Principal Changes to the Guide Formulas to Calculate Source Deductions and Contributions
Below are the changes made to the guide Formulas to Calculate Source Deductions and Contributions for 2012.
Variable E - Value of personal tax credits
The indexation factor to calculate the value of personal tax credits for 2012 is 2.66%.
In addition, to take into account the new amount for workers 65 or older that may be claimed in 2012 using the Source Deduction Return (form TP-1015.3-V), we have modified the definition of variable E to distinguish indexed amounts (variable E1) from non-indexed amounts (variable E2). Variable E is thus defined as follows:
|E||=||Value of personal tax credits indicated on form TP-1015.3-V|
|=||E1 + E2|
|If the result obtained is not a multiple of 5, round it off to the nearest multiple of 5. If the result is halfway between two multiples of 5, round it off to the higher multiple.|
|E1||=||Indexed value of personal tax credits, which corresponds to one of the following amounts:|
The indexed value of variable E for 2011 corresponds to the value of variable E for 2010, multiplied by the indexation factor for 2011.
|E2||=||Non-indexed value of the personal tax credits, which corresponds to the amount from line 9 of form TP-1015.3-V, for individuals who completed the 2012-01 version of the form.|
Variables H, H1 and H2 - Deduction for employment income
The maximum deduction for employment income has been increased from $1,045 to $1,075 for 2012. Consequently, the maximum amount of variables H, H1 and H2 has been increased from $1,045 to $1,075.
Variable K - The constant for adjusting the income tax rate
For 2012, the income tax rates applicable to the three income tax brackets remain at 16%, 20% and 24% and the thresholds for the three tax brackets have been indexed as follows:
- The 16% rate applies to taxable income of $40,100 or less. (The threshold was previously $39,060.)
- The 20% rate applies to taxable income of more than $40,100 but not more than $80,200. (The threshold was previously $78,120.)
- The 24% rate applies to taxable income of more than $80,200.
The values of variable K have therefore been increased from $1,562 to $1,604 and $4,687 to $4,812.
Variable M - QPP
The QPP contribution rate has been increased from 9.9% to 10.05% for 2012 which corresponds to a contribution rate of 5.025% for the employee and 5.025% for the employer. In addition, the maximum pensionable earnings for the purposes of the QPP have been increased from $48,300 to $50,100. Variable M has therefore been increased from $2,217.60 to $2,341.65.
Variables N and N1 - QPIP
The maximum insurable earnings subject to QPIP premiums have been increased from $64,000 to $66,000 for 2012. Also, the employee premium rate has been increased from 0.537% to 0.559%, and the employer premium rate has been increased from 0.752% to 0.782%. As a result, variable N is $368.94 (instead of $343.68) and variable N1 is $516.12 (instead of $481.28).