1

One of my cousins lives in Toronto, Canada. Her husband is an accountant who works in a private company. Last year, he was offered a promotion which he denied. According to him, he would have to pay more taxes, and as a result, his net income would decrease.

I don't have any means to talk to this person to ask about this problem. So, can you shed some light on this?

My younger brother is working in Canada. He said the employer is cutting $600 of his $2500 salary on the pretext of tax.

Can you explain?

7
  • Don't they have tax brackets in Canada ?
    – audionuma
    Commented Nov 29, 2022 at 7:04
  • @audionuma, I don't know. I don't live in canada yet.
    – user366312
    Commented Nov 29, 2022 at 7:07
  • 2
    This doesn't make sense. Someone misunderstood something.
    – littleadv
    Commented Nov 29, 2022 at 9:36
  • 3
    I've heard stories like this before. It was usually some bad employer gaslighting the person. it doesn't make any sense. The tax brackets are published for the federal and for the provincial part. It should be easy to calculate. Commented Nov 29, 2022 at 12:45
  • 3
    It's a bit embarrassing that an account is not able to solve it's own tax issues.
    – audionuma
    Commented Nov 29, 2022 at 18:29

1 Answer 1

7

According to him, he would have to pay more taxes, and as a result, his net income would decrease.

Your cousin's accountant husband has an incomplete understanding of Canada's taxation rules.

When your income reaches into the next tax bracket, it's not the entire income that is taxed at the higher rate. It's only the portion of the income that is above the previous tax bracket.

See 8.2.4 Tax brackets and rates for complete information and examples.

1
  • This is a common misunderstanding in countries that use tax brackets.
    – jcm
    Commented Dec 8, 2022 at 10:11

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service and acknowledge you have read our privacy policy.

Not the answer you're looking for? Browse other questions tagged or ask your own question.