate in Ontario?
The highest income tax rate in Ontario is 46.41% of taxable income over $118,285.

- Who pays Canadian income taxes?
Anybody who is a resident of Canada and their taxable income is over $10,000 pays income taxes in Canada. However, any person over 18 years of age should file an income tax return, even if they do not have any income to receive certain refundable tax credits (example: Goods and Services Tax, Provincial Sales Tax credit and rent credit).

- How much RRSP can I buy?
You can buy 18% of your previous year's earned income. This information is also available on your Notice of Assessment of the previous year.

- What can I deduct from my employment income?
The following deductions are available on employment income:
   a. Moving expenses
   b. Child care expenses
   c. University tuition fees
   d. Medical expenses (prescription drugs, eye glasses and dental)
   e. RRSP
   f. Donations
   g. Professional and union dues
   h. Certain car, travel and office expenses are deductible by certain employees who need to travel for business purposes and are given a form called T2200 by their employers.

Business Income Tax

- What deductions are available for businesses (sole proprietorships, partnerships and corporations)? Simply-put, all expenses that are incurred to earn income can be expensed with the exception of capital assets, which are amortized at a prescribed rate by Canada Revenue Agency (CRA).

- Should I operate my business as a sole proprietor, partnership or corporation?
This is a complex question and there are certain advantages and disadvantages to each of the business types. This requires in-depth consultation and you can book a FREE 30-minute consultation with Mr. Siddiqi to customize your business to meet your needs.

- What is the tax differential between unincorporated and incorporated businesses?
Unincorporated business income is taxed in the hands of the proprietor and can be taxed as high as 46.41% over $118,285 of taxable income. Whereas an incorporated business is a living, legal entity by itself - it pays its own taxes, files its own tax returns and pays 18.62% up to $400,000 of taxable income.