Income taxes can be confusing. However, with a basic understanding of the Canadian system, anyone can ensure they are well-prepared come tax season.
The essence of personal income tax in Canada is built upon the principle of fairness. Unlike a flat tax system where everyone pays the same percentage regardless of income, Canada employs a progressive tax system. This means that the percentage of tax you pay increases as your income does. In simpler terms, those who earn more contribute a higher percentage of their income towards taxes than those who earn less.
So, why is understanding this progressive system crucial? Firstly, it allows you to anticipate your tax obligations based on your income bracket. This can aid in financial planning, ensuring you set aside an appropriate amount for tax purposes and aren’t caught off-guard when the tax bill arrives. Let’s dive into how everything works in the video above.
