Effective tax strategy - answer✔-vital for successful financial planning
goal of tax strategy - answer✔maximize after tax cash flows and net worth
important in terms of taxes - answer✔-know current tax laws as they affect you
-make employment, purchase and investment decisions that leave you with the greatest after
tax cash flows and net worth
-maintain compete tax records
-file by April 30 deadline each year
types of taxes - answer✔1. taxes purchases: sales tax and excise tax
2. taxes on property: real estate tax, personal property tax
3. taxes on wealth: estate tax, capital gain
4. taxes on earnings: income tax
how to file a tax return - answer✔-most file electronically
-2 systems for filing electronically
1. netfile: consumer uses authorized software to complete and file the tax return
2. efile: authorized service providers send in the tax return from software used to prepare the
return
who must file taxes - answer✔-all residents of Canadian must file a federal income tax return
for any year in which they have a balance of taxes owing
-a resident is anyone living in canada but also includes non canadians whoa re present 183 days
(half a year) or more
-tax filling is only way to access income through tax benefits and credits and establish eligibility
for income tested benefits
tax brackets - answer✔-both federal and provincial governments collect income tax
-amount collected depends on where tax filer lives and level of taxable income or "tax bracket"
-marginal tax rate
-average tax rate
marginal tax rate - answer✔rate of tax calculated on the next dollar of taxable income earned
average tax rate - answer✔total tax due divided by total taxable income
federal tax rates - answer✔-15% on the first $53 359 up to $106 717
-20.5% on the portion of taxable income over $106 717 up to $165 430
-26% on the portion over $165 420 up to $235 675
-29% on the portion over $165 420 up to $235 675
-33% over $235 675
manitoba tax rates - answer✔-10.8% on first $36 842
-12.75% over $36 842 and including $79 625
-17.4% over $79 625
tax deductions - answer✔-reduce taxable income
-do not result in a refund if the person has no income
common tax deductions - answer✔-registered pension plan (RPP) contributions - shown in box
20 of T4 slips
-registered retirement savings plan (RRSP) contributions shown on receipts
-union or professional dues usually shown in box 44 of a T4 slip
tax credits - answer✔-reduce taxes payable
-non refundable and refundable
non refundable tax credits - answer✔-reduce taxes payable but do not provide any additional
benefit if the tax filer doesn't have any taxable income
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