Chapter 3 Vocab Flashcards
(28 cards)
Excise tax
a tax imposed on specific goods and services, such as gasoline, cigarettes, alcohol, tires, and air travel
employment income
remuneration (or payment) received for personal effort
net business income
net income from an activity that is carried out for profit , after expenses are deducted
taxable capital gains
net gains from the sale of capital assets such as stocks, bonds, and real estate.
One half of capital gains are taxable
Employment income
is remuneration received for personal effort, including salaries, wages, commissions tips, bonuses, and taxable employee benefits
Net business income
includes any income from an activity that is carried out for profit, including income from a sole proprietorship, partnership, corporation, or profession after expenses are deducted
investment income
income from property, income in the form of interest, diividends, rental income net of expenses
types of income
employment income net business income investment income taxable capital gains other income
other income
retiremente income from pension plans, insurance, welfare, etc
net income
total income reduced by certain deductions such as contributions to an RRSP or RPP;
deductions taken from total income to get net//
this is your taxable income
deductions
expenses that can be deducted from total income, such as child care expenses, union dues, disability, support payments, investment counselling fees, and certain employment related expenses
Marginal Tax Rate
the rate of tax paid on the next dollar of taxable income
Average tax rate
total tax due divided by total income
total tax bill divided by your total taxable income
tax credit
directly reduces taxes
either refundable or non refundable
non refundable tax credit
are subtracted from the amount of taxes owed but can never reduce federaltax below zero/ more cmmon
refundable tax credit
are refunded to individuals if they qualify even if their tax liability is zero
tax planning
the use of legitimate methods to reduce one’s taxes
tax evasion
the use of illegal actions ot reduce one’s taxes
tax audit
a detailed examination of your tax return by the Canada Revenue Agency
4 types of taxes
taxes on purchases
taxes on property
taxes on wealth
taxes on earnings
tax deduction
is a cost that reduces your taxable income
total income consists of 5 main parts
employment, net business income, investment income, taxable capital gains, other income
formula for taxable income
total income - deductions
formula for tax payable
(taxable income)(tax rates)
