Chapter 2: Income Management

Budgeting

A budget is a plan for smart spending and savings based on one’s income
and expenses.

Budgets
The main purpose of a budget is to compare financial expectations with
reality, and adjust the next month’s projections, if necessary.
Individuals plan in order to ensure that their limited resources are dispersed in
the manner that is best for them and their families.

A budget helps you plan for your regular expenses, put money aside for the
larger expenses that occur less often, invest money to reach your financial
goals, and examine your expenditures to ensure that you are spending your
money wisely
1
Chapter 2: Income Management
Budgeting

Personal Budgeting
Personal budgets can be kept daily, weekly, and even monthly. Many people
avoid budgeting because they believe that it is too difficult, or it will limit their
enjoyment of life. However, learning to budget can actually help them find
money for the things they really want or need.

A budget is a very personal document. You can use software specifically for
budgeting purposes or you can create tables using a spreadsheet software
program.

Why make a personal budget?

A personal budget will help keep your personal finances on track so that you
are not spending more than you take in. When it comes to personal finances,
the best way to manage your money is to create a budget.
2
3
 Chapter 2: Income Management
Budgeting

Creating a Personal Budget

It is said that every journey begins with a first step.
The road to financial freedom is the same.

Personal budgeting is a plan that monitors how you

spend, save, invest, and manage your money.

It begins with careful financial planning and being

attentive to your income and your expenses.

4
 Chapter 2: Income Management
Budgeting

Setting Personal Goals

Setting up a personal financial plan requires establishing realistic and
achievable short- and long-term goals. Most people need to set aside specific
minimum monthly amounts to achieve long-term financial goals.

5
 Chapter 2: Income Management
Budgeting

A budget is a financial plan, which list or identifies all planned expenses and
revenues (income). It is therefore a plan of savings, borrowing and spending.

A budget is balanced when income (all money coming in) is equal to expenses (all
money going out, which savings and investments).

Balance Budget Income = Expenses

To keep a budget balanced an increase in some expenses must be countered by:

 A decrease in other expenses
 An increase in income. This could be from an increase in wages or finding
an additional job.
 An increase in income and a decrease in expenses.
6
 Chapter 2: Income Management
Budgeting
Budget Surplus or Disposable Income occurs when your income is greater than your expenses,
resulting in you having money left over.

Budget Deficit occurs when your expenses are greater than your income. Therefore, are
spending more than you earn. When there is a deficit, you need to revisit the budget and cut back
on expenses to meet your income or borrow money to cover the expenses.

Fixed Expenses – Expenses that occur regularly for the same amount each time. For example:
rent, mortgage, insurance,

Variable Expense –An expense that differs each time and is usually difficult to estimate in
advance. For example: food, clothing, entertainment, Utility bills (light, water, heat)
In a personal or family budget all sources of income are identified, and expenses are planned
with the intent of matching expenses to income (making ends meet).

Budget constraint prevents or restrict individual from spending more than they earn (income).

7
 Chapter 2: Income Management
Budgeting

Purpose of a Budget
Provide a forecast of revenues and expenditures.
Enable the actual financial operation of the business to be
measured against the forecast.
Establish the cost constraint for a project, program, or operation.
To control resources
To communicate plans to various responsibility center managers.
To motivate managers to strive to achieve budget goals.
To evaluate the performance of managers.
To provide visibility into a company's performance

8
 Chapter 2: Income Management
Budgeting
Types of Budget
Sales budget – an estimate of future sales, often broken down into both units and dollars. It is used to create

company sales goals.

Production budget – an estimate of the number of units that must be manufactured to meet the sales goals. The
production budget also estimates the various costs involved with manufacturing those units, including labor and
material. Created by product oriented companies.
Cash flow/cash budget – a prediction of future cash receipts and expenditures for a particular time period. It
usually covers a period in the short term future. The cash flow budget helps the business determine when income
will be sufficient to cover expenses and when the company will need to seek outside financing.
Marketing budget – an estimate of the funds needed for promotion, advertising, and public relations in order to
market the product or service.
Project budget – a prediction of the costs associated with a particular company project. These costs include
labour, materials, and other related expenses. The project budget is often broken down into specific tasks, with
task budgets assigned to each. A cost estimate is used to establish a project budget.
Revenue budget – consists of revenue receipts of government and the expenditure met from these revenues. Tax
revenues are made up of taxes and other duties that the government levies.
Expenditure budget – includes spending data items.
9
 Chapter 2: Income Management
Basic Rules Regarding Your Personal
Income & Expense

Always seek to ensure you use the following rules to manage your
income & expenses.

