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GLOSSARY

Canadian Financial, Real Estate and Mortgage Glossary

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Direct Tax


Synonyms:candid, non-hidden tax, straightforward tax, tariff
Filed Under: financial-banking, taxation
Tags: banking, taxes
 

Definition of direct tax

direct tax
1. A type of tax that is paid directly to the government. Unlike indirect taxes such as sales taxes, tax payments do not go through an intermediary. Income taxes and property taxes are examples of direct taxes.

Related Terms and Acronyms:

  • alternative minimum tax (AMT)   This tax primarily affects high-income taxpayers who shelter some of their income from tax through certain tax preference items or deductions. It is often referred to in tax publications as AMT and, if your income meets the limit, you have to recalculate your tax due based on the separate alternative minimum tax rates and tables.
      ➥  Form T691.
  • average tax rate   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.
  • before-tax income   Earnings before income taxes are paid.
  • filing extension   An additional amount of time to file your return. A filing extension, however, does not give you more time to pay your taxes.
  • goods and services tax (GS, GST)   A sales tax that applies in all Canadian provinces charged at 5% (as of 2012).
      ➥  Bank account transaction code.
  • harmonized sales tax (HST)   A sales tax used in some provinces to merge the GST and PST.
      ➥  Canadian consumption tax.
  • indirect tax   A tax that is collected by a third party before being transferred to the government.
  • levy   A cost imposed on an individual or entity.
  • payroll taxes   A tax based on wages and salaries that is deducted from employees pay cheques.
  • sales tax   Federal and / or provincial taxes that are applied to purchases.

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