Question

VANIER COLLEGE- BUSINESS ADMINISTRATION PERSONAL FINANCIAL PLANNING-FALL 2020 TEACHER: R. BLOOM SECTION 0001 Chapter 4 Assignment on Personal Taxes Using general information you know and referring to your book as necessary, please answer the following questions with full/complete responses. Please use proper APA font and font size. 1- Explain the difference between personal taxes, sales and service taxes and municipal taxes. 2- Under what circumstances would you report a Capital gain? a. If you report a capital gain, how much of it is taxable? b. Where do you include a capital gain in a tax return? 3- What is the difference between TOTAL INCOME AND NET INCOME? 4- What is TAXABLE INCOME? 5- List 3 common sources of income. 6- List and explain 4 deductions in arriving at Net income. 7- What it the difference between refundable and non- refundable tax credits? 8- Your little sister asked you what the “BASIC PERSONAL AMOUNT" is in her tax return. Explain it to her in layman's terms. 9- What is the difference between RRSPs and RESPs? 10- List the eligibility criteria for the GST/HST tax credit.

Answer 1

1. Income tax is the direct tax on income.

Sales tax is the tax son sale or lease of goods. It is also known as pass through tax.

Municipal taxes are the aggregate of all the taxes,local improvements or similar rates,duties,assesments,charges etc.

2. Capital gain is shown under the head Income from capital gains. Long term capital gains are taxed at flat rate of 20%.

3. Total income is the gross income earned by the individual and net income is the taxable income.

4. Taxable income refers to the base upon which income tax system imposes tax.

5. The common sources of income include salariez and wages, interest, dividend etc

6. Medical insurance, interest income, LIC, principal amount of housing loan etc

7. Amount of refundable tax credit exceeding tax liability is refunded to tax payers. If non refundable tax credit exceeds amount of taxes owed, the excess is lost.

8. Basic personal amount is the non refundable tax credit claimed by all individuals.

9. RRSP is registered retirement savings plan and is about savings when we grow old. RESP is registered education savings plan.