Net income

Meet a registered nurse in Ontario who earns $35 an hour and works an average of 45 hours each week. After paying taxes, they receive approximately 80% of their earnings. This is known as their net income or “take home” pay. If they work 45 hours each week, how much will they receive on their pay? How would we calculate this?

Calculating net income

The nurse works an average of 45 hours per week and is paid $35. Their weekly income is:

$45\times \$35=\$\mathrm{1,575}$

Their gross (total) income on their pay cheque every two weeks is:

$\$\mathrm{1,575}\times 2=\$\mathrm{3,150}$

Their net (after tax) income on their pay cheque every two weeks is:

$\$\mathrm{3,150}\times 0.80=\$\mathrm{2,520}$

Review of Key Vocabulary

Budgeting a monthly expense

A nurse’s net income (or “take home” pay) was significantly less than their gross income. This is something to account for as you create a budget, keeping in mind additional expenses along the way. Let’s revisit the nurse’s situation and explore an expense that they must consider each month.

If you would like, you can complete the next word problem using TVO Mathify. You can also use your notebook or the following fillable and printable document.

A nurse determined the budget for their car payment and would be able to complete the same process for everything they spend money on each month. They could use this information to build a monthly budget.

We can use the same idea to plan our spending. After determining each of our monthly expenses, we can organize them all together in a monthly budget. Most lines in a budget will stay the same each month so we can use the same framework each month to track expenses.

Sample budget

Total monthly income:

Importance of deductions

While your “net income” or take home pay is less than your gross salary, reflect on why these types of deductions are important and necessary.

Consider doing a search on the Ontario Government, specifically the CRA (Canada Revenue Agency) website and identify how deductions such as CPP, EI and income tax are allocated in a way to best support all Ontarians. Alternatively, you can speak with an adult to find out more information.

Based on the nurse’s tax bracket what suggestions or considerations would you share with them?

Tax paid and net income

If you would like, you can complete the next word problem using TVO Mathify. You can also use your notebook or the following fillable and printable document.

Reflection

As you read the following descriptions, select the one that best describes your current understanding of the learning in this activity. Press the corresponding button once you have made your choice.

Now, expand on your ideas by recording your thoughts using a voice recorder, speech-to-text, or writing tool.

When you review your notes on this learning activity later, reflect on whether you would select a different description based on your further review of the material in this learning activity.

Connect with a TVO Mathify tutor