Personal Income Tax

• True/False: Personal Income Taxes are the largest source of government revenue

  True
• How many days are you required to be in Canada to file taxes

  183
• What tax system was used prior to the 2000's

  tax on tax system
• What tax system was used post-2000's in provinces except quebec

  tax on income system
• What is the net tax liability

  sum of taxes owed minus tax credits and benefits
• What is horizontal equity

  People who are equally well off before taxes should pay the same amount of taxes
• What is veritcal equity

  Tax burdens should be fairly distributed across people with different abilities to pay
• What is the third step in calculating individual tax liabilities in CANADA

  Apply the tax rate schedule to taxable income
• What is the 5th step in calculating the individual tax liabilities in Canada

  Calculate the net tax owing, taking credit into account
• What is the haig-simmons definition of income?

  Income is the monetary value of a net increase in an individuals consumption power
• Which type of capital gains are taxed in Canada

  realized
• What sources of income are included in the Haig-simmons definition of income but not in the Canadian PIT system

  -Unrealized capital gains

  -Gifts and Inheritances

  -Employer contributions to benefit up tot an annual limit
• What is the formual for net income

  Total income - deductions
• True/False: The gross tax liability is calculated on total income

  False
• What type of deductions in Canada are justified by the H-S income criterion

  All expenses in earning income and Alimony
• What are refundable tax credits

  You receive these credits even if it leads to a negative net tax liability (i.e the gov.t owes you funds)
• What are non-refundable tax credits?

  You only receive these credits to reduce the amount owing the government (only positive net tax liability)
• A tax credit reduces the effective price of the good by the same percentage for all individuals
• A deduction decreases the price by different percentages for different people
• Does a deduction favour those with a higher/lower MTR more

  higher
• What is a surtax

  Additional tax on high income earners(on top the regular provincial rate)