The common rule for housing costs is that they should not exceed 28%
of your gross pay.

The recommended budget amount for food and beverages, including
takeout food and restaurant meals, is 14%.

Transportation budgets that include owning a car, taking a bus, taxi, or
subway, or paying for gas and insurance should account for about 19%
of your income.

10
Chapter 2: Income Management
The 50/30/20 Budget Rule

11
 Chapter 2: Income Management
The 50/30/20 Budget Rule

The rule is to split your after-tax income into three categories of

spending: 50% on needs, 30% on wants, and 20% on savings.

KEY POINTS TO REMEMBER

The rule states that you should spend up to 50% of your after-tax
income on needs and obligations that you must-have or must-do. For
example, rent and utilities.

The remaining half should be split up between 20% savings and debt
repayment and 30% to everything else that you might want.

The rule is a template that is intended to help individuals manage their

money and save for emergencies and retirement.

12
 Chapter 2: Income Management
The 50/30/20 Budget Rule

50% On Needs
Needs are those bills that you absolutely must pay and are the things
necessary for survival. These include rent or mortgage payments, car
payments, groceries, insurance, health care, minimum debt payment, and
utilities.

These are your "must-haves." The "needs" category does not include items
that are extras, such as HBO, Netflix, Starbucks, and dining out.
Half of your after-tax income should be all that you need to cover your needs
and obligations.

If you are spending more than that on your needs, you will have to either cut
down on wants or try to downsize your lifestyle, perhaps to a smaller home
or more modest car. Maybe carpooling or taking public transportation to
work is a solution or cooking at home more often.
13
 Chapter 2: Income Management
The 50/30/20 Budget Rule
30% On Wants
Wants are all the things you spend money on that are not absolutely essential.
This includes dinner and movies out, that new handbag, tickets to sporting
events, vacations, the latest electronic gadget, and ultra-high-speed Internet.
Anything in the "wants" bucket is optional if you boil it down.

You can work out at home instead of going to the gym, cook instead of eating
out, or watch sports on TV instead of getting tickets to the game.

This category also includes those upgrade decisions you make, such as
choosing a costlier steak instead of a less expensive hamburger, buying a
Mercedes instead of a more economical Honda, or choosing between watching
television using an antenna for free or spending money to watch cable TV.

Basically, wants are all those little extras you spend money on that make life
more enjoyable and entertaining.
14
 Chapter 2: Income Management
The 50/30/20 Budget Rule
20%: Savings
Finally, try to allocate 20% of your net income to savings and investments.
This includes adding money to an emergency fund in a bank savings
account, making RRSP contributions, putting aside money into a tax-free
savings account (TFSA), and investing in the stock market or other
investments.

You should have at least three months of emergency savings on hand in

case you lose your job, or an unforeseen event occurs. After that, focus on
retirement and meeting other financial goals down the road.

If emergency funds are ever used, the first allocation of additional income
should be to replenish the emergency fund account.

Savings can also include debt repayment. While minimum payments are
part of the "needs" category, any extra payments reduce the principal and
future interest owed, so they are savings. 15
Table used to calculate Monthly
Expenses
Frequency Number of
Periods Per Year

Annually 1
Semi -annually 2
Quarterly 4
Monthly 12
Weekly 52
Biweekly 26
Daily 365

16
 Chapter 2: Income Management
Budget Calculator

Budget Calculator

[Link]

17
Chapter 2: Income Management
Making The Budget Process Smoother

A budget is effective only if you maintain it and you are most likely to maintain it only if the task
of budgeting can be done quickly. Most budgets require a few hours work to set up properly, and
then only an hour or two each month to maintain. The benefits of budgeting are well worth the
hours you spend preparing one.

