Personal Tax 101
for individuals living in ontario
What is Personal Tax?
If you live or work in Ontario, you need to pay income tax to both the federal and provincial governments on the income you earn from different sources. The amount of income tax you pay depends on how much income you make and what kind of income it is.
Ontario has five income tax brackets with different rates for 2022, from 5.05% to 13.16%. You may also qualify for various tax credits and benefits that can lower your tax bill or give you money back. This is what you need to know about personal tax in Ontario. Get more insights by reading on “Personal Tax 101”.
How Does Personal Tax Work in Canada
Personal tax is a form of direct tax that the government collects from individuals on their personal income from different sources, such as
- Wages
- Salaries
- Investments
- Pensions, and
- Benefits
Personal tax rates and rules differ depending on the country, province, or state where the individual resides or works. In Canada, both the federal and provincial or territorial governments impose personal tax, except in Quebec, which has its own personal tax system.
Personal tax rates are progressive, meaning that they rise as the taxable income rises. Personal tax credits and deductions are available to lower the amount of personal tax owed or to provide refunds.
Frequently Asked Questions
You can apply for tax credits and benefits that can reduce your tax payable or provide you with refunds, such as the Ontario Child Care Tax Credit, the Low-Income Workers Tax Credit, the Ontario Energy and Property Tax Credit, and the Seniors’ Home Safety Tax Credit. To apply for these tax credits and benefits, you need to file your tax return online or by paper.
Ontario has five income tax brackets with rates from 5.05% to 13.16% for 2022. The tax rates apply to your taxable income, which is your total income minus deductions and exemptions. The following table shows the tax brackets and rates for 2022:
| Taxable Income | Tax Rate |
|---|---|
| Up to $46,226 | 5.05% |
| $46,227 to $92,454 | 9.15% |
| $92,455 to $150,000 | 11.16% |
| $150,001 to $220,000 | 12.16% |
| Over $220,000 | 13.16% |
You can use an online income tax calculator, such as the one offered by TurboTax, to estimate the amount of income tax that you owe or get back in Ontario. You will need to enter your income, deductions, credits, and other information to get an accurate result. Alternatively, you can use the tax tables and formulas provided by the Canada Revenue Agency (CRA) to manually calculate your income tax.
The deadline for filing your personal income tax return and paying your outstanding income tax is April 30 of each year. If April 30 falls on a weekend or a holiday, the deadline is extended to the next business day. If you miss the deadline, you may have to pay penalties and interest on any balance owed.
You can file your personal income tax return online using certified software or web applications, such as TurboTax, or by paper using the forms and guides provided by the CRA. You can pay your income tax online using your bank account or credit card, by phone using a pre-authorized debit service, by mail using a cheque or money order, or in person at a Canada Post outlet or a financial institution.