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78 Tax Tips For Canadians For Dummies
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About This Book
Compiled by an expert team of accountants, 78 Tax Tips For Canadians For Dummies offers practical tax planning strategies. These individual tips offer straightforward advice and insight that will save readers aggravation and money.
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Yes, you can access 78 Tax Tips For Canadians For Dummies by Christie Henderson, Brian Quinlan, Suzanne Schultz in PDF and/or ePUB format, as well as other popular books in Desarrollo personal & Finanzas personales. We have over one million books available in our catalogue for you to explore.
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Part I
Tips for Everyone
In this part . . .
Tips for Everyone; the title says it all! Take some time to read through this part, no matter what stage of life you are in. Donât worry, there are very few numbers and complicated calculations lurking among these tips. Instead, we ease you in gently: Have you ever wanted to understand what sorts of taxes you have to worry about? Or if you qualify for âfree moneyâ from the taxman? If so, youâve come to the right place. We also give you some handy pointers on how to stay organized, or â for all you procrastinators out there â how to get organized in the first place. We also have some helpful advice on how to make your charitable donations give you the best tax breaks. And for those who are about to get audited, donât stress, weâve got tips for you, too!
#1 Understand the Essentials
We get it. Most Canadians arenât tax geeks like us. We understand that tax is not known to be the most exciting of subjects. But if you donât care about your money, who will? Having a basic understanding of the Canadian tax system is an imperative first step to ensure you donât pay more tax than you should. So, that being said, congratulations on taking this step to know more about taxes! We promise it wonât be too painful.
Though it can be confusing at times, Canadaâs income tax system has two very straightforward purposes. The first is to finance government expenditures. The second is to encourage Canadians to make certain expenditures. Thatâs right â our government cuts you a tax break when you spend money in ways it approves of. For example, the government wants to encourage you to:
Youâre probably beginning to realize that you spend money every year on items you can use to reduce your taxes. And every little bit counts! With this in mind, in this tip we guide you through the nitty gritty of the Canadian tax system.
Understanding Where the Numbers Come From
If you live in Canada itâs pretty easy to figure out what gets included in your total income. Why? Well, to keep things simple, the Canadian government requires you to include all of your worldwide income earned in a calendar year on your tax return. If you earned income, you can pretty much count on the fact that itâs taxable. Of course some exceptions do exist, and we discuss these throughout this book.
The next step is to claim any deductions youâre entitled to. Net income is the amount you arrive at when you subtract these deductions from your total income. You might think this net income figure is the amount on which you should pay tax. Well, no. The amount you pay tax on is your taxable income.
Determining what makes up taxable income
Here in Canada our income taxes are based on the amount of taxable income we earn in a year. Both the federal and provincial/territorial governments levy income taxes on your taxable income (we talk more about these taxes in Tip #2). Your base amount of tax owing is reduced by any tax credits available to you, and the net amount is your tax bill for the year. It stands to reason that if you can keep your taxable income to a minimum and your tax credits as high as possible, you will pay less tax. And with tax rates reaching as high as about 50 percent for some Canadians, this can mean a lot more money stays in your wallet.
Even though taxes are not based on net income, itâs still an essential calculation thatâs used to calculate your entitlement to certain tax credits and programs â like the provincial/territorial tax credit (Tip #3), the GST/HST credit (Tip #23), the Canada Child Tax Benefit (Tip #49), and credits for charitable donations (Tip #9), medical expenses (Tip #59), and social benefits (Tip #64).
Taxable income has a different focus altogether. The types of deductions allowed under the taxable income category are not necessarily related to current-year activities. For instance, the calculation of taxable income includes deductions for prior-year losses. In fact, some of the deductions are permissive, meaning they allow for tax deductions based on your personal situation. For example, deductions are available for employee stock options, for residents in northern areas of Canada, and for certain non-taxable payments received in the year.
Table of contents
- Cover
- Table of Contents
- Title Page
- Introduction
- Part I: Tips for Everyone
- Part II: Tips for Employees and Business Owners
- Part III: Tips for Investors
- Part IV: Tips for Families
- Part V: Tips for Special Tax Planning Circumstances
- Part VI: The Part of Tens
- Cheat Sheet