Ch 1 notes - Slides - 2 What is a progressive tax system?...

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Chapter One Class Notes Tran Chung Agenda Go over course overview and outline Some frequently asked questions Introduction to tax FAQ: Is this a hard course? Are the exams hard? Are you a tough marker? Is the final exam cumulative? Can I use last year’s textbook and Income Tax Act? Should I check WebCT regularly? How do I get a good grade in this course? Why are tax laws so complicated? © 2010 Tran Chung 1
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What is a tax? A tax is an involuntary fee paid by individuals or businesses to a state, or to functional equivalents of a state, including tribes, secessionist movements or revolutionary movements. What are the objectives of the Canadian tax system? Raise revenue o to provide for public goods and services, such as military, transportation infrastructure, education, health, Quebec ad sponsorship, etc… Redistribute Income o Robin Hood theory…take from the rich and give to the poor Promote or penalize certain activities o o Sin taxes Re-allocation of wealth among different layers of government o Provincial transfer payments © 2010 Tran Chung
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Unformatted text preview: 2 What is a progressive tax system? As the individual earns more income, higher tax rates are applied to higher level of income. What is the difference between marginal tax rate (MTR) and average tax rate (ATR)? MTR = tax liability income ATR = Total tax liability Total income Example using hypothetical tax brackets: Tax brackets Tax rate $0 - $10,000 0% $10,001-$15,000 25% $15,001 - $25,000 35% > $25,000 40% What are the MTR and ATR of someone making (1) $14,000/year and (2) $40,000/year? What is more important for tax planning? Tax revenue (liability) = (tax rate) x (tax base) 2010 Tran Chung 3 Structure of the Income Tax Act Section, Subsection, Paragraph, Subparagraph, Clause, Subclause Important to remember section 248 Tools Law Income Tax Act Court Cases Interpretation Tools CRA publications Website: http://www.cra-arc.gc.ca/menu-e.html IT Bulletin, IC, Technical Interpretations, ATR, Technical News, Guides, and Pamphlets Journal Articles 2010 Tran Chung 4...
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This note was uploaded on 11/03/2010 for the course COMM 355 taught by Professor Trancheung during the Winter '10 term at The University of British Columbia.

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Ch 1 notes - Slides - 2 What is a progressive tax system?...

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