Thankfully, this isn't true. Moving into a higher tax bracket only increases the rate of tax paid on the last dollars you earn. Suppose you're filing single, your old salary was $40,000 a year and your new salary is $43,000 a year. According to the Canada Revenue Agency's (CRA) 2011 federal tax rates, when your salary was $40,000, your marginal tax rate was 15 Per cent. With a salary of $43,000, your marginal tax rate is now 22 per cent. For simplicity we are going to ignore provincial tax rates and any tax credits.

The key to unlocking this myth is the word "marginal." In this scenario, your first $41,544 of income is still taxed the same way it was before you got your raise. With a $40,000 income, your take-home will be $34,000. If you make $43,000, you will take home $36,448. This is because only the extra $1,456 above $41,544 is taxed at 22 per cent — not the whole $43,000.

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