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11%20-%20Taxable%20Income%20and%20Tax%20Payable%20for%20Individuals%20Revisted

11%20-%20Taxable%20Income%20and%20Tax%20Payable%20for%20Individuals%20Revisted

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Chapter 11 Taxable Income and Tax Payable for Individuals Revisited
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Taxable Income The calculation of taxable income starts with NIFTP and then the following items are deducted: The stock option deduction (Chapter 3) Social assistance payments (Chapter 4) Home relocation loan deduction (Chapter 4) Lump-sum payments (this Chapter) Life time capital gains deduction (this Chapter) Northern residents deduction (Chapter 4) Losses (this Chapter)
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Lump Sum Payments Retroactive payments of salary, pensions and spousal support can create a tax problem for the recipient, since these items are taxed on a cash basis When a lump sum is received, because of the progressive tax rates we have, it can be taxed at a higher rate than would normally be the case if the same amount was spread over a few years For certain types of payments, relief is available Qualifying amounts: Spousal and child support, pension benefits, EI, salaries in certain situations Process: Spread the amount received over earlier years at the marginal rate effective each year Interest is charged from May 1 of the year following each year that additional tax is owing
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