PersonalIncomeTaxesPayable

PersonalIncomeTaxesPayable - DRAFT PERSONAL INCOME TAXES...

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DRAFT PERSONAL INCOME TAXES PAYABLE ©F. BARRY GORMAN, PHD, CA, TEP INTRODUCTION PART I – PERSONAL TAX CREDITS 1. Non-Refundable Personal Tax Credits (a) General Principles (b) Basic Credit (c) Spousal Credit (d) Equivalent-to-Spouse Credit (e) Child Credit (f) Caregiver Credit (g) Dependent Credit (h) Foreign Dependents (i) Age Credit (j) Pension Credit (k) Employment Credit (l) Adoption Expense Credit (m) Public Transit Credit (n) Child’s Fitness Credit (o) Charitable Donations Credit (p) Medical Expenditures Credit (i) General Rules (ii) Eligible Expenditures (iii) Attendant Care and Nursing Home Expenditures (iv) Travel for Medical Care (v) Refundable Medical Expenditures Supplement (q) Disability Credit (i) Eligibility (ii)Transfer of the Disability Credit (iii) Supplementary Credit (r) Credits for Students (i) Tuition Credit (ii) Education Credit (iii) Textbook Credit (iv) Transfer of Student Credits to a Spouse or Supporting Person (v) Student Loan Interest Credit (s) EI and C(Q)PP Credits 1
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(t) Transfer of Unused Credits to a Spouse (u) Dividend Tax Credit (v) Investment Tax Credit (w) Federal Political Tax Credit (x) Foreign Tax Credit (y) Overseas Employment Tax Credit (z) First-Time Home Buyers’ Credit (aa) Children’s Arts Credit (bb) Volunteer Firefighters’ Credit 2. Tax Planning Note 3. Ordering of Tax Credits PART 2 – OTHER PERSONAL TAX ISSUES 1. Tax Brackets 2. Child Tax Benefits 3. Universal Child Care Benefit 4. Social Benefit Clawback 5. Minimum Tax 6. Surtax on Employees Working Abroad APPENDIX – PERSONAL TAX CREDITS (2008-2011) 2
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INTRODUCTION In all developed countries, because income has traditionally been considered the most appropriate benchmark on which to base ability-to-pay, the personal income tax constitutes a major source of government revenue. By means of allowances 1 and rate adjustments, such a base provides the necessary flexibility for reacting quickly to changing economic conditions and achieving greater equity within the tax system. The personal income tax is a general factor tax in that its economic effect is on the supply of the factors of production, that is, labour, capital, and savings. For example, the personal income tax may furnish a reason for individuals to replace taxed labour with untaxed leisure time or non-taxed employment. Also affected is the willingness with which investors assume risk. On the other hand, the personal income tax may stimulate individuals to increase their work effort in order to replace disposable income surrendered to taxation. Because of the categorization of personal income by source, with potentially discriminatory tax affects, individuals may also be encouraged to substitute one form of income earning activity for another. Such substitution activity can lead to unwarranted levels of tax avoidance or the emergence/expansion of an underground economy. Because of the progressivity of Canadian personal tax rates, and the consequent marginal tax rate created, these latter effects are less significant for
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PersonalIncomeTaxesPayable - DRAFT PERSONAL INCOME TAXES...

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