- Income that does not qualify as a capital gain. Wages, interest, dividends and net income from a business are examples of ordinary income.
earned income, active income
Related Terms and Acronyms
- Active Income — Definition,
- Active income refers to wages, tips, and profits from your business or employment that you partake in. It also includes portfolio income such as interest and dividends, but you cannot usually offset active income with passive losses.
- Capital Gain (CG) — Acronym, Important,
- The profit made by the seller when real estate or other capital assets are sold. Capital gains are taxed more favourably than earned income. However, this can be dependent on your tax bracket and the length of time you owned the asset before it was sold. You could pay approximately one-third to one-half less tax than you would pay on the same amount of earned salary.
- Capital Gains Tax (CGT) — Acronym, Canada,
- A tax on profits from the sale of real estate or investments.
- Earned Income — Definition,
- Money earned through wages, salaries, tips, net earnings (if self-employed), and any other income received for work or personal services. Investment income, such as dividends and interest, is not counted as earned income.
- Gross Income — Definition,
- Normal annual income including overtime that is regular or guaranteed. The income may be from more than one source. Salary is generally the principal source, but other income may qualify if it is significant and stable.
- Income Tax — Definition,
- The main source of revenue for the federal government and many Provinces. The tax is based on your earned and unearned income. The amount or percentage taxed is based on the amount of income, using the governments graduated tax scale.
- Investment Income — Definition,
- Income that is earned from investments such as interest, dividends, and capital gains.
- Mixed-income Housing — Definition,
- A neighbourhood whose residents earn widely varying wages and salaries.
- Ordinary Dividends — Definition,
- The distribution of a company's profits that are subject to full taxation.
- Payroll Taxes — Definition,
- A tax based on wages and salaries that is deducted from employees pay cheques.
- Personal Disposable Income — Definition,
- Personal income minus personal income tax payments. Also called "take-home pay."
- Taxable Income — Definition,
- Income that is subject to taxation after accounting for adjustments, exemptions, and deductions.
- Unearned Income — Definition,
- Income such as interest, dividends, capital gains or rents, as opposed to earned income, such as wages, tips and salaries.