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CTP_(08)_Chapter_01 - Byrd& Chen’s Byrd& Chen’s...

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Unformatted text preview: Byrd & Chen’s Byrd & Chen’s Canadian Tax Principles Canadian Tax Principles 2008/2009 Edition 2008/2009 Edition Chapter 1 Chapter 1 Introduction To Federal Taxation Introduction To Federal Taxation In Canada In Canada © 2008, Clarence Byrd Inc. © 2008, Clarence Byrd Inc. 2 Alternative Tax Bases Alternative Tax Bases • Federal Revenues $245.8 Billion – 2008/09 – Personal Income (49%) – Corporate Income (15%) – EI Contributions (7%) – GST (11%) – Other (18%) © 2008, Clarence Byrd Inc. © 2008, Clarence Byrd Inc. 3 Taxable Entities Taxable Entities • Individuals • Corporations • Trusts © 2008, Clarence Byrd Inc. © 2008, Clarence Byrd Inc. 4 Federal/Provincial System Federal/Provincial System • Individual with Taxable Income of $20,000 – Federal Tax - @ 15% $3,000 – Provincial Tax (Assumed) - @ 7% 1,400 – Total $4,400 © 2008, Clarence Byrd Inc. © 2008, Clarence Byrd Inc. 5 Federal/Provincial System Federal/Provincial System • Public Corporation With Taxable Income of $100,000 – Federal Tax - @ 21% $21,000 – Provincial Tax (Assumed) - @ 13% 13,000 – Total $44,000 © 2008, Clarence Byrd Inc. © 2008, Clarence Byrd Inc. 6 Economic Objectives Economic Objectives • Resource Allocation • Distribution Effects • Stabilization Effects • Fiscal Federalism © 2008, Clarence Byrd Inc. © 2008, Clarence Byrd Inc. 7 Taxation And Income Levels Taxation And Income Levels • Progressive Systems • Regressive Systems © 2008, Clarence Byrd Inc. © 2008, Clarence Byrd Inc. 8 Taxation And Income Levels Taxation And Income Levels – Evaluation • Progressive Is Viewed As Fair (Ability To Pay) • Regressive Or Flat – Less Complex – Doesn’t Kill Initiative – Doesn’t Encourage Evasion – Fairer If Income Fluctuates – Fairer To One Income Families – Flat Tax Systems (Good For Simplicity) © 2008, Clarence Byrd Inc. © 2008, Clarence Byrd Inc. 9 Tax Incidence Tax Incidence Tax Assessed On Corporation Who Pays? Shareholders? Customers? © 2008, Clarence Byrd Inc. © 2008, Clarence Byrd Inc. 10 10 Tax Expenditures Tax Expenditures • Examples (2008) – Basic Personal Credit - $26.3 Billion – RRSP Deductions - $8.6 Billion – Capital Gains - $3.4 Billion © 2008, Clarence Byrd Inc. © 2008, Clarence Byrd Inc....
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