Ontario Tax Structure and Tax credits you must know!

Ontario Tax Structure and Tax credits you must know!

Ontario has a progressive tax system, and its citizens must annually file income taxes. Before submitting your return by the deadline of April 30, you can avoid paying interest and penalties on your income tax return. To make the process of submitting your taxes simpler, sign up for CRA My Account.

Residents of Ontario pay different amounts depending on their income and tax bracket. However, the tax bracket they are in does not provide the whole picture. An approach to personal income taxes is known as a marginal tax rate scheme, which taxes income in segments. Based on inflation, the tax rates rise annually. The basic personal allowance is the maximum amount of money you can make before you have to start paying taxes. The federal BPA is $14,398 for the 2022 tax year, compared to the Ontario BPA of $11,141.

Important links for you –

• 2021 tax rates
• 2022 Provincial and Territorial tax rates
• Ontario tax return filing

The income tax rate structure in Ontario is comparable to that in other Canadian provinces. There are certain unique credits for residents of Ontario, however many of the provincial taxes and credits for citizens of Ontario are complementary to comparable federal credits. Here are a few examples:

• In Ontario, you can be eligible for assistance with child care costs.
• The Ontario Sales Credit, the Ontario Energy and Property Tax Credit, and the Northern Ontario Energy Credit are all included in the Ontario Trillium Benefit.
• Tax credit from CARE (Ontario child care access and relief from expenses is a refundable tax credit. This tax credit is based on family income and a few other criteria.
• Low-income Ontario taxpayers including those making minimum wage can get up to $850 in personal income tax relief through the Low-Income Individuals and Families Tax (LIFT) credit.

Avoid late payment

The CRA assesses a late fee equivalent to 5% of the outstanding sum plus an additional 1% for each month you are past due. Make sure you are aware of the annual due dates for your income tax returns if you want to avoid interest and penalties. If you expect to owe money in taxes, make sure you file your return by April 30. Visit the CRA page link to know more.