Many people are talking about paying too much tax in Canada. But not many Canadians know exactly how much they pay for income tax each year, or in other words, what percentage of their total income goes to the taxman.
To find out how much you pay for income tax, look at Line 435 (Taxes Payable) on your tax return. That tells you the actual amount of income tax you need to pay. If you divide Taxes Payable (line 435) by Total Income (Line 150), it gives you your Effective Tax Rate, the actual rate of tax on your total income.
Effective tax rate is different from marginal tax rate, which tells you how much tax you have to pay on the next dollar you plan to earn.