This is a type of tax whose charge is based on the amount of another tax being paid. In Canada, there are four types of surtax: federal income, provincial/territorial income, Ontario’s wealth and the non-resident.

Federal, Provincial and Territorial Income Surtax

The federal government and most provinces/territories use a staggered tax system with individuals and joint filers paying tax based on income thresholds. Some of these government agencies, including the federal government, charge surtaxes on top of these rates.

The amount of the surtax is determined by the amount of basic income tax paid. For example, someone with $40,000 of taxable income will pay 15% of this, $6,000, to the federal government. They will also pay an additional surtax of 15% on that $6,000, or $900. The marginal tax rate, the total paid to taxes, is $6,900, or 17.25% of the filer’s income.

Deductions apply to the basic income tax, … Read More

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