Taxation for Individuals in Ontario 2021 

As a Canadian resident, you are obligated to pay taxes on your global income. This encompasses earnings from employment, self-employment, professional income, and any taxable capital gains from investments or properties you possess. However, there are exceptions. For instance, you are not taxed on gifts or certain miscellaneous income types. 

If you earn income from another country, Canada typically provides a tax credit to prevent double taxation. It’s essential to note that not all income types are taxed in the same manner. For instance: 

• Only half of the capital gains are considered taxable income. 
• Most dividends from Canadian sources are eligible for the gross-up and dividend tax credit, which reduces the tax amount for resident individuals. 
• Some employment benefits are tax-free. 
• Employee stock option benefits are usually taxed at half the rate in most scenarios. 
• The timing of when income and expenses are reported varies. For instance, professional income is taxable on an accrual basis, employment income when received, and capital gains and losses when realized or sold. 

For medical professionals, understanding the reporting of professional income can be perplexing. Under the accrual method, income earned during the calendar year is reported, irrespective of its receipt time. 

Here’s a breakdown of the combined federal and Ontario income taxes payable for 2021: 

When planning tax strategies, especially for medical doctors, it’s crucial to consider your current and projected tax bracket. For instance, if you anticipate a higher income in the coming years, it might be beneficial to defer or carry forward RRSP contributions.