Income Tax Basics
Start with the Canadian income tax terms that define income, rates, and what eventually becomes taxable.
Income Tax Basics explains the core calculation language that shows up across the Canadian personal tax system.
Use This Section When
- you need to understand how income moves through the Canadian tax calculation
- you are comparing total income, net income, taxable income, and tax-rate concepts
- the question is about the math and sequence behind the return rather than a specific slip or CRA notice
Start Here
What This Section Covers
This section focuses on the sequence that turns income into tax results: total income, net income, taxable income, and the rates that apply after deductions and credits are considered.
In this section
- Effective Tax Rate
Understand effective tax rate as the average rate a taxpayer pays across income rather than the rate on the next dollar.
- Marginal Tax Rate
Learn what marginal tax rate means in Canada and why it applies only to the next slice of taxable income.
- Net Income
Learn what net income means on a Canadian return after deductions reduce total income.
- Taxable Income
Understand taxable income as the amount that tax rates are applied to on a Canadian personal return.
- Total Income
Understand what total income means on a Canadian tax return before deductions are applied.