Personal Income Tax

Here is a brief overview of how personal income tax works in Canada outside Quebec.

\begin{equation} Net Income = Total Income - Deductions \end{equation}
\begin{equation} Taxable Income = Net Income - Other Deductions \end{equation}
\begin{equation} Basic Federal Tax = Federal Tax - Nonrefundable Tax Credits \end{equation}

Add CPP contributions if self-employed
Subtract other federal nonrefundable credits
Subtract tax already paid
Subtract refundable tax credits
Equals Tax owed or Tax to be refunded

\begin{align} Tax Payable = (Earned Income - Deductions - Tax Credits) \times Tax Rates \end{align}

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