Let’s talk tax!

March 30, 2023 | RBC Wealth Management


Share

Introduction to income tax in Canada

People learning financial literacy

Financial Literacy program logo

Formal financial education, when combined with advice and practical learning, can help set the stage for a lifetime of informed and confident financial decision-making. RBC Wealth Management (RBC WM) recognizes the importance of helping clients and their families build sound financial management skills, offering a range of resources to support and encourage financial learning.


In Canada, most of our income is subject to at least some tax. The Canadian tax system is based on progressive tax rates, which means the tax rate goes up as income goes up. Your marginal tax rate is the rate at which additional dollars earned will be taxed at. You don’t pay your marginal rate on all of your income. You only pay the rate that applies to the amount of income you have in each bracket, or at each step. Your average tax rate refers to the amount of tax you pay in a year, relative to your total income.

To calculate your income tax, add up your income, subtract applicable deductions, multiply this by the tax rates, then deduct applicable credits. Tax deductions and credits can save you money by reducing how much income tax you pay. Since not every deduction and credit applies to every individual, it’s important to research those that might apply to you and/or consult with a qualified tax advisor.

For more information on income tax and how it affects you, contact us today.

Interested in learning more? Check out these related resources:


This information has been prepared for use by the RBC Wealth Management member companies, RBC Dominion Securities Inc.*, RBC Phillips, Hager & North Investment Counsel Inc., Royal Trust Corporation of Canada and The Royal Trust Company (collectively, the “Companies”) and certain divisions of the Royal Bank of Canada. *Member-Canadian Investor Protection Fund. Each of the Companies and the Royal Bank of Canada are separate corporate entities which are affiliated. This information is not intended as nor does it constitute tax or legal advice. Readers should consult a qualified legal, tax or other professional advisor when planning to implement a strategy. This will ensure that their individual circumstances have been considered properly and that action is taken on the latest available information. Interest rates, market conditions, tax rules, and other investment factors are subject to change. This information is not investment advice and should only be used in conjunction with a discussion with your RBC advisor. ® / ™ Trademark(s) of Royal Bank of Canada. Used under licence. © Royal Bank of Canada 2023. All rights reserved.

Categories

Financial Literacy