If you live in Canada, you are required to pay a great amount of taxes. Every resident of Canada is required to file an income tax return with the Canadian Revenue Agency yearly. Now, the problem is that there are a number of assumptions about taxes out there. Some people believe that 50% of your earnings will be diverted to the government as taxes. However, this is not the case. You are generally subject to a marginal tax rate that is determined by your income.
Various items, on the other hand, are exempted from taxation in Canada. Knowing about them can be beneficial when it comes to filing your taxes. Despite the fact that it is not a particularly long list, we should still be aware of it.
When it comes to financial management, you must be certain that you determine the income that is taxable and the ways in which you don’t have to pay the taxes.
Non-taxed Income
There are a few types of incomes that are not taxable:
- GST/HST Credit
People with a low to modest income can gain from reaping the benefits of the GST/HST credit program, in which the Canada Revenue Agency (CRA) compensates the government for the GST/HST paid by people. Individuals and families that qualify for the GST/HST credit are reimbursed by the Canada Revenue Agency (CRA). By filing your tax return, you will be able to immediately apply for the GST/HST credit.
You will need to follow a slightly different set of steps if you are a new resident of Canada. In order to apply for the credit, you must complete one of the forms. The form would be different for individuals who have children and a different one for those who do not have children.
- Canada Child Benefits (CCB) Payment
When you have children under the age of 18, you can qualify for CCB payments, which is a tax-free benefit that helps to support low- to middle-income families.
- Gifts and Inheritances
Canada, in contrast to many other countries, does not impose a gift tax on its citizens. Even if you have received a gift from a relative, you are not liable to pay the associated tax. Second, there are no taxes levied on inheritance money. In addition, the money received as a beneficiary of a life insurance policy is not subject to taxation either.
- Tax-Free Savings Account
The TFSA was established in 2009 and provides you with the ability to open an account with any financial institution in the country. A TFSA account allows you to make a variety of payments. For example, you may be making an investment in the purchase of shares, bonds, mutual funds, or other similar securities. You will not be taxed on any of the income you produce from TFSA assets, and all withdrawals will be done from this account.
For more help in processing the abovementioned non-taxed income, please reach out to IDM Professional Corporation CPA.
