Below you will find an analysis of the combined Federal(l) and Provincial(m) personal income tax rates by province, as well as their ranking from highest to lowest. These rates reflect the top marginal rate in each province and represent the rate of tax on the next dollar of income, in the highest tax bracket. The threshold level of taxable income where these rates apply will vary from province to province and are not presented here. In 1996 we see little change in the overall rankings among provinces, with Newfoundland soaring to second place overall due to the introduction of a new surtax. Ontario's tax rate cuts and the implementation of the new Health Care Levy are included below.
| Provinces | Rate | Ranking | Ranking-1995 |
|---|---|---|---|
| British Columbia(a) | 54.17% | 1 | 1 |
| Newfoundland(b) | 53.33% | 2 | 6 |
| Quebec(c) | 52.94% | 4 | 3 |
| Ontario(d) | 52.92% | 3 | 2 |
| Saskatchewan(e) | 51.94% | 5 | 4 |
| New Brunswick(f) | 51.36% | 6 | 5 |
| Manitoba(g) | 50.40% | 7 | 7 |
| Nova Scotia(h) | 50.30% | 8 | 8 |
| Prince Edward Island(i) | 50.30% | 9 | 9 |
| Alberta(j) | 46.07% | 10 | 10 |
| Yukon Territory(k) | 45.94% | 11 | 11 |
| Northwest Territories | 44.37% | 12 | 12 |
(a) The 1996 B.C. budget announced a reduction in the B.C. rate to 51.5% effective July 1, 1996 and to 50.5% effective July 1, 1997. The effective rate for 1996 is therefore 52% of basic federal tax. The reduction will not apply to taxpayers with taxable incomes greater than $80,000. As a result, B.C.'s high surtax rate is increased to 21.5% and the threshold is lowered to $8,915 for 1996. A surtax of 30% applies to B.C. tax in excess of $5,300. An additional surtax of 20% applies to B.C. tax exceeding $9,000.
(b) A surtax of 10% applies to basic Newfoundland tax in excess of of $7,900. This new surtax, effective for the 1996 taxation year, was announced in the 1996 Newfoundalnd budget.
(c) Quebec collect its own taxes. Its highest marginal rate is 24.0% on income over $50,000. Two surtaxes, each at 5% are applied and a reduction of Federal tax of 16.5% is also applicable.
(d) As anounced in the 1996 Ontario budget, Ontario's basic tax rate fell from 58% in 1995 to 56% for 1996. The rate is scheduled to fall further. The new Fair Share Health Care Levy (the Levy), also announced in the 1996 Ontario budget, replces the former provincial surtaxes.
For 1996, a Levy of 20% applies to basic Ontario tax in excess of $5,310 plus an additional levy of 13% applies to Ontario tax in excess of $7,635. These rates are scheduled to increase further.
(e) Saskatchewan imposes a flat tax of 2% of net income and a surtax of 15% on Saskatchewan tax (including flat tax) in excess of $4,000. An additional "Deficit Surtax" of 10% is applicable to basic Saskatchewan tax plus the flat tax.
(f) A surtax of 8% applies to New Brunswick tax in excess of $13,500.
(g) Manitoba imposes a flat tax of 2% of net income and a surtax equal to 2% of net income in excess of $30,000.
(h) A surtax of 10% applies to basic Nova Scotia tax in excess of $10,000.
(i) A surtax of 10% applies to basic P.E.I. tax in excess of $12,500.
(j) A surtax of 8% of basic Alberta tax in excess of $3,500 and a flat tax of 0.5% of Alberta taxable income are levied.
(k) A surtax of 5% applies to Yukon Territory tax in excess of $6,000.
(l) In all the above, the federal rates include, in addition to the basic rate of 29%, both the 3% and 5% personal surtaxes.
(m) In all the above, the Provincial rates include flat taxes, surtaxes, in the case of Quebec, a Federal tax rebate, and in the case of Ontario, the Fair Share Health Care Levy.
This above provided for information purposes only. Tax rates are current as indicated. Your particular situation may vary with your specific circumstances.
Copyright © Ormsby & Mackan, Chartered Accountants
Please read our disclaimer