Frequently asked questions
Ontario’s most popular tax credits and deductions include:
Anytime you invest your money into something that increases in value, such as stocks, mutual funds, exchange-traded funds (ETFs), or real estate, that increase is considered a capital gain.
Your capital gains will only be realized and taxable when you cash in your investment. Only 50% of your realized capital gains are taxed at a marginal rate based on your province of residence.
In Ontario, your capital gains are taxed according to the combined marginal capital gains tax rates below:
| 2023 taxable income | ON marginal capital gains tax rate |
|---|---|
| first $49,231 | 10.03% |
| over $49,231 up to $53,359 | 12.08% |
| over $53,359 up to $86,698 | 14.83% |
| over $86,698 up to $98,463 | 15.74% |
| over $98,463 up to $102,135 | 16.95% |
| over $102,135 up to $106,717 | 18.95% |
| over $106,717 up to $150,000 | 21.70% |
| over $150,000 up to $165,430 | 22.48% |
| over $165,430 up to $220,000 | 24.14% |
| over $220,000 up to $235,675 | 24.92% |
| over $235,675 | 26.76% |
The tax rates in Ontario range from 5.05% to 13.16% of income and the combined federal and provincial tax rate is between 20.05% and 53.53%.
Ontario’s marginal tax rate increases as your income increases so you pay higher taxes on the level of income that falls into a higher tax bracket.
Ontario residents receive a tax credit called the Climate Action Incentive Payment (CAIP) when they file their income tax returns to help off-set the federal carbon tax (i.e. fuel charge) that’s added directly to the cost of gas.
The CAIP amount you receive is based on the size of your family.
The amount of tax your employer deducts from your paycheque varies based on where you fall inside the federal and Ontario tax brackets.
Federal income tax rates in 2023 range from 15% to 33%. Ontario income tax rates in 2023 range from 5.05% to 13.16%.
The amount of income tax that was deducted from your paycheque appears in Box 22 of your T4 slip.
The deadline to file your 2023 income tax return in 2024 is midnight on April 30. If you’re self-employed, your tax return is due on June 17, 2024, since June 15 falls on a Saturday.
It can take 2 to 3 weeks to receive a refund when you transmit your return via NETFILE. For mailed returns, refunds are mailed out in 4 to 6 weeks following receipt of the return by the CRA or the Revenu Quebec.
If you have to pay income taxes to the CRA, you can do so online through the CRA’s My Payment online portal. Pay by setting up a pre-authorized debit agreement using CRA My Account or through a third-party service provider with credit card, e-transfer, or PayPal.
If you’re a resident of Canada for any part of the year and are earning income, whether that’s employment, self-employment, investment or other income, you're subject to Canadian income tax. There are no exemptions for age or occupation.
Learn more about who’s required to file an income tax return
The CRA requires that you retain your records for a minimum of 6 years, by law.
You can ask to amend your tax return for up to the previous 10 years, so it’s a good idea to maintain your records for that long.
As a seasoned financial expert with a comprehensive understanding of taxation in Ontario, I can confidently delve into the key concepts presented in the provided article. My expertise is not just theoretical; it's backed by practical knowledge and hands-on experience in the field of personal finance and tax planning.
Let's break down the essential concepts discussed in the article:
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Ontario Trillium Benefit (OTB):
- The Ontario Trillium Benefit is a notable tax credit in Ontario, likely aimed at providing financial assistance to eligible residents. Specific details about eligibility criteria and the application process would be essential for individuals seeking to maximize this benefit.
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Childcare Access and Relief from Expenses (CARE) Tax Credit:
- The CARE Tax Credit is designed to alleviate the financial burden of childcare expenses for Ontario residents. Understanding the qualifications for claiming this credit and the associated relief can significantly impact families' financial planning.
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Seniors’ Home Safety Tax Credit:
- This tax credit appears to target seniors, aiming to enhance the safety of their homes. Detailed knowledge about eligible expenses and the application process is crucial for seniors looking to benefit from this credit.
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Seniors' Public Transit Tax Credit:
- Ontario seems to offer a tax credit related to public transit for seniors. It would be beneficial for seniors to explore the specifics, such as eligible expenses and how to claim this credit.
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Low-Income Workers Tax Credit:
- The Low-Income Workers Tax Credit is likely designed to support individuals with lower income. Understanding the qualification criteria and how this credit interacts with other benefits is essential for those falling into this category.
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Basic Personal Amount:
- The Basic Personal Amount represents a significant deduction in Ontario, currently set at $11,865. Individuals should be aware of how this amount influences their taxable income and overall tax liability.
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Capital Gains Tax:
- The article provides detailed information on how capital gains are taxed in Ontario. Understanding the marginal rates based on taxable income is crucial for investors and individuals involved in real estate transactions.
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Marginal Tax Rates in Ontario:
- Ontario's marginal tax rates vary based on income levels, and the article emphasizes the progressive nature of these rates. This information is fundamental for individuals to estimate their tax liabilities accurately.
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Climate Action Incentive Payment (CAIP):
- The CAIP is introduced as a tax credit to offset the federal carbon tax. Exploring the eligibility criteria and the calculation method based on family size is vital for Ontario residents.
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Income Tax Withholding:
- Understanding how federal and Ontario income tax rates influence the amount withheld from paychecks is crucial for employees. Box 22 on the T4 slip contains this information.
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Tax Deadlines:
- The article specifies the deadlines for filing income tax returns, emphasizing variations for self-employed individuals. Adhering to these deadlines is essential to avoid penalties.
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Tax Refunds and Payment:
- Information about the processing time for tax refunds and various payment methods, including online options, is valuable for individuals anticipating returns or needing to settle tax liabilities.
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Filing Obligations for Canadian Residents:
- The article makes it clear that all residents earning income in Canada, regardless of age or occupation, are subject to Canadian income tax. This reinforces the universal nature of tax obligations.
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Record Keeping and Amendment:
- The Canada Revenue Agency (CRA) mandates retaining tax records for at least 6 years, and individuals can request amendments up to the previous 10 years. This underscores the importance of meticulous record-keeping for tax purposes.
In conclusion, my expertise allows me to not only explain these concepts but also offer strategic insights for individuals seeking to optimize their tax positions in Ontario. Whether it's understanding tax credits, managing capital gains, or navigating filing deadlines, I have the knowledge to guide individuals through the intricacies of Ontario's tax landscape.
