Higher Incomes, Taxes

A temporary tax measure has been introduced for the 2014 and 2015 tax years, in order to increase the amount of tax paid by those earning the highest incomes in British Columbia.

Taxes, money

Currently, the highest tax rate in BC is 43.7% on income earned over $135,034. Starting in 2014, an additional tax bracket will be added with a tax rate of 45.8%, for those people earning over $150,000. This follows a global trend to increase the amount of tax paid by the highest income earners.

Because it is a temporary tax measure, and one not planned for the current year, it does offer some tax planning opportunities. If you know that your income will be over $150,000 in both 2014 and 2015, it may make sense to hold off on claiming your RRSP deduction in 2013, reporting it in 2014, instead.

In 2012, Ontario added a tax bracket for incomes earned over $500,000, and, in Europe, the French government has been attempting to implement a 75% tax on annual earnings exceeding one million euros.

If you are going to claim an RRSP deduction of $10,000, the deduction will be worth an additional $210 if you claim it on your 2014 tax return rather than your 2013 tax return.

If you are going to report dividends from your company, it may make sense to report those dividends in 2013 or 2016, if they would otherwise bump your income over $150,000 in 2014 or 2015.

Photo credit: http://www.bcliberals.com/news/economy/your_taxes_by_the_numbers