Reference no: EM132853602

Question - Consider the following single (non-senior, non-married) resident of Ontario. During the 2019 tax year, they earned $145,000 in (gross) T4 employment income. From this sum, $35,000 was deducted by their employer (for provincial and federal taxes) at source and remitted to the Canada Revenue Agency, which may or may not be enough to cover their tax bill. They also paid the full Canadian Pension Plan (CPP) premiums and Employment Insurance (EI) premiums for 2019. They contributed $5,000 to an RRSP and $1,500 to their TFSA. In addition, they received $3,500 in interest income from a Canadian bank and $350 in dividends from their stock holdings (which involved only Canadian companies). Lastly, they made $1,500 in charitable contributions, $500 in political donations and gave $750 to their younger sibling as a gift during the 2019 tax year.

Please compute the total tax due for the 2019 tax year (which would have been due June 1st, 2020). Be sure to use the proper Federal, Provincial and surtax rates. Make assumptions if necessary but do not assume away any valid deductions or credits. Be sure to show your work, including (i.) Federal Tax, (ii.) Ontario basic Tax, and (iii.) Ontario Surtax.

What is the individual's marginal tax rate? Average tax rate? Explain the difference between these two rates.