Investment Funds in Canada (IFIC) -
Chapter 6 fully solved
What are the some examples of legitimate tax avoidance?
* Full utilization of allowable deductions
* Conversion of non-deductible expenses into tax deductible expenditures
* Postponing the receipt of income
* Splitting income with other family members, when handled properly
* Selecting investments that provide a better after-tax rate of return
The Income Tax System in Canada
The federal government imposes income taxes by federal statute (the Income Tax Act, often referred to
as the ITA).
All Canadian provinces have separate statutes which impose a provincial income tax on residents of the
province and on non-residents who conduct business or a have permanent establishment in that
province.
Which provinces the federal government does NOT collect provincial income taxes from?
* Quebec, which administers its own income tax on both individuals and corporations; and
* Alberta, which administers their own income tax on corporations.
Canada imposes an income tax on:
* Non-residents, which they are subject to Canadian taxes on world income of its residents and certain
types of Canadian source income.
, * Companies incorporated in Canada under federal or provincial law.
* Foreign companies with management and control in Canada.
Taxation Year
- Individuals >>> Calendar Year
- Corporations >>> Fiscal Year
Note: No corporate taxation year may be longer than 53 weeks.
What are the 4 steps involved in calculating income tax?
1. Calculating all sources of income from employment, business, and investments
2. Making allowable deductions to arrive at taxable income
3. Calculating the gross or basic tax payable on taxable income
4. Claiming various tax credits, if any, and calculating the net tax payable.
Types of Income
1. Employment Income
2. Capital Property Income
3. Business Income
4. Capital Gains and Losses
Chapter 6 fully solved
What are the some examples of legitimate tax avoidance?
* Full utilization of allowable deductions
* Conversion of non-deductible expenses into tax deductible expenditures
* Postponing the receipt of income
* Splitting income with other family members, when handled properly
* Selecting investments that provide a better after-tax rate of return
The Income Tax System in Canada
The federal government imposes income taxes by federal statute (the Income Tax Act, often referred to
as the ITA).
All Canadian provinces have separate statutes which impose a provincial income tax on residents of the
province and on non-residents who conduct business or a have permanent establishment in that
province.
Which provinces the federal government does NOT collect provincial income taxes from?
* Quebec, which administers its own income tax on both individuals and corporations; and
* Alberta, which administers their own income tax on corporations.
Canada imposes an income tax on:
* Non-residents, which they are subject to Canadian taxes on world income of its residents and certain
types of Canadian source income.
, * Companies incorporated in Canada under federal or provincial law.
* Foreign companies with management and control in Canada.
Taxation Year
- Individuals >>> Calendar Year
- Corporations >>> Fiscal Year
Note: No corporate taxation year may be longer than 53 weeks.
What are the 4 steps involved in calculating income tax?
1. Calculating all sources of income from employment, business, and investments
2. Making allowable deductions to arrive at taxable income
3. Calculating the gross or basic tax payable on taxable income
4. Claiming various tax credits, if any, and calculating the net tax payable.
Types of Income
1. Employment Income
2. Capital Property Income
3. Business Income
4. Capital Gains and Losses
