Chapter 4 (September 16th): Using Tax Concepts for Planning (TIED FOR MOST IMPORTANT)

Question 1

What are taxes used for

Answer 1

government services/programs.

Question 2

when are taxes paid

Answer 2

income earned, consumer purchases, assets and property.

Question 3

when do tax exemptions apply

Answer 3

income earned on a reserve (buy goods on, or delivered to, a reserve)

Question 4

what is purpose of tax exemption

Answer 4

improve living conditions on reserve.

Question 5

what is purpose of tax exemption

Answer 5

improve living conditions on reserve.

Question 6

First Nation communities on the reserve may often enact their own tax rules.

Question 7

First Nation communities on the reserve may often enact their own tax rules.

Question 8

who is responsible for enforce federal taxes

Answer 8

Canadian revenue agency (CRA)

Question 8

who is responsible for enforce federal taxes

Answer 8

Canadian revenue agency (CRA)

Question 9

taxes imposed on income earned.

Answer 9

personal income taxes.

Question 9

taxes imposed on income earned.

Answer 9

personal income taxes.

Question 10

GST, PST, HST meaning

Answer 10

Government Sales tax, provincial sales taxes, HST paid at time of transaction.

Question 11

Who does not pay GST, HST.

Answer 11

First Nations (under Indian act)

Question 12

special taxes levied on certain products such as cigarettes, alcohol and gasoline.

Answer 12

Excise tax (everyone pays)

Question 13

special taxes levied on certain products such as cigarettes, alcohol and gasoline.

Answer 13

Excise tax (everyone pays)

Question 14

any asset that is acquired and held for the purpose of generating income.

Answer 14

Capital Assets

Question 15

what government body major source of revenue

Answer 15

municipal government.

Question 16

who has the power to reserve property taxes on their own land <— hint

Answer 16

First Nations.

Question 17

who has the power to reserve property taxes on their own land <— hint

Answer 17

First Nations.

Question 18

Do you have to file a tax return?

Answer 18

Yes, If
- you have to pay tax for a calendar year.
- you want to claim a refund.
- you want to claim the Canada Workers Benefit (CWB) or you received CWB advance payments in the year.
- you or your spouse or common-law partner want to begin, or continue receiving the Canada child benefit (CCB), GST/HST credit, or Guaranteed Income Supplement (GIS).
- the CRA sent you a request to file a return.
- you owe tax to CRA.
- you and your spouse or common-law partner are jointly electing to split pension income.
- you disposed of capital property or you realized a taxable capital gain in the year.
- you have to repay all or part of your old age security (OAS) or employment insurance (EI) benefits.
- you have not repaid all the amounts you withdrew from your registered retirement savings plan (RRSP) under the Home Buyers’ Plan (HBP) or Lifelong Learning Plan (LLP).
- you have to contribute to the Canada Pension Plan (CPP).
- you are paying employment insurance premiums on self-employment income or other eligible earnings.
- you have incurred a non-capital loss in the year that you want to be able to apply in other years.
- you want to transfer unused tuition fees or carry forward unused tuition, education, and textbook amounts to a future year.
- you want to report income that would allow you to contribute to an RRSP, a pooled registered pension plan (PRPP), or a specified pension plan (SPP).
- you want to carry forward to a future year the unused investment tax credit on expenditures you incurred during the current year.

Question 19

Government benefits that are payable for periods of time when you are away from work due to specific situations.

Answer 19

Employment Insurance(EI):

Question 20

Government benefits that are payable for periods of time when you are away from work due to specific situations.

Answer 20

Employment Insurance(EI):

Question 21

When does Tax year end.

Answer 21

December 31st

Question 22

When must you file a tax return

Answer 22

April 30th

Question 23

When must you file a tax return if you are self-employed:

Answer 23

June 15th

Question 24

When must you file a tax return if you are self-employed:

Answer 24

June 15th (though taxes owed mayst be paid by April 30th)

Question 25

BY what means can you file a tax return

Answer 25

Mail and electronically.

Question 26

What programs may students be eligible to get a tax refund from

Answer 26

GST/HST: credit (467$) and climate action incentive clan ($373)

Question 26

What programs may students be eligible to get a tax refund from

Answer 26

GST/HST: credit (467$) and climate action incentive clan ($373)

Question 27

Late Tax Penalty

Answer 27

5% plus 1% every month.

