45171
44095

Taxation.

Taxation.

Postby Ken7 » Sep 7th, 2017, 6:43 am

I've been out of full time work for quite sometime now, 2006 to be exact when I retired from a full career.

For those of you who still slave away and work 40 plus hours a week please read on.

When I was working I found if I did work a overtime shift of 12 hours, it equated to a additional $75.00 on my pay stub. Now I realize I may have been bumped into the higher tax bracket and that may be the cause.

Any of you out there actually notice this?? Let me know, as after listening to the Castanet story of Trudeau on how he's not bashing small business I got reflecting back.

Thanks.
Ken7
Guru
 
Posts: 5785
Likes: 2881 posts
Liked in: 1841 posts
Joined: Sep 30th, 2007, 4:09 pm

Re: Taxation.

Postby GordonH » Sep 7th, 2017, 6:56 am

Working overtime can be double edge sword, you have to look at deduction tables (Canada Revenue agency). To find that sweet spot to get maximum take home pay, without moving into next tax bracket.
Here is an online CRA deduction tables: https://www.canada.ca/en/revenue-agency ... lator.html
(Play around with the numbers)
2 employees one does huge amounts of OT, the other does not. They compared paycheque's, the person working lots of OT hours noticed his/hers pay was not much more then the person who only worked a few OT hours.

Ken7 likes this post.
User avatar
GordonH
Buddha of the Board
 
Posts: 17586
Likes: 1682 posts
Liked in: 5241 posts
Joined: Oct 4th, 2008, 7:21 pm
Location: Second star to the right and straight on 'til morning

Re: Taxation.

Postby Bsuds » Sep 7th, 2017, 7:13 am

A long time ago in my youth if I worked overtime on a Saturday my take home was $10 more than if I worked both Saturday and Sunday. The Company had a very hard time getting people to work both days.
How do you milk Sheep?

Bring out a new iPhone and charge $1000. for it.

Ken7 likes this post.
User avatar
Bsuds
The Wagon Master
 
Posts: 40559
Likes: 6755 posts
Liked in: 8524 posts
Joined: Apr 21st, 2005, 10:46 am

Re: Taxation.

Postby Gilchy » Sep 7th, 2017, 8:05 am

Moving in to a higher tax bracket means that only income made above the cutoff is taxed at the higher rate. So working some OT, if it pops you up into the next bracket, doesn't increase your tax rate back to dollar zero.

5 people like this post.
User avatar
Gilchy
Generalissimo Postalot
 
Posts: 925
Likes: 112 posts
Liked in: 329 posts
Joined: Nov 19th, 2010, 7:51 am

Re: Taxation.

Postby Poindexter » Sep 7th, 2017, 8:13 am

Really kicks the crap out of bonus pay as well. One thing to note is that you get some of that extra tax back in your yearly return because the OT or bonus pay gets spread out with your regular pay.

2 people like this post.
User avatar
Poindexter
Lord of the Board
 
Posts: 4658
Likes: 2548 posts
Liked in: 3069 posts
Joined: May 26th, 2008, 11:44 am

Re: Taxation.

Postby Bleach » Sep 7th, 2017, 10:09 am

Yeah, I found that out the hard way. Now I dislike OT, what is the point of working my butt off to take $100 home?! I know there is bottlenecks once you hit the top end of the pay before you jump to the next TAX bracket, makes OT worthless you will make more taking bottles in then to work OT.

I would gladly work OT, if there was any benefit.
Bleach
Fledgling
 
Posts: 225
Likes: 0 post
Liked in: 25 posts
Joined: Apr 2nd, 2006, 11:03 pm

Re: Taxation.

Postby my5cents » Sep 7th, 2017, 10:56 am

Gilchy wrote:Moving in to a higher tax bracket means that only income made above the cutoff is taxed at the higher rate. So working some OT, if it pops you up into the next bracket, doesn't increase your tax rate back to dollar zero.

Yes !!!

So many people talk about "I'll be in a higher tax bracket",,, as though once you enter the new bracket that all your earning are then taxed at the higher rate.

