Let's meet Paul

Our main character, Paul, is a 17-year-old high school student who spends most of his free time with his friends Omar and Anya. Paul doesn't really know anything about income tax although he has heard other people talk about it.

To earn some extra money, Paul has started a part-time job. He works after school and on weekends at a local store.

On average, Paul works 22 hours a week, and he is paid $8.00 an hour. After two weeks of working, he is looking forward to getting his first cheque for $352.00 (22 hours x $8.00 x 2 weeks). He has already decided how he is going to spend his money.

On payday, Paul goes to work with Omar to pick up his cheque. They are both excited and plan to buy some CDs.

When Paul opens his pay envelope, he is disappointed to find that, instead of getting $352.00, he got $317.39.

"What's going on?" Paul says, "Some of my pay is missing. They have taken $34.61 in deductions."

Paul shows the pay stub to Omar (view sample pay stub). On the printout, there are deductions for EI (Employment Insurance ) and Fed. tax (federal income tax) with the dollar amounts deducted from Paul's pay (the original $352.00).

"What are these deductions for, like this EI?" asks Paul.

"I think they are taking money from your pay for some different taxes," offers Omar.