How to reduce your taxes in Ontario, 2024.
According to Indeed Salaries, the average salary for a pharmacist in Ontario is approximately $103,647 per year. So based on the data from CRA, Pharmacist will pay 20.5% federal income tax plus 11.16% Provincial income tax, total 31.66% income tax. This is at the lower end of the pay scale if you earn $48.42 per hour.
Pharmacists are in the high-income bracket, earn $65 per hour which is approximately $135,200.00 per annum. These pharmacists will pay 26% federal tax and 11.16% Provincial income tax, a total of 37.16% income tax.
Pharmacists are in the middle to high income bracket. Some new changes have been put into effect for the 2023 tax year that may have an impact on your situation, including new credits and deductions that you may be eligible for.
1.Increase in unpaid tax penalty
- COVID-19 benefits have expired
- A new grocery rebate was introduced
- Disability Tax Credit
- The Basic Personal Amount (BPA) has been increased
- Tax brackets have shifted to account for inflation
- The TFSA and RRSP limits have been increased
- New OAS limit amounts
- Canada Pension Plan maximum contributions have been increased
As a Pharmacist I don’t qualify for most of these deductions, my only saving grace is the RRSP.
What is a RRSP?
A Registered Retirement Savings Plan (RRSP) is a registered savings plan for retirement. You can open a RRSP savings account with any Canadian bank.
When you contribute money to a RRSP, your funds are exempt from being taxed in the year you make the contribution. Any income earned from investments held within the RRSP can then grow tax-deferred, until it’s withdrawn.
RRSP contributions are tax-deductible, meaning that they can be deducted on your current year tax return, potentially reducing the total amount of taxes you pay.
How much you can contribute annually is subject to a maximum contribution amount, known as your RRSP contribution or deduction limit. Your RRSP contribution limit for 2024 is equal to 18% of your 2023 earned income, or $31,560 (whichever is lower) plus previous unused contribution room less any pension adjustments. You can also look at your 2023 notice of assessment for your 2024 RRSP contribution limit. (https://www.td.com/ca/en/personal-banking/personal-investing/learn/what-is-rrsp)
