Defining Taxable Income
Taxable income is the amount of income on which you actually pay income taxes. There are several reasons why you don’t pay taxes on your total income: First, not all income is taxable such as profit you make on your residence and the profit you earn on money invested in RRSPs and Tax-Free Savings Accounts (TFSAs). Second, you get to subtract deductions from your income.
Here are a few ways to reduce your taxes and increase your deductions:
1. Contribute to RRSPs and retirement plans
2. Claim child care expenses: $7,000 for children under 7, $4,000 for children 7-16
3. Annual union and professional fees: claim regular annual dues
4. Business losses can be claimed to reduce income
5. Interest on investment loans (Not RRSPs)
6. Married versus common law: Research options include spousal RRSP
7. Moving Expenses
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