Income Tax Mind Map
par Ishan Brar
1. Tax Basics
1.1. -Residents of Canada pay several different taxes -Taxes pay for public programs and services -Taxpayers have rights to: >Understand the taxation system >Pay no more than tax laws have authorized >Fair treatment -Taxpayers have the responsibility to: >Report their income >Pay taxes accurately, honestly and on time
2. All About Income Tax
2.1. -Different types of income can be taxed at a different rate, or are tax-free -You pay income tax on your taxable income - your total income minus allowable deductions or exemptions -Under a graduated income tax system, people with lower income pay a lower tax rate
3. Reducing Your Taxes
3.1. -Canada’s tax system provides many deductions and tax credits >Find all the deductions and credits that apply to you -The tax deductions and credits vary as family and financial circumstances change -Check the Income Tax Guide or get expert help to see how they apply
4. Filing Your Taxes
4.1. -Prepare for your taxes in advance >Avoid penalties for late filing >Organize your finances to minimize taxes -Use a system to organize tax documents through the year -Software packages help prepare and file returns -Professional tax advice may save you time and money
5. IMPORTANT CONCEPTS
5.1. TD1 - Is the form your employer uses to determine the amount of feder4al and provincial tax to deduct your pay.
5.1.1. T4 - Information slips you get from the employer for you and the CRA to know how much income you recieve and how much income is deducted.
5.1.1.1. T1 Form - Used to determine the amount of federal tax payable.
5.2. Taxable Income - The amount of income used to calculate the taxes owed by an individual or a company.
5.2.1. Tax Credit - Reduction of income tax paid as refundable and/or non-refundable.
5.2.1.1. Tax Deduction - Lowers your taxable income, and calculated as percentage of tax rate. (Self-Employed Business Expense)