tax planning Flashcards
what is a progressive tax system?
higher levels of taxable income are taxed at higher rates. the lower rate applies to all income up to a specified level, then all income above that level is taxed at a higher level
what is a tax bracket?
a range of incomes taxed at a given rate
what makes someone a resident of Canada?
1.anyone living in Canada
2.factual resident
-if you have significant residential ties in Canada while living/traveling abroad
3. deemed resident
-non Canadians living in Canada for 183 days or more (>1/2 year)
what are the 6 examples of significant residential ties
-dwelling
-spouse
-dependants
-part days
-vacations
-education
what income are residents of Canada taxed on?
worldwide income
-may receive foreign tax credits if tax paid in foreign country with tax treaty in Canada
who must file a tax return
all residents of Canada who have taxes owing in any year
what is the marginal tax rate?
the rate that applies to one more dollar of income.
what is the “tax on income” system?
they base their taxes on provincial taxble income and have their own provincial tax credits
what is the average tax rate?
the average tax rate is simply the total tax payable divided by total taxable income
what are tax paid by instalments>
instalments are not payments made in advance; they are paid during the calendar year in which you are earning the taxable income. you have to pay tax by instalments for the same reason that most people have tax withheld from their income throughout the year.
