Fema Employment

canadian income tax?

Here is an interesting math problem. Suppose that you are self-employed and earn an annual gross income of $13 000 CAD in Canada. That means, there are no deductions for Employment Insurance, Canada Pension Plan, and income tax. So, you always take home the paycheques of your gross earnings. How much will you have to pay back the government when you file your income tax return?

Public Comments

1. There are other factors involved, such as dependents, childcare, etc. You will have to pay CPP on your earnings, as well as a small amount of tax (if there are no other deductions) Easiest way to know is to pick up Quciktax or similar program, and run the numbers with zero tax withholding ans see what it says.
2. It depends on so many things... what province you live in, what type of business it is, is it home based or external, do you have a spouse, do you have children, do you pay property tax or rent, do you have a mortgage, any medical bills or donations, RRSPs..... A safe estimate for self employment is 20-25% On your proposed $13k the tax rate might be closer to 10% but again, it depends on all the other factors. Something else to understand is that you are not taxed on your gross earnings. Go to the CRA website and see if you can print off a T2124. That is the statement of business activities for self employed people . At the top you enter your gross earnings of $13000, then you put in all your relative expenses: supplies, tools, purchases, meals, cell phone, work clothing, internet, vehicle useage, home useage, bank fees, interest on any loans or lines of credit, advertising, membership fees, business registration fees... whatever you pay for to make your business happen, it goes on that sheet. You may put assets in a list and depreciate them according to their class and at the end of all of that, you have your taxable income. If that is still at $13 then you should have about 10-15% ready to pay. Then you begin to factor in everything else - is there a spouse with income, dependant children, rrsp contributions, investment expenses, medical bills, charitable donations... For about $10 you can do your whole return online with the CRAs online tax package - or for about 20 you can do it in Quick Tax... either way, they will both walk you through extensive "interviews" and give you hints of other things you should be looking at. If those options don't make you comfortable you can find an independant tax preparer to do it for you - prices may vary but make sure it is someone who will ask you questions about your self employment and many other things - some places just promise to do your taxes in 5 minutes and take your money - speed should NOT be a factor when looking for tax help. In the end, if you do owe money to the government look closely at your summary - on $13000 I would think it's not income tax that you're paying but rather it will be your contribution to the CPP - which isn't a bad thing to be contributing to since you will get it back evetually. Good luck.