Tips for the budgeting process Here are seven budget tips to make the process a little smoother.

Tip 1: Use appropriate software.

A number of good budgeting programs are available. Software programs such as Microsoft Excel
or Google Sheets are very helpful as they perform your calculations for you.

Tip 2: Use broad categories.

Select each category for its interest appeal and relevance to you. If you want to know how much
you are spending each month on meals outside the home, then include it as a specific category. If
you want to know only how much you’re spending on food each month, include the meals
consumed both at home and away from home, in the food budget.
Example: “household expenses,” is a category that could include home cleaning products, utilities,18
and home repairs.
Chapter 2: Income Management
Making The Budget Process Smoother

Tip 3: Create an allowance that you don’t have to account for.

You should have a few dollars a week for small things that you don’t record. List it as
“Miscellaneous Expenses.”

Tip 4: Have a category called “Investments”.

This is where you’ll record each investment you might make as if it were an expense. In this
way, you will get used to paying yourself (which you should do first, before you pay anyone
else).

Tip 5: For major expenses, develop several investment accounts.

Include one investment account one for each major expenditure that you are planning to
make during the year. Pay into these accounts monthly to keep the money allocated to these
expenses available, safe, and earning interest. The vacation account described above was
only one example of this type of account; you can have one for clothing, furniture and
appliances, car maintenance and repairs, and anything else you may have budgeted to buy.
19
Chapter 2: Income Management
Making The Budget Process Smoother

Tip 6: Set aside a few minutes each day to record items in your budget.
Don’t wait until the end of the month to do it all, as the task will appear too overwhelming,
and you will postpone, delay, and finally abandon it.

Tip 7: Make your monthly budget reconciliation a celebration event.

Perhaps order in a pizza, or go out to a movie when you have finished. By looking forward to
budgeting, you will continue to budget.

20
 Chapter 2: Income Management
Budgeting – All Expenses Must Be Converted
To Monthly Expense
To change an annual (yearly) amount to a monthly amount, divide by 12.

To change a weekly amount to a monthly amount, multiply by 52

and then divide by 12.

To change a daily amount to a monthly amount, multiply by 365

and then divide by 12.

To change a bi-weekly (every two weeks) amount to a monthly amount,

multiply by 26 and then divide by 12.

To change a semi-monthly (twice a month) amount to a monthly amount,

multiply by 2.

To change a quarterly (four times a year) amount to a monthly amount, divide by 4.

To change a semi-annual (twice a year) amount to a monthly amount, divide by 6.

21
 Chapter 2: Income Management
Budgeting – Revenue & Expenses

Getting personal budget right -Tracking the money in.

In a personal context, the main thing to get right when budgeting is your
earnings and any other revenue coming in.

22
 Chapter 2: Income Management
Budgeting – Revenue & Expenses

Getting personal budget right — Tracking the money out.

On the expenses side, the items to project correctly are things like rent,
interest due, vehicle expenses, groceries, utilities, clothing, entertainment,
cellphone, and internet

23
 Chapter 2: Income Management
Budgeting

Updating a personal budget.

A personal budget, like a business budget, is not “cast in stone.” It can be
changed. A personal budget can, and should, be updated as time goes on.
Businesses and governments do it all the time.

24
 Chapter 2: Income
Management
Budgeting
The rules of personal budgeting
Set incremental goals and make a plan to achieve them.
Automate your savings.
Allocate money to savings, investments, or future goals.
Save first and spend later.
Focus on paying off your debt first.
Always make sure you pay the best price for goods and services your buy.
Use coupons and vouchers — that is what they are for.
Watch “variable” expenses — meals, travel & entertainment as they can
easily increase rapidly.
Track what you earn and what you spend
Work to keep your spending lower than your income
Adjust your spending and saving as your income changes.
Ensure you shop using a shopping list
Allocate your budget according to your needs, wants and goals
Use a basic template to bring your spending in line with your income. 25
 Budget Template
Monthly Budget
Calculating Monthly Expenses Total
FIXED EXPENSES: $

MONTHLY SAVINGS AND LOAN EXPENSES:

IRREGULAR EXPENSES:

VARIABLE EXPENSES:

TOTAL MONTHLY EXPENSES

Calculating Your Monthly Income

SOURCE OF INCOME Total

TOTAL MONTHLY INCOME

BUDGET SUMMARY

Total Monthly Income

Less Total Monthly Expenses
Cash Remaining (Disposable Income) 26
Chapter 2: Income Management
Budgeting
Preparing a Personal Budget

Step 1: Calculate the amount of

expected income.

