W1 Flashcards
What types/categories of taxes are there
income tax, property tax, consumption tax, value added tax (sales), tarrifs or customs, transfer tax, capital tax
what does the Canadian tax system rely on as the highest income source from tax
income from residents - the second is GST
How can the canadian tax system be classified
on tax basis (types of tax), incidence of tax, nature of the tax, taxable entities
what is tax incidence
its the idea that explores who the tax will be paid by
what are the natures of tax
flat, progressive, regressive
when it comes to income tax, what are the three taxable entities
individuals (T1), corporations (T2), trusts (T3)
are partnerships or single proprietorships taxed and why
not a tax entity so taxed as part of personal/individual income
what are direct taxes?
a tax that is paid directly to the government - cannot be shifted on
what are indirect taxes?
a tax that can be passed on or shifted to another entity by the entity that OWES it to the government
provinces have mostly direct or indirect taxes?
most direct taxes for individuals and corps
federal gov collect taxes on behalf of all provinces bsides:
alberta and quebec
what are the main objectives of tax?
resource allocation, distribution effects, stabilizing effects, fiscal federalism
what is the stabilizing effect of the tax objective do?
aims to grow the economy, stabilize inflation, increase employment
what is fiscal federalism?
distributing cash among different levels of government
positives of progressive taxation
viewed as fair, after tax income stability
Negatives of progressive taxation
complex, income fluctuations, limit economic growth, encourages tax evasion, high tax rates reduce tax revenues
qualitative characteristics of an ideal tax system
equity, neutrality, adequacy in funding, elasticity of revenues, flexibility of system, simplicity, certainty of rebates, balances between sectors, international competitiveness
When it comes to GST, what are the taxable entities
any persons, including individuals, corporations, trusts, partnerships, charities and even MUSH
is GST tax regressive and how is it corrected?
yes, and it is corrected by the rebates we get back
what taxation powers do federal governments have
direct and indirect
HST is a mix of what taxes
goods service tax and provincial sales tax
what is it called when a corporation passes down tax, who can they pass it down to and what does it depend on
tax incidence, can be passed down to shareholders, customers, and employees, it depends on unemployment, monopoly etc…
what are tax expenditures
when the government foregoes revenues through tax break and chooses not to tax certain entities or types of income. this cuts out the step of taking in tax and giving back as rebate
what does the objective of neutrality mean
it means that the tax system does not interfere with the decision making process of the taxpayer
what does the objective of equity mean
it means that the tax is fair and that taxpayers in similar scenarios should be subject to similar amounts of income tax
what does the objective of simplicity mean
to ensure it is understood by all taxpayers
what does the objective of adequacy mean
the tax is to provide sufficient funding for the government
what does the objective of certainty mean
the tax is to be certain to provide funding for the government
what does the objective of flexibility mean
the tax system is able to grow and evolve alongside, legislature, economy and society
what does the objective of elasticity mean
the tax system is supposed to have adjustable revenue
