1. Income Tax and Deductions
F&P Math 10

2. Learning Goals
I will be able to define what a deduction is, and state the various provincial and federal deductions on income tax
I can calculate deductions from a given paystub

3. Deductions Deductions are money taken off your gross income
By lay, employers must take deductions from employee pay cheques
Main deductions for all BC residents are:
Canadian Pension Plan (CPP)
Employment Insurance (EI)
Provincial Income Tax
Federal Income Tax

4. Deductions Other deductions can be: Union dues
Pension (or other retirement saving plans)
Extended health/dental insurance
Life insurance

5. Taxes
Taxes are required contributions to federal and provincial revenue
Leveled by government on personal income and business profit or added to cost of goods and services (PST and GST)

6. Taxes Taxes are used for: Education Health care Roads and bridges
Social services

7. Taxable vs Non-taxable Income
Canada Pension Plan (CPP) (~3%)
Union Dues
Employment Insurance (EI) (~2%)
Private Pension
Income Tax (18% if you earn less than 32,000 annually)
Federal Tax
Provincial Tax
Short/long term disability
Life Insurance
Extended Health/Dental (~5%)

8. Taxable Income Income after non-taxable deductions have been applies
Take off the deductions (union dues, private pension and disability) and then use the remaining as your taxable income

9. Example #1
John’s group life insurance is 1.5% of his salary of $ every two weeks. How much does he pay for group life insurance?

10. Example #2
Hank paid $37.51 Employment (EI) on his taxable monthly income of $ What is the EI rate in percent?

11. Net Income Your take home pay
Income after all deductions have been applied

12. Example #3 Calculate her gross income, deductions, and net income
Kara earns $400 a week working for a telemarketing firm. The deductions from her weekly pay are:
EI - $8.55
CPP - $13.45
Income Tax - $44.15
Company Pension Plan - $9.50
Health Plan - $10.40
Calculate her gross income, deductions, and net income

13. Example #4
Kylie receives an annual salary of $53,750. Calculate Kylie’s bimonthly pay.
Kylie’s before tax deductions include union dues of 3.5% and private pension of 4.5%. She also pays federal tax of 19%, provincial tax of 6.8%, CPP at 4.95% and EI 2% what is her net income?
Bimonthly pay = 24 pay periods

14. Example #5
Autumn has a weekly income of $ and is assigned claim code 2. Calculate her total weekly deductions and taxes.
Use the deduction charts for EI, CPP, Prov IT, Fed IT

15. To Do Today: Complete the Income Tax and Deductions worksheet
Work in class, whatever is not completed, work on for 30 minutes at home over the weekend.