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Personal Tax Increases Retroactive to January 1, 2014 for Employees Annual Earning over $150,000

September 4, 2014

On May 1, 2014 the Ontario government tabled a provincial budget which introduced higher personal income tax rates for individuals with annual earnings over $150,000. This budget was defeated, triggering a provincial election. The current Liberal government was elected with a majority on June 12, 2014 and re-introduced the budget which passed July 24, 2014 with the same tax rate changes and retroactivity to January 1, 2014.

Employees whose taxable earnings exceed $150,000 will see an increase in their Ontario taxes on regular pay from September to December 2014.

Rate Comparison

Current 2014 Ontario tax rates and income thresholds New 2014 Ontario tax rates and income thresholds
Annual taxable income ($)
From – To
Provincial tax rate (%) Annual taxable income ($)
From – To
Provincial tax rate (%)
0 to 40,120 5.05% 0 to 40,120 5.05%
40,120 to 80,242 9.15% 40,120 to 80,242 9.15%
80,242 to 514,090 11.16% 80,242 to 150,000 11.16%
514,090 and over 13.16% 150,000 to 220,000 12.16%
220,000 and over 13.16%

Impact on Net Pay Effective September 2014

Effective September 2014, U of T will implement the revised Ontario tax rate based on the revised tax tables published by the CRA to implement retroactive Ontario tax increases.

The personal tax rate increases in the Ontario budget is 1% for earnings of $150,000 to $220,000 and 2% for $220,000 to $514,090. Because the tax increases are effective January 2014 but implemented for only the last 4 months of 2014, the new CRA tax tables will result in affected employees having a 3% or 6% increase in their Ontario tax deduction on regular pay from September to December 2014.

Employees earning over $514,090 will also have a retroactive tax increase from September to December, 2014 since their earnings between $150,000 and $514,090 would have been taxed at the lower rates from January to August 2014.

Questions?

Please contact Central Payroll Services.