Saying "I'll be in a higher tax bracket" as though it's a negative, would be like turning down a 25% increase in salary because you'd be taxed more.
"The power of accurate observation is commonly called cynicism by those who haven't got it"

2 people like this post.
my5cents
Lord of the Board
 
Posts: 3013
Likes: 515 posts
Liked in: 769 posts
Joined: Nov 14th, 2009, 3:22 pm

Re: Taxation.

Postby Boda » Sep 7th, 2017, 11:09 am

my5cents wrote:[
Yes !!!

So many people talk about "I'll be in a higher tax bracket",,, as though once you enter the new bracket that all your earning are then taxed at the higher rate.

Saying "I'll be in a higher tax bracket" as though it's a negative, would be like turning down a 25% increase in salary because you'd be taxed more.


It all comes out in the wash. At the end of the year.
User avatar
Boda
Board Meister
 
Posts: 652
Likes: 175 posts
Liked in: 216 posts
Joined: Oct 4th, 2007, 4:21 pm

Re: Taxation.

Postby Veovis » Sep 7th, 2017, 11:39 am

What this actually is two issues. A lack knowing of how taxes work, and how payroll works. When running payroll for a past company I never had an issue keeping taxes proper for staff, if you know what you are doing.

Let's say you are paid bi-weekly and make 1400 bi-weekly. This will have a payroll system look at your pay and determine annual earnings of 36400 putting you in the first Federal tax bracket, but then wait you get a $100 bones next pay. The system will by default now look at the 2400 as an annual salary of 62400 (2400*26) and take taxes overall at a higher average rate.

You will receive the difference back when filing your tax return.....however if your payroll guy knows his stuff they can account for this issue and keep the tax rate for your actual projected earnings about the same.

It's a timing difference for getting the money not a "taxed more" scenario, but it feels like it if you don't know.

Also, I had many times people complain that they "had gotten too much tax taken off" only to show them that after the added pay the rate was within 1% of regular. The number might be higher but so was your earnings.


For many of you with more than 1 job as well, when you owe taxes in April your employer did not mess up (99%) it's likely you filled out TD1 forms (should have at least) and claimed the basic tax credit twice. You only get the 11,635 total for the year, claiming it at both jobs will leave you owing every year. Claim 0.00 at all other jobs but the main one.

2 people like this post.
Veovis
Guru
 
Posts: 5106
Likes: 586 posts
Liked in: 2956 posts
Joined: Apr 19th, 2007, 3:11 pm

Re: Taxation.

Postby Ken7 » Sep 7th, 2017, 4:46 pm

GordonH wrote:Working overtime can be double edge sword, you have to look at deduction tables (Canada Revenue agency). To find that sweet spot to get maximum take home pay, without moving into next tax bracket.
Here is an online CRA deduction tables: https://www.canada.ca/en/revenue-agency ... lator.html
(Play around with the numbers)
2 employees one does huge amounts of OT, the other does not. They compared paycheque's, the person working lots of OT hours noticed his/hers pay was not much more then the person who only worked a few OT hours.


As I stated, just one 12 hour shift was $75.00 more than the guy/gal who enjoyed the day off!

Thanks Veovisv for your explanation. I've found even in the past the Canadian Tax revenue people do not know how to do taxes. The average City bean counter just hits you as the programs states, and you do not see the extra money until later. However it still appears you are not being paid very well.
Ken7
Guru
 
Posts: 5785
Likes: 2881 posts
Liked in: 1841 posts
Joined: Sep 30th, 2007, 4:09 pm

Re: Taxation.

Postby Veovis » Sep 7th, 2017, 5:16 pm

That was a quick and dirty explanation but good to know.

IT still doesn't prevent the fact that 15% of 100 is less than 15% of 200 so people scream they took twice as much tax, though while true is also false since you made twice as much.

Ken7 likes this post.
Veovis
Guru
 
Posts: 5106
Likes: 586 posts
Liked in: 2956 posts
Joined: Apr 19th, 2007, 3:11 pm


Return to Canada

Who is online

Users browsing this forum: No registered users and 7 guests