Definitions under Income Tax Act The Income Tax Act defines several terms that are important to understand for taxpayers. These terms include: Assessmen...
Definitions under Income Tax Act
The Income Tax Act defines several terms that are important to understand for taxpayers. These terms include:
Assessment period: The period of time during which income is earned and taxed.
Capital asset: A property that is held for investment and is not sold during the tax year.
Depreciation: The decline in value of a property over time.
Earnings: The income that a taxpayer receives from their employment or self-employment.
Income tax: The tax paid by taxpayers on their income.
Taxable income: The portion of an income that is subject to taxation.
Taxpayer: An individual or business that is required to pay income tax.
Taxable income: The total amount of income that a taxpayer is entitled to receive from their employment or self-employment.
Tax deduction: A reduction in taxable income that a taxpayer can claim to reduce their tax liability.
Tax credit: A refund of taxes paid on behalf of a taxpayer.
Value-added tax (VAT): A tax paid on the sale of goods and services.
By understanding these definitions, taxpayers can better understand how the Income Tax Act works and how they can comply with its requirements