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Income Tax and Deductions
F&P Math 10
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Learning Goals I will be able to define what a deduction is, and state the various provincial and federal deductions on income tax I can calculate deductions from a given paystub
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Deductions Deductions are money taken off your gross income
By lay, employers must take deductions from employee pay cheques Main deductions for all BC residents are: Canadian Pension Plan (CPP) Employment Insurance (EI) Provincial Income Tax Federal Income Tax
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Deductions Other deductions can be: Union dues
Pension (or other retirement saving plans) Extended health/dental insurance Life insurance
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Taxes Taxes are required contributions to federal and provincial revenue Leveled by government on personal income and business profit or added to cost of goods and services (PST and GST)
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Taxes Taxes are used for: Education Health care Roads and bridges
Social services
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Taxable vs Non-taxable Income
Canada Pension Plan (CPP) (~3%) Union Dues Employment Insurance (EI) (~2%) Private Pension Income Tax (18% if you earn less than 32,000 annually) Federal Tax Provincial Tax Short/long term disability Life Insurance Extended Health/Dental (~5%)
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Taxable Income Income after non-taxable deductions have been applies
Take off the deductions (union dues, private pension and disability) and then use the remaining as your taxable income
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Example #1 John’s group life insurance is 1.5% of his salary of $ every two weeks. How much does he pay for group life insurance?
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Example #2 Hank paid $37.51 Employment (EI) on his taxable monthly income of $ What is the EI rate in percent?
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Net Income Your take home pay
Income after all deductions have been applied
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Example #3 Calculate her gross income, deductions, and net income
Kara earns $400 a week working for a telemarketing firm. The deductions from her weekly pay are: EI - $8.55 CPP - $13.45 Income Tax - $44.15 Company Pension Plan - $9.50 Health Plan - $10.40 Calculate her gross income, deductions, and net income
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Example #4 Kylie receives an annual salary of $53,750. Calculate Kylie’s bimonthly pay. Kylie’s before tax deductions include union dues of 3.5% and private pension of 4.5%. She also pays federal tax of 19%, provincial tax of 6.8%, CPP at 4.95% and EI 2% what is her net income? Bimonthly pay = 24 pay periods
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Example #5 Autumn has a weekly income of $ and is assigned claim code 2. Calculate her total weekly deductions and taxes. Use the deduction charts for EI, CPP, Prov IT, Fed IT
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To Do Today: Complete the Income Tax and Deductions worksheet
Work in class, whatever is not completed, work on for 30 minutes at home over the weekend.
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