Income Tax

Importance: 0.57

Is a company: no

Is a proper noun: no

Synonyms

  • dues
  • fee
  • imposed contribution
  • tax contribution

Definition of Income Tax

  1. A tax that is levied by the Federal Government and by some Provincial or Municipal Governments on the annual income of an individual or a company. The amount or percentage taxed is based on the amount of an individual's earned and unearned income, using the government's graduated tax scale.

Related Terms and Acronyms

  • Personal Disposable Income Definition,
    • Personal income minus personal income tax payments. Also called "take-home pay."
  • Gross Overtime Definition,
    • Overtime pay before taxes that is averaged over two years can be considered monthly income, but it must be over the two years or it does not count.
  • Non-dischargeable Debt Definition,
    • Debt that cannot be eliminated in bankruptcy such as Federal taxes.
  • Average Tax Rate Definition,
    • The real rate of taxes you pay after taking into account the various federal tax brackets. There are different tax rates for different levels of income; you pay lower rates on the first part of your income, more on the later earnings. As you pass each income level, the money above that level is taxed at the next higher rate. Therefore, your average tax rate is less than the top rate you pay on a portion of income.
  • Old Age Security (OAS) Acronym, Important,
    • A Canadian pension plan for eligible Canadians over the age of 65.
  • Tax Credit (TC) Acronym, Important,
    • Tax credits are used to reduce the amount of the tax owed. Tax credits are more valuable than deductions because they directly reduce the amount of tax owed, rather than reducing the amount of income that is taxed.
  • Canada Pension Plan (CPP) Acronym, Canada, Important,
    • A public pension plan administrated by the Canadian government.
  • Local Taxes Definition,
    • Taxes imposed by local governments (municipalities) to pay for its services. These taxes are in addition to Federal and Provincial taxation.
  • Constructive Receipt Definition,
    • The idea in which a taxpayer does not actually have to take possession of money for it to be taxable. An example of this is when savings account interest is reinvested rather than sent to the account holder as a separate payment. In this case, the account holder constructively received the interest because the earnings were credited to his account and could have been taken out at the owner's discretion. As such, the earnings are taxable.
  • Passive Income Definition,
    • Income coming in on a regular basis, with little or no maintenance.
  • Recognized Gain or Loss Definition,
    • The amount of gain or loss reported for income tax purposes. You may be able to defer recognizing gain or loss on certain property exchanges, such as like-kind exchanges.
  • Short Tax Year Definition,
    • A tax period less than 12 months long, resulting from a business start-up or the transition to a tax year ending on a different date.
  • Filing Extension Definition,
    • An additional amount of time to file your return. A filing extension, however, does not give you more time to pay your taxes.
  • Notice of Assessment (NOA) Acronym, Canada, Important,
    • A form the federal government issues when personal taxes are complete. A notice of assessment shows a breakdown of the given years income along with the balance owing or refund.
    Canada Revenue Agency's T451 tax form.
  • Household Income (HHI) Acronym, Important,
    • The total income of all members of a household.
  • Tax (TX) Acronym,
    • A levy paid by an individual or entity that is collected by a government.
    Bank account transaction code.
  • Electronic Filing (NETFILE, EF) Acronym, Very Important,
    • Taxpayers can now file their tax information with personal computers and tax preparation software. The information goes directly to Revenue Canada and they can directly deposit refunds into the taxpayer's bank account.
  • Non-refundable Credit Definition,
    • Tax credits reduce your tax liability dollar-for-dollar. Non-refundable credits can get your tax bill down to zero.
  • Audit Definition,
    • An examination of a taxpayer's income tax return or other transactions bearing tax consequences. Audits range from a simple letter from the agency to a detailed review of individual or business tax filings and records.
  • Ordinary Income Definition,
    • Income that does not qualify as a capital gain including wages, interest, dividends, and net income from a business.
  • Capital Cost Allowance (CCA) Acronym, Canada,
    • Capital Cost Allowance is a method of expensing depreciable assets as defined by the Canadian Income Tax Act (ITA).
  • Exchange Definition,
    • A trade of property for other property or services. Like-kind property exchanges are a popular tax-deferral strategy.
  • Income-splitting Definition,
    • A financial strategy used for tax purposes to reduce the overall tax burden on a family. Income is shifted from one family member to another who is in a lower tax bracket, so the income is taxed at the lower rate to save the family money.
  • Refund Definition,
    • To give back, return, or repay.
  • Payroll Taxes Definition,
    • A tax based on wages and salaries that is deducted from employees pay cheques.
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