What are Tax Tables?
Tax Tables are simply a structured layout with tax information displayed in a logical manner. Tax tables specify specific amounts as:
- Minimum Fixed Amounts: A figure which defines the lowest amount that must be met before a specific action happens. For example, Pension Qualification: $2,000.00. In this example, you would have to earn $2,000.00 before qualifying for the pension.
- Maximum Fixed Amounts: A figure which defines the highest amount that is accepted before a specific action happens. For Example, Child Care Relief Cap: $15,000.00. In this example, after earning over $15,000.00 the Child Care Relief allowance would change (either reducing, remaining fixed or changing to a different scale).
- Fixed Ranges: Fixed ranges use a combination of a minimum fixed amount and maximum fixed amount and apply action when you fall within that range. Fixed ranges are commonly used to tax income, applying different actions (normally percentages tax) dependant on your taxable income. For example, Income bracket $15,000.00 - $20,000.00 :: 20%. All taxable earning falling between the minimum and maximum fixed amount would be subject to 20% income tax. In this example the difference between $15,000.00 and $20,000.00 is $5,000.00 so the tax would be 20% x $5,000.00 = $1,000.00. When Fixed Ranges are used in tax tables, they are normally sequential proving a stepped approach with different percentages applying for each range.
- Percentages:Percentages are normally used as a means of calculating an amount due or tax rebate and applied against one of the tax thresholds mentioned above (Minimum, Maximum or Fixed Range Thresholds).
What information is contained within tax tables?
Tax tables cover everything. Most people associate tax tables with tax applied on income/earnings but the reality is that tax tables touch every element of our lives. Here are some common uses of tax tables:
- Income tax rates for individuals: Used to apply tax on an individual based on their total annual income or income over a certain period after applying refundable and non-refundable tax credits.
- Federal Tax: Tax defined by the Federal government and applied against individuals, groups, businesses and organisations.
- Province Tax: Like Federal Tax, Province tax is a tax applied against individuals, groups, businesses and organisations though in this case set by specific province(s).
- Payroll Tax: Technically the same as Income Tax mentioned above, though in this case the tax is deducted directly from an individuals payroll and held by the employer for direct payment of Federal and/or Province Income Tax on the employees behalf.
- Sales Tax: A tax which is applied at the point of sale on specific retail goods, services and certain products. Sales taxes typically vary depending on the product and means to which they are applied and can be used to balance the relative sales cost of low cost imported goods to allow domicile companies to compete effectively.
- Value Added Tax: Value Added Tax or VAT as it is more commonly known is a similar tax to sales tax though in this case applied at each point a product or service is transformed or changes hands. This point of transaction is seen as the point at which Value is added to the product or service. Although VAT increases with each transaction the tax is transitional so it is eventually paid by the consumer of the goods / service.
- Automobiles Deductions and Benefits: Used to calculate the taxes due as a result of using automotive vehicles, typically limited to business activity.
- Old Age Security Benefits: Tax benefits and incentives offered to our elderly folk to support them in their later years.
- Retirement and Savings Plans Contribution Limits: Tax incentives and initiatives used to encourage people to save for their retirement. Retirement tax initiatives have become increasing common over the past decade with the average lifespan increasing almost annually.