Taxation.

[Ken7]

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.

[GordonH]

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.

[Bsuds]

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.

[Gilchy]

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.

[Poindexter]

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.

[Bleach]

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.

[my5cents]

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.

[Boda]

[
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.

[Veovis]

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.

[Ken7]

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.

[Veovis]

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.