Friday, 2 May 2014

Ontario 2014 Budget Puts Income Above $220,000 into the 49% Tax Bracket

New Ontario budget reduced the tax threshold subject to 49.13% tax from $514,090 to $220,000 and also introduced a new band between $150,000 and $220,000 which is now subject to 47.77% tax as opposed to 46.41% tax previously.   Just to get an idea of amount of tax an individual earning $514,090 in 2014 would have paid about $9,000 less tax before the new rates.

 Incorporating your business or investment portfolio makes more sense now.  If you and your spouse can live on $440,000 less tax per year you should incorporate and invest your funds through your corporation.  The top rate applicable to a corporation earning investment income is 46.17% in Ontario and the top tax rate of a corporation earning business income is 26.5% in Ontario, while the first $500,000 of business income in a corporation is taxed at 15.5% in Ontario. 

Check the link below to our website and read our Q&A on benefits of incorporating.

This blog is for general information only and cannot replace professional advice.
The reader is invited to contact the writer to discuss the contents of the newsletter.
Readers are advised to seek professional advice before acting on the material
in this newsletter

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