Now, at that precise taxable income level of $37,179, a $1,000 RRSP or pension contribution will save a taxpayer only $285, not $350, because the deduction from taxable income will be calculated on the lower taxable income and the lower MTR.

Deductions from taxable income include things like union or professional dues, child-care expenses, interest on money borrowed to earn investment income or rental income, interest on money borrowed to invest in a business, legitimate business expenses, fees paid to a registered investment counsel, moving expenses, support payments and "social benefits repayment," if you claimed the OAS income.

"Eligible" dividends (those paid by public companies) are tricky. If you receive a $100 dividend, it is "grossed up" by 45 per cent and you claim $145 of taxable income. However, a credit on the grossed-up amount reduces your taxes to a very low level - about nine per cent if you are in the lowest tax bracket.