Question

Consider an individual in Canada who earns $95,000, pays $6,000 in childcare expenses for one child, pays the maximum ($25,370) in Registered Pension Plan (RPP) contributions, pays $15,000 in medical expenses and makes charitable donations of $200. The tax credit for charitable donations of $200 is 15 percent. Medical expenses in excess of 3 percent of one's net income (taxable income) are deductible at 20 percent. Her statutory marginal tax rate is 15 percent.

1) Find the individual’s taxable income?

2) Find the individual’s federal tax payable?

3) What is the individual's actual or effective marginal tax rate?

Answer 1