Review Effective Tax Rate

Understand Your True Tax Burden in Canada

Many taxpayers focus only on how much tax they owe—but a more powerful metric is your effective tax rate. Reviewing this rate helps you understand how much of your income actually goes to tax and reveals opportunities to improve your tax strategy.

At Tiki Tax, we help Canadians analyze their effective tax rate and build smarter, forward-looking tax plans.

What Is an Effective Tax Rate?

Your effective tax rate is the percentage of your total income paid in taxes, after deductions and credits.

Effective Tax Rate = Total Tax Paid ÷ Total Income

This rate provides a clearer picture than marginal tax brackets alone.

Effective Tax Rate vs. Marginal Tax Rate

• Marginal tax rate applies only to your next dollar of income

• Effective tax rate reflects your overall tax burden

You may be in a high marginal bracket but still have a lower effective tax rate with proper planning.

Why Reviewing Your Effective Tax Rate Matters

✔️ Understand your real tax cost
✔️ Identify missed deductions or credits
✔️ Compare year-over-year tax efficiency
✔️ Improve cash flow planning
✔️ Support long-term tax strategies

A high effective tax rate may signal planning opportunities.

What Can Affect Your Effective Tax Rate?

• Income type (employment, business, investment)

• RRSP and pension contributions

• Tax credits and carryforward amounts

• Capital gains and losses

• Provincial vs federal tax mix

Small changes can significantly impact your rate.

Who Should Review Their Effective Tax Rate?

• High-income earners

• Self-employed individuals

• Small business owners

• Investors

• Families with multiple income sources

📌 Reviewing annually helps prevent overpaying tax.

How to Review Your Effective Tax Rate

• Review your Notice of Assessment (NOA)

• Compare total tax paid to total income

• Analyze changes from prior years

• Consider income splitting or timing strategies

Professional analysis adds deeper insight.

How Tiki Tax Can Help

✔️ Calculate and explain your effective tax rate
✔️ Identify opportunities to lower it legally
✔️ Align tax planning with financial goals
✔️ Support individuals and businesses Canada-wide

Turn Insight Into Action

Understanding your effective tax rate is the first step to paying only what you owe—no more.

👉 Contact Tiki Tax today to review your effective tax rate and create a smarter tax strategy for the future.

🌐 Website: https://www.tikitax.ca/