Consider a Canadian family of five – two adults and three children (ages 3, 8 an

Question

Consider a Canadian family of five – two adults and three children (ages 3, 8
and 12). There are two wage earners in the family – the husband’s income is $50,000 and the
wife’s income is $2,000. Also assume that only federal personal income taxes are paid (that
is, ignore provincial taxes) and use 2017 brackets and rates.
(a) If the husband’s income increases by $6,000, by how much does his tax liability
increase?
(b) If the husband’s increases by $6,000, by how much does his tax liability increase
due to the GST credit clawback? The GST credit is clawed back by 5% of the
amount by which the family income exceeds $36,429 but under $56,449.

Tax bracket is 15% up to 45,916 and 20.5% from 45917 - 91831

Explanation / Answer

This comes under Head of Married filling jointly

So for total taxable income is $50,000+$2,000= 52000

Federal Tax amount is $6,867.5

comes under 15$ bracket

If husbands income increased by $6,000 then

Federal Tax amount will be 7767.5

$900 increased in tax liability

Point b

Family will not be credited with GST claw back as it is exceeding the income slab.

So, $900 increase is total increase of Federal Tax

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