Ch12short-1 - Some Tax Terms Average tax rate = total taxes...

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Ch 12 After-Tax Cash Flows Objectives • Calculate taxes due or taxes owed • Understand incremental nature of tax rates used to calculate taxes on income • Select appropriate income tax rate for engineering economic analysis
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Calculation of Taxable Income - taxable income of individuals Gross Income – Deductions = Taxable Income • Gross income = Wages and salary + Interest income + Dividend income + Rent and royalty income + Capital gains + Other • Deductions = Retirement plan contributions + Union and professional dues + Child care expenses + Business investment losses + Moving expenses + Others Tax Income of Individuals • Most personal income taxes are progressive, the larger the income, the larger the percentage of taxes, e.g. the Federal Income Tax Structure below: • Provincial income taxes are usually also progressive (except Alberta, which has a fixed rate flat tax scheme).
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Unformatted text preview: Some Tax Terms Average tax rate = total taxes payable taxable income (total taxes payable = federal + provincial + surtaxes) Marginal tax rate = the tax rate that applies to the next taxable dollar (it refers to the tax bracket you are in) Corporate Income Taxes Property Capital Cost Allowance Capital Cost Undepreciated Capital Cost Proceeds from Disposition Asset Depreciation Cost Base Book Value Salvage Value Tax Depreciation Terms Book Depreciation Terms Corporate Income Taxes The are not progressive so do not increase as amount of income increases Percentage rate varies depending on type of business and province. There is a Small Business Deduction (SBD) that results in less tax charged on the first $300,000 of taxable income. Corporate Income Taxes 2006 Marginal Tax Rate on Active Business Income over $300,000 Simplified Income Statement Formula...
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This note was uploaded on 12/07/2011 for the course ENGR 301 taught by Professor Gg during the Fall '11 term at Concordia Canada.

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Ch12short-1 - Some Tax Terms Average tax rate = total taxes...

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