Taxation Ledger

The Taxation ledger tab outlines the income and tax calculations for each year of the analysis.

Client and Spouse/Partner

• Taxable Income – The taxable portion of income for each client. This is the total income minus any non-taxable investment growth (Tax Efficiency) and deductions.
• Basic Tax Payable – The amount of tax payable before credits, based on Taxable Income. RazorPlan uses federal and provincial tax brackets to arrive at this amount.
• Age Credit – The age tax credit amount received each year. Applicable to clients when 65 or older.
• Pension Credit – The pension credit each year by clients who receive pension income.
• Age Credit Recovery Tax – When a client is receiving the age credit but their income is above a threshold, the age credit is clawed back through the use of a recovery tax. See the Effective Tax Rate calculation for more information.
• OAS Recovery Tax – When a client is receiving Old Age Security income but their income is above a threshold, the age credit is clawed back through the use of a recovery tax. See the Effective Tax Rate calculation for more information.
• Net Tax Payable – Calculated as Net Tax Payable – Basic Tax Payable – Age Credit – Pension Credit + Age Credit clawback + OAS clawback.
• Marginal Tax Rate – The rate of tax applied to the last dollar of taxable income earned. The rate is comprised of the combined federal and provincial rates.
• Clawback Rate – The rate of recovery tax used to clawback the age credit and/or Old Age Security.
• Effective Tax Rate – Represents the highest tax paid on any one dollar of taxable income when including the Clawback Rate. See the Effective Tax Rate calculation for more information.
• Average Tax Rate – Calculated as Net Tax Payable divided by Taxable Income. This amount represents the percentage of tax that is paid on average.

Personal Assets

• Taxable Income – The sum of client and spouse/partner taxable income.
• Tax Payable – The sum of client and spouse/partner tax payable.
• Paid At Source – The total annual tax withheld at source. Withholding tax is calculated on income from Retirement Investments (above the minimums), Pension Plans and OAS.
• Paid By Instalment – The total annual taxes paid on investment withdrawals.
• Paid By LOC – The total annual taxes paid by the Lifestyle Line of Credit. When the tax payable is greater than the amount paid at source or by installment, the Lifestyle Line of Credit is used to pay the taxes and help offset any possible shortfall.
• Average Tax Rate – The combined average tax rate of the client and spouse/partner calculated as Tax Payable divided by Taxable Income.