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GLOSSARY

Canadian Financial, Real Estate and Mortgage Glossary

How often this word is used
 
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50% - Moderately

Garnishment


Synonyms:collect on arrears, collections, seize debt, seizure, take
Filed Under: financial-banking, taxation
Tags: banking, taxes
 

Definition of garnishment

garnishment
1. When a set dollar amount is withheld from a person's pay cheque and given to another party, such as a creditor or ex-spouse. Any amount garnished from a pay cheque must be included as taxable income because the full pay cheque is considered to be received by the person even though some was withheld to pay debts.

Related Terms and Acronyms:

  • Canada Pension Plan (CPP)   A public pension plan administrated by the Canadian government.
  • constructive receipt   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.
  • creditor   One who is owed money.
  • debtor   A person who has filed a petition for relief under the bankruptcy laws.
  • instalment   The regular periodic payment that a borrower agrees to make the lender.
  • lien   A legal hold or claim of a creditor on the property of another.
  • old age security (OAS)   A Canadian pension plan for eligible Canadians over the age of 65.
  • payroll taxes   A tax based on wages and salaries that is deducted from employees pay cheques.
  • secured debt   A debt that is secured by a lien on debtor's property that may be taken by the creditor in case of non-payment by the debtor. A common example is a mortgage loan.
  • taxable income   Income that is subject to taxation after accounting for adjustments, exemptions, and deductions.

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