Tax Planning

How is Tax in Canada

Taxes are collected by the Canada Revenue Agency (CRA) which partly is federal and partly provincial. Canadian individuals for specific year must submit their tax maximum by April 30 of the following year.Today, major part of government’s earning is from tax paying by Canadian individuals and enteritis. This tax is supposed to pays for Medicare, public transport & roads, municipality, education, defence and security.

What are the most important taxes in Ontario

There are three more important taxes among several types in Canada, Ontario as follow:

  • Income tax
  • Sales tax
  • Capital gain tax

Other taxes like: property tax, eco tax and land transfer tax add on the main above mentioned.

What is the income tax and how much is it

1- Income tax is associated with income of individuals or businesses (corporations or other legal entities).When the tax is on the income of companies, it is often called a corporate tax, corporate income tax, or profit tax

2- Sales tax (HST), is on top of the price of most goods and services. Its usually 13% as Harmonized Sales Tax (HST)

3-Capital gain tax, is a tax receivable on capital gains, the profit earned on the sale of a non-inventory asset that was purchased at a lower price.

How can we save and pay less tax

  • Tax differed, is a taxable account which you can pay it later, in future like investment money in your RRSP and RESP.
  • Tax shelter, is an account which can be grow without paying tax as long as not withdraw like investment growth in the life insurance.
  • Tax exempt, is an account which tax free as of the tax regulation like face amount of the life insurance or growth of TFSA.

By-law every resident of Canada must file an annual form and declare all worldwide income earned during each calendar year. The key to reduce income tax is to reduce the total taxable income by using “tax deductions”. This will be especially effective if the deduction move the tax payer to a lower marginal tax rate.

What is the tax planning

Tax planning means minimization payable tax or/and differed tax through vehicles like:

  • Life insurance
  • Will
  • Income splitting (RRSP)
  • Investment return (rather than interest income)

That’s why tax planning is one of budgeting these days and more essential than ever. Not just for top income earners but especially for middle income families..

What is the tax return in Ontario

There is a tax advantage to help low income families. For each family with lower income than what introduced by the government, they will not pay tax, even receive a check from CRA to compensate their budget.

What is child tax benefit in Ontario

Child tax benefit is a kind of tax support for family with one or more children. This tax return deposit to the account of parents (usually mother) on monthly bases and calculate based on family income and number of children.

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