Question 28

What are the steps you must take to fill out a tax return.

Answer 28

1. ID
2. Calculate Total Income
3. Calculate Net Income
4. Calculate Taxable Income
   5: Calculate Federal Tax
   6: Calculate Provincial Tax
   7: Deduct Tax refund
5. Balance Owing

Question 29

A document provided to you by your employer that shows your salary and all deductions associated with your employment with that specific employer for the previous year.

Answer 29

T4 slip.

Question 30

Step: Total Income, what consists of income?

Answer 30

• Employment Income
• Business Income
• Property Income (rent)
• Capital gains/losses (investment value)
• Other Income (international income)

Question 31

Money earned when you sell an asset at a higher price than you paid for it.

Answer 31

Capital gains (capital Loss is the opposite - natives are exempt from taxes)

Question 32

Interest earned from investments in various types of savings accounts at financial institutions; from investments in debt securities such as term deposits, GICs, and CSBs; and from loans to other individuals, companies, and governments.

Answer 32

Interest income:

Question 33

A document provided to you when you receive income other than salary income.

Answer 33

T5 Statement of Investment Income (slip):

Question 34

income received from corporations in the form of dividends paid on stock or on mutual funds that hold stock.

Answer 34

Dividend income:

Question 35

A taxable capital gain is currently equal to __ percent of the capital gain.

Answer 35

50 percent.

Question 36

An allowable capital loss is currently equal to __ percent of the capital loss.

Answer 36

50 percent.

Question 37

An allowable capital loss is currently equal to __ percent of the capital loss.

Answer 37

50 percent.

Question 38

amount remaining after subtracting deductions from your total income.

Answer 38

Net income:

Question 39

Deduction:

Answer 39

an item that can be deducted from total income to determine taxable income.

Question 40

Deduction:

Answer 40

an item that can be deducted from total income to determine taxable income.

Question 41

Types of deductions:

Answer 41

RRPP (box 32 - T4)
RSP
UNION/PROFESSIONAL DUES (box 44 - T4)
CHILD CARE EXPENSES
CHILD/SPOUSAL SUPPORT
CARRYING CHARGES
MOVING EXPENSES
EMPLOYMENT EXPENSES

Question 42

Types of deductions:

Answer 42

RRPP (box 32 - T4)
RSP
UNION/PROFESSIONAL DUES (box 44 - T4)
CHILD CARE EXPENSES
CHILD/SPOUSAL SUPPORT
CARRYING CHARGES
MOVING EXPENSES
EMPLOYMENT EXPENSES

Question 43

Calculate Taxable Income:

Answer 43

Net Income - deductions

Question 44

the percentage of tax you pay on your next dollar of taxable income.

Answer 44

marginal tax rate.

Question 45

the amount of tax you pay as a percentage of your total taxable income.

Answer 45

Average tax rate:

Question 46

the amount of tax you pay as a percentage of your total taxable income.

Answer 46

Average tax rate:

Question 47

specific amounts used directly to reduce tax liability.

Answer 47

Tax Credits

Question 48

Refundable tax credit:

Answer 48

portion of the credit that is not needed to reduce your tax liability may be paid to you (e.g. GST/HST credit, CWB).

Question 49

portion of the credit that is not needed to reduce your tax liability will not be paid to you and cannot be carried forward to reduce your tax liability in the future.

Answer 49

Non-refundable tax credit:

Question 49

portion of the credit that is not needed to reduce your tax liability will not be paid to you and cannot be carried forward to reduce your tax liability in the future.

Answer 49

Non-refundable tax credit:

Question 50

Used to reduce a particular government benefit provided to taxpayers who have income that exceeds a certain threshold amount.

Answer 50

Clawback

Question 51

the general base amount for anon refundable tax credit multiplied by the lowest marginal tax bracket.

Answer 51

therefore, tax deductions are more valuable than tax credits. Cause they deduct from higher.

Question 52

amount of total tax payable is less than the amount of total tax already paid (i.e. if you have already paid too much tax you get some back!)

Answer 52

Tax refund.

Question 53

amount of total tax payable is greater than amount of total tax already paid

Answer 53

Tax owing