1.    Canadian income tax rates - federal personal income tax rates:

Canadian federal income tax is calculated based on taxable income, and then non-refundable tax credits are deducted to determine the net amount payable.  The non-refundable tax credits include the basic personal amount, which is available to every taxpayer.  Thus, a taxpayer can earn $8,012 of taxable income in 2004 before paying any federal tax. The tax credit is calculated by multiplying the lowest tax rate by the basic personal amount, for instance $8,012 x 16% = $1,282 in 2004.  For a list of all the federal non-refundable tax credits and amounts see #3, Federal, British Columbia and Ontario non-refundable personal tax credits.

Every province and territory also has non-refundable tax credits, including the basic personal amount.  These are listed under the provincial/territorial tax tables in the next section.

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2.    Combined Federal + Provincial Personal Income Tax Rates

Canadian federal and provincial/territorial income taxes are calculated separately, although on the same tax return, except for Quebec.  The rates are combined here so that taxpayers can see the total tax rate being paid.

There are an abundance of tax brackets when the federal and provincial tax tables are combined, because almost all the tax brackets for the provinces and territories differ from the federal ones.  Only Yukon (YT) and Nunavut (NU) have the same tax brackets as the federal ones in 2004.

After the income tax amounts are calculated, non-refundable tax credits are deducted from the tax payable.  Non-refundable tax credits include the basic personal amount, which is available to every taxpayer.  A list of most of the non-refundable tax credits can be seen below at #3, Federal, British Columbia and Ontario non-refundable personal tax credits.  

The basic personal amount for each province and territory is listed below the tables of tax rates.  This is the amount that can be earned before any provincial/territorial tax is paid.  

NL also has a surtax of 9%, which applies when the NL income tax (after deducting non-refundable tax credits) exceeds $7,032.  Thus, if the provincial income tax payable after tax credits was $10,000, the surtax would be $267, or ($10,000 - $7,032) x 9%.  This surtax applies to both 2003 and 2004.  For a single person with a tax credit for only the basic personal amount, the provincial income tax will reach $7,032 at a taxable income of approximately $58,600 in 2004 or 2003.

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PE also has a surtax of 10%, which applies when the PE income tax (after deducting non-refundable tax credits) exceeds $5,200.  Thus, if the provincial income tax after tax credits was $10,000, the surtax would be $480, or ($10,000 - 5,200) x 10%.  This surtax applies to both 2003 and 2004.  For a single person with a tax credit for only the basic personal amount, the provincial income tax will reach $5,200 at a taxable income of approximately $51,850 in 2004 or 2003.

NS also has a surtax of 10%, which applies when the NS income tax (after deducting non-refundable tax credits) exceeds $10,000.  Thus, if the provincial income tax after tax credits was $12,000, the surtax would be $200, or ($12,000 - $10,000) x 10%.  This surtax applies to both 2003 and 2004.  For a single person with a tax credit for only the basic personal amount, the provincial income tax will reach $10,000 at a taxable income of approximately $85,660 in 2004 ($79,525 in 2003).

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Unlike other provinces and territories, QC does not apply the lowest provincial tax rate (16%) to the basic personal amount in calculating the non-refundable tax credits.

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ON also has two surtaxes:
    1. a surtax of 20% on ON income tax (after deducting non-refundable tax credits) in excess of $3,856 ($3,747 in 2003).  For a single person with a tax credit for only the basic personal amount, the ON tax will reach $3,747 at a taxable income of approximately $58,772 in 2004, or $57,110 in 2003.
    2. a surtax of 36% on ON income tax (after deducting non-refundable tax credits) in excess of $4,864 ($4,727 in 2003).  For a single person with a tax credit for only the basic personal amount, the ON tax will reach $4,727 at a taxable income of approximately $69,246 in 2004, or $67,290 in 2003.

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