Personal Income Tax
Who pays Income Tax?
Income-earning individuals
Who charges a higher tax percentage rate on income-earning individuals? Federal or Provincial?
Federal
What is the definition of tax credits?
The amount of money subtracted from the total value of the tax that you already owe, rather than subtracting from your income. (Money subtracted from tax owed)
What are the 3 popular savings plans presented today?
RRSP
Registered retirement savings plan
RPP
Registered pension plan
TFSA
Tax-free savings account
Name 2 advantages of a TFSA account
Tax free compounding
No barrier to withdrawals
Share contribution room with a spouse
Contribution room is the same, regardless of income
Contribution room returns the next year
No mandatory withdrawals
Withdrawals won’t affect government benefits
No tax upon death
What income tax paying system is implemented to ensure everyone pays a "fair" amount? (Low income earners pay less, high earners pay more)
The Progressive Income Tax System
Most countries impose a progressive income tax system where the higher-earning individuals have to pay more tax than low-income people
Below what amount of income must you generate to be ONLY considered in the lowest Federal bracket?
$47630
What is 1 reason that allows you to receive tax deductions? (From reasons presented)
If you had to move 40 km+ to work
Moving expense
Saving to an RRSP
How many Canadians (In Percent) contribute to at least one of the 3 popular savings plans?
62% of Canadians contribute to 1 of the 3 most common savings plans in the country
What is one disadvantage of TFSA?
* No barriers to withdrawn
* No income tax reduction
* No protection from creditors
What is the DEFINITION of income tax?
Income tax is the tax that a government imposes on individuals within their jurisdiction and is taken from the taxable income generated by that person
On taxable income between $87813-$150000, in Ontario, what is the tax percentage rate?
11.16%
What are 2 reasons to apply for tax credit? (From reasons presented)
University or college
Dependent spouse
Basic personal tax credit
Caregiver
What age group of people usually contribute to TFSA?
Income bringing individuals aged under 35 or over 54 use TFSA more often
Why is it important to invest as much as you can as soon as possible? (In TFSA Account)
Although your room for contribution grows every year up to $63500, like all investments, investing earlier will make it so that investments will have more time to compound.
Once again, you can start investing into the TFSA from the age of 18.