Different Taxes and Rates in Manitoba
If you are living in Manitoba, you should be ready to pay a substantial amount as tax. The province pays one of Canada’s highest amounts as personal income tax rates.
Just like the story is the same in other jurisdictions in Canada, the tax structure of Manitoba is progressive. By implication, as your income increases, your tax will also increase.
The least amount you can pay for tax in Manitoba is 10.80%, while the highest provincial tax is 17.40%. The earnable income is $34,431 and $74,416 respectively. The tax rate for regular earners at both provincial and federal levels is 50.40%.
The Tax Brackets for Manitoba in 2022
As a personal earner in Manitoba, here are the tax rate brackets from 2022 and 2021:
The Year, 2021
| Income | Tax Rate |
|---|---|
| Up to $33,723 | 10.80% |
| Between $33,723.01 and $72,885 | 12.75% |
| Over $72,885.01 | 17.40% |
The Year, 2022
| Income | Tax Rate |
|---|---|
| Up to $34,431 | 10.80% |
| Between $34,431.01 and $74,416 | 12.75% |
| Over $74,416.01 | 17.40% |
How does this work?
If your first $34,431 income is taxable, you will pay 10.80%. Continuously, you will pay 12.75% when your taxable income increases to $39,985. Finally, you must pay 17.40% when the taxable income is more than $74,416.
The primary individual amount is $10,145. The implication is that people who earn this amount or less will not pay personal taxes for that year. Similarly, you will not pay federal taxes, too, as much as the federal basic personal amount is higher at $14,398.
Federal and Provincial Marginal Tax Rates in Manitoba
As a resident of Manitoba, you will pay federal taxes with provincial taxes based on your income. Below is the tax rate at the federal level in 2022:
| TaxableIncome | Tax Rate |
|---|---|
| Up to $50,197 | 15% |
| Between $50,197 and $100,392 | 20.5% |
| Between $100,392 and $155,625 | 26% |
| Between $155,625 and $221,708 | 29% |
| Over $221,708 | 33% |
If you combine your provincial and federal tax burdens, the numbers below represent your figures in 2022.
– Regular Income: 50.40%
– Capital Gains: 25.20%
– Ineligible Canadian Dividends: 46.68%
– Eligible Canadian Dividends: 37.78%
How To Calculate Marginal Tax Rate In Manitoba
If your yearly earnings are $70,000, you can calculate your federal and Manitoba taxes as follows:
- You will pay 25.80% on your first income of $34,431. The result is $8,883.20
- You will pay 27.75% on the net income of $15,766. The result is $4,375.07.
- You will pay 32.25% on the final $20,980 that made your yearly earning $70,000. The result is $6,584.50.
You are expected to pay a total of $19,842.77. Hence, the marginal tax rate is 33.25%. The truth is that your tax is lower when you consider federal and provincial basic personal earnings and other possible deductions and credits.
This calculation helps to know how much one pays on tax deductions. Additionally, it helps to know how Registered Retirement Savings Plan (RRSP) works.
Suppose you deposited $10,000 to your RRSP; your marginal tax rate should be 33.25%. There is no tax deduction on RRSP. However, the RRSP will reduce the tax by $3,325.
Also, you can get your overpayment as a tax refund or have it reduced at the source; it all depends on the design of your payroll.
What About Tax Credits And Deductions?
All deductions, non-refundable tax credits, and refundable tax credits reduce your overall tax burden. The commonest federal refundable tax credits are GST/HST credit and your worker’s benefit in Manitoba. To be more specific, refundable tax credits are:
a. Fertility treatment tax credit
b. Education property tax credit
c. Primary caregiver tax credit
d. Homeowner’s school tax assistance
e. Green energy equipment tax credit
f. Senior’s school tax rebate
On the other hand, there are non-refundable tax credits for residents of Manitoba. Typical examples include:
a. Small business venture capital tax credit
b. Community enterprise development tax credit
c. Political contributions tax credit
d. Employee share purchase tax credit
e. Mineral exploitation tax credit
f. Children’s arts and cultural activity tax credit
g. Fitness tax credit
You should know that deductions help to reduce your taxable income. It consists of regular cheque deductions like CPP payments, employment insurance, RRSP contributions, and workplace pension contributions.
Sales Tax In Manitoba
Manitoba has a provincial sales tax (PST) on items. As of July 2022, PST is valued at 7%. However, residents of Manitoba also pay Goods and Services Tax (GST). Altogether, the total retail sales tax is 12%.
In July 2019, the government lowered the amount of PST from 8% to 7%. Also, in July 2020, the government wanted to adjust the provincial retail sales tax again from 7% to 6%. However, the plan has been postponed till an unspecified date.
Accounting Software Programs?
The answer is simple, yes. There are user-friendly software programs you can use to prepare your income taxes. They are easy to use as their questions are in plain English. Also, they are available on desktop and mobile devices.
Notable examples include:
- TurboTax
- TaxTron
- GenuTax
- CanTax
- UFile
- SimpleTax
You should understand the tax structure even as a newcomer. It helps you prepare and plan properly and manage your income effectively. As it is commonly said, “proper preparation prevents poor performances.”
REFERENCES
– (2022). Retrieved 12 July 2022, from https://www.savvynewcanadians.com/manitoba-tax-brackets/
– The Best Canadian Tax Software and Apps You Can Use. (2022). Retrieved 12 July 2022, from https://www.thebalancesmb.com/top-canadian-tax-software-programs-2948660
