Math 11 Foundations: Unit 6 Finances. Net Income = CPP contribution rates, maximums and exemptions. Basic exemption amount 2017 $55,300 $3,500 4.

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1 6.2 Net Income Name: Definitions Net Income = Tax-Exempt Deductions Payroll Deductions CPP = CPP contribution rates, maximums and exemptions Year Maximum annual pensionable earnings Basic exemption amount Employee and employer contribution rate (%) 2017 $55,300 $3, $54,900 $3, EI = EI premium rates and maximums Year Maximum annual insurable earnings Rate (%) Maximum annual employee premium 2017 $51, $ $50, $955.04

2 Example: Mr. McDaniel, a Project Manager, earns a gross monthly income of $5250 per month. He pays union dues of $85 per month, contributes $750 per month to an RRSP, and pays into a health plan $65 per month. Calculate his CPP and EI deductions and well as his annual taxable income. Assignment 1) Luigi is a lawyer who has an annual salary of $ He pays professional association fees of $120/month, contributes $1150 per month to an RRSP, and has life insurance premiums of $175 per month. He pays the maximum amounts for CPP and EI. Calculate his annual taxable income. 2) Marlyn is a loans officer at the local bank. She has a gross monthly income of $3979 per month. She contributes $275 per month to a RRSP and has weekly child care expenses of $62. Her monthly mortgage payment is $775. What is her annual taxable income? 3) Calculate the 2016 CPP contribution for the following employees: a) Mrs. Makowichuk who has an annual salary of $ b) Lauren, a junior accountant who works 25 weeks part time for $475 per week c) Mr. Marshall, a city manager, who earns $2750 per month. d) Mr. Foster, a zoning enforcement officer, who earns $ per year.

3 4) Calculate the 2016 EI Premium for the following employees: a) Cheyenne, a teacher, who earns $ per year. b) Rebecca, a consultant, who earns a gross monthly salary of $ ) Siddhu is a web designer who, in 2016, has a weekly gross income of $650. Find his weekly a) CPP Contribution b) EI Premium Answer Key: 1) $ ) $ a) $ b) $ c) $ d) $ (max) 4a) $ b) $ a) $ b) 12.22

4 Income Tax This is based on your taxable income. The lowest bracket will change depending on how many tax credits you have. What qualifies as a tax credit?

5 Example #2: Melissa works as a customs officer in Vancouver. In the year 2016, she earned a gross income of $ She pays 4% of her gross income into an RRSP, and she has union dues of $50 per month. Use the chart below to estimate her taxes for the year. Federal Income Tax Estimate $ $ at 15% $ $ at 20.5% $ $ at 26% $ $ at 29% $ and up at 33% Total Federal Tax *this depends on how many tax credits you have! Provincial Income Tax Estimate $ $ at 5.06% $ $ at 7.7% $ $ at 10.5% $ $ at 12.29% $ and up at 14.7% Total Provincial Tax Federal + Provincial Taxes =

6 Assignment Part 2 1) Antonio, an animal control officer in Edmonton, had a gross annual income of $ in the year After receiving his take home pay he paid $170 per month into an RRSP, and had child care expenses of $150 per month. Estimate the taxes he should pay for the year. Step #1: Calculate his taxable income Federal Income Tax Estimate $ $ at 15% $ $ at 20.5% $ $ at 26% $ $ at 29% $ and up at 33% Total Federal Tax *this depends on how many tax credits you have! Provincial Income Tax Estimate $ $ at 5.06% $ $ at 7.7% $ $ at 10.5% $ $ at 12.29% $ and up at 14.7% Total Provincial Tax Federal + Provincial Taxes =

7 2) Marsha is a well-paid attorney. She makes an average of $ per month. She contributed $ to an RRSP this year. Estimate her taxes for the year. Step #1: Calculate his taxable income Federal Income Tax Estimate $ $ at 15% $ $ at 20.5% $ $ at 26% $ $ at 29% $ and up at 33% Total Federal Tax *this depends on how many tax credits you have! Provincial Income Tax Estimate $ $ at 5.06% $ $ at 7.7% $ $ at 10.5% $ $ at 12.29% $ and up at 14.7% Total Provincial Tax Federal + Provincial Taxes = Answer Key 1) taxable = $39040, Fed = $4056 Prov = $ , Total = $ ) taxable = $ , Fed = $ , Prov = $ , Total = $