GETTING PAID FOR WORK

GETTING PAID FOR THE JOB YOU DO

Employment Standards Act:

All employees must be paid minimum wageException: Training Wage ($6.00 for the first

500 hours work)

Employers must make deductions from an employees pay cheque on their behalfCanada Pension PlanUnemployment Insurance Income Tax

GETTING PAID CONT’D

Most employers will pay either bi-weekly or bi-monthlyBi-weekly = every two weeks (usually on a

Friday) Usually done with jobs paid by the hour

Bi-monthly = twice a month (usually on the 15th and the 30th of each month) Usually done with salary positions

There is usually a cut-off date for getting paidFor most jobs, it is the Friday before you get

paid – time worked after that Friday would be on your next pay cheque

GETTING PAID CONT’D

Gross vs. Net Income:

Gross Income = money earned before deductions Ex. You make $10/hour and you worked

30 hours in the last pay period: 10 x 35 = $350

Net Income = money earned after deductions (commonlycalled your “take-home pay”)

-deductions depend on how much you make

DEDUCTIONS TO CONSIDER

Canada Pension Plan – not deducted until you are 18 years oldAmount determined by how much money

you make during each pay period Ex. If you make between $375.28 - $375.48, you

would pay $15.25 on your pay chequeYou pay half and your employer pays half – so

you would actually pay $7.13Can be paid out in the form of:

Retirement benefit Disability benefit Survivor benefit

Maximum amount in Canada: $50,100 per person/per year

UNEMPLOYMENT INSURANCE

Provides temporary financial assistance to unemployed Canadians who have lost their job through no fault of their own, while they look for work or upgrade their skills. Sick, pregnant or those caring for a sick family

member can also apply Amount deducted is 1.8% of your gross

income earned during that pay period Ex. $350 x 1.8% = $6.30

There is no age limit for deducting unemployment insurance Must be deducted during any employer-

employee relationship

INCOME TAX

Started during WWI as a way to pay for the war – temporary measure!

Payments by Canadians to the government to help cover the costs of a variety of services such as Education and Health Care

Two Types:Federal Tax Provincial/Territorial Tax

INCOME TAX CONT’D

Federal Tax Rates - depends on your salary Set up so the those taxed the most are those who

make the most amount of money 15% on the first $42,707 + 22% on the next $42,707 (up to $85,414) + 26% on the next $46,992 (up to $132,406) + 29% on any income over $132,406

Provincial Tax Rates – calculated much the same as Federal rates 5.06% on the first $37,013 + 7.7% on the next $37,015, + 10.5% on the next $10,965, + 12.29% on the next $18,212, + 14.7% on the amount over $103,205

GETTING BACK YOUR TAX

Every year, each working Canadian is required to file a tax returnSummary of their earningsHelps the government ensure that each

working individual in Canada has paid the appropriate amount of tax

When filing, many individuals can apply for a variety of tax benefits which give them access to rebates for money spent throughout the yearEx. Child Care Tax Benefit, Child Fitness Tax

Credit, Tradesperson’s Tax Credit

SAVING YOUR MONEY

WHAT TO DO WITH ALL THAT MONEY!

Reality is expensive!!

Getting a part-time job while attending school is a great way to earn money to spend on extra items such as clothes and entertainmentKnown as ‘disposable income’

Getting a job is also a great time to start thinking about saving your money

SAVING YOUR MONEY

Reasons To Save:To have more ‘disposable income’To buy a big item such as a new carTo pay for a monthly bills that you have

agreed to such as a cell phone billTo have emergency fundsTo build funds to invest

When you’ve made the decision to start saving, you need to consider the best place to put your moneyWant to “put your money to work for you”

PUTTING YOUR MONEY TO WORK

Want to earn more money by investing any amount in an account that will pay you interest

Two Types of Interest:

1. Simple Interest: Interest that is paid only on the initial deposit

2. Compound Interest: Interest that is paid on the initial deposit and

on any future interest that is earned

PUTTING YOUR MONEY TO WORK

Simple Interest Ex. You invest $100 in an account that pays 5%

simple interest$100 x 5% = $5 each yearYear 1: $100 + $5 = $105.00Year 2: $105 + $5 = $110.00Year 3: $110 + $5 = $115.00

Compound Interest Ex. You invest $100 in an account that pays 5%

compound interestYear 1: $100 x 5% = $105.00Year 2: $105 x 5% = $5.25 (total = $110.25)Year 3: $110.25 x 5% = $5.51 (total =

$115.76)

SAVING YOUR MONEY1. Savings Accounts

Can be simple or compound interest Usually have an interest rate of 3-5% Be aware of withdrawal limitations and penalties

2. Guaranteed Investment Certificate (GIC) Fixed deposit amount and fixed term Interest rate can be fixed or variable (changes

throughout the length of your investment) Most are locked in or have limited withdrawals

3. Term Deposits Fixed term – cannot remove money before the end

of the term (aka ‘reaching maturity’) Higher interest rate than a savings account

SAVING YOUR MONEY

4. Canada Savings Bond: Only offered between end of October and the

beginning of December each year Backed by the Canadian government – interest

rate is connected to the rates announced by the Canadian government each year

Can be withdrawn whenever but are worth the most when left for 10 years

5. Stock Market Investments (High-risk) Use your savings to purchase stocks or shares in a

company Earn money by selling shares as their value

increases Extremely risky – can make big money or lose it

all!

SAVING YOUR MONEY6. RRSP – Registered Retirement Savings Plan

Can set up with your bank for any amount – even $10 is a great help in the long run

Can be locked in or accessible – better interest rate if you lock in (don’t touch it)

Based on your salary, you can use your contributions to your RRSP as a tax credit at the end of the year

If you end up owing taxes, you can claim your RRSP and you’ll owe less

7. RESP – Registered Education Savings Plan Often set up by parents to save for their children’s

education Gives them access to possible scholarships, grants

and bursaries offered by the government (free money!)