How are equalization payments calculated?

Equalization payments are based on a formula that calculates the difference between the per capita revenue yield that a particular province would obtain using average tax rates and the national average per capita revenue yield at average tax rates.

What do equalization payments pay for?

The purpose of equalization payments is to enable the “have not” provinces to provide public services which are reasonably comparable to those in other provinces, at similar levels of taxation.

How often are equalization payments calculated?

A province’s Equalization payment in any given year is based on a weighted three year moving average, lagged by two years.

What is equalization amount?

An equalization rate is New York State’s measure of a municipality’s level of assessment and how close a property’s assessment is to its actual value. They are designed to ensure that owners of properties with similar full market values pay an equivalent amount of taxes.

How is net family property calculated in Ontario?

Each spouse must calculate their individual net family property (NFP). To do this, each spouse adds up the value of their property less any debts on the date of separation. From this, they subtract the value of their property less any debts on the date of marriage.

What are transfer payments included in?

A payment made for which no current or future goods or services are required in return. Government transfer payments include Social Security benefits, unemployment insurance benefits, and welfare payments. Taxes are considered transfer payments.

Is an equalization payment in a divorce taxable?

Generally, equalization payments between divorcing spouses do not create a “taxable event” and therefore are non-taxable. However, parties dividing assets must be cautious to consult a tax professional because tax may be owed in the future on certain assets received by a party in divorce.

What factors determine fiscal capacity?

The fiscal capacity of governments depends on a variety of factors including those that contribute to the tax base; the government’s ability to efficiently tax; compensating behavior among taxed individuals, markets, and asset prices; and access to other non-tax forms of revenue.

What is an equalization factor?

About Equalization Equalization is the application of a uniform percentage increase or decrease to assessed values of various areas or classes of property in order to bring assessment levels, on average, to the same percentage of market value.

How is equalization calculated in Ontario?

Subtract the lower NFP from the higher one, and divide the difference in half. This is the amount of the equalization payment, which the spouse with the higher NFP must pay to the spouse with the lower NFP.

How is financial settlement calculated in a divorce?

As well as looking at actual earnings, the Court will also assess the parties’ future potential earnings. The Court will take a realistic approach when calculating the settlement and will take account of the individual’s skills, time out of work, age and the possibility and cost of retraining and the job market.