Step 2: Calculate expenses.

Include regularly occurring fixed

expenses.

 Estimate variable expenses

that change monthly.

Step 3: Calculate amount left over.

27
Students, it
pays to do
your taxes!

1
Land acknowledgement
2
 Outline

• Doing your taxes pays off

• Starting your first job

• Underground economy

• Ways to do your taxes

• GST/HST credit and other tax credits

• Online services

• Scams

3
Why do we pay taxes?

Many services and benefits you enjoy are made

possible through taxes:

• Airports
• Education
• Emergency services
• Health care
• Libraries
• Roads
• Social programs

4
Starting to work

5
Social insurance number (SIN)
• Needed to work in Canada or access government benefits and services

• Unique to you and cannot be used by anyone else

Find a Service Canada office: Information on the

social insurance number:
[Link]/service-canada-office
[Link]/social-insurance-number
1-800-622-6232
1-866-274-6627

6
Form TD1, Personal Tax Credits Return

• Must be completed when you start a new job

• Should be provided to you by your employer

• Helps your employer pay you accurately

For a helpful two-part video on how to fill out a

Form TD1, visit [Link]/learn-about-taxes

7
Pay stub

The Burrito Shop

123 First Street, Toronto, ON Canada

Sacha V.

Employee ID Pay period ending: Pay date: Cheque number:

00123456789 07/31/2024 08/07/2024 0075321
Earnings Hours Rate Current Amount Deductions Current Year-to-date
Amount

001 Basic Pay 75.00 16.00/hr 1,200.00 Income Tax 147.32 147.32
EI 18.96 18.96
CPP/QPP 58.06 58.06

Summary Gross Pay Deductions Net Pay

Current 1,200.00 224.34 975.66

Year-to-date 1,200.00 224.34 975.66

8
T4 slip, Statement of Remuneration Paid

9
Other income?

Not all income will be reported on an information slip, but you are still responsible for reporting it
on your tax return.

If you receive tips or gratuities as part of the work you do:

• Keep track of all your tips and gratuities (on a calendar, a mobile app or in an agenda)

• Calculate the total received between January 1 and December 31

• Report the total received on your tax return

10
Underground economy

How can you protect yourself from financial risks?

• Report all your income

• Work for employers who protect you

• Get a written contract or receipt

[Link]/taxes-underground-economy

11
Do you have to do your taxes?

That’s the big question!

You must file if:

• You must pay tax for the year

• The CRA asked you to file

• You want a refund of taxes you overpaid

• You want the CRA to determine if you are

eligible to receive the GST/HST credit and
other benefits

12
Get ready to do your taxes

[Link]/taxes-get-ready

13
Ways to do your taxes

Use certified tax software products to make online filing fast. Some
products are free!

You may be able to get help from a volunteer at a free tax clinic.

Get help from a family member, friend or tax preparer.

File on paper. Get a paper income tax package online or by mail.

[Link]/taxes-get-ready

14
Free tax help

Volunteers prepare income tax and

benefit returns for those who are eligible,
for free!

[Link]/get-tax-help

15
What happens after you do your taxes?

1. Receive your notice of assessment

2. Get your refund or pay what you owe.

Can’t pay now? We can help!

3. Fix any mistakes

16
Need help?
You can give permission to a person, group of people, or business to deal
with the CRA for you.

Your representative can be:

• a family member

• a friend

• a lawyer

• an accountant

You can give your representative offline or online access to your account.
• Offline access: Form AUT-01, Authorize a Representative for Offline Access
• Online access: Authorize my representative in My Account

17
GST/HST credit

Helps those with low and modest incomes offset

the tax they pay on goods and services.

Married or have a For each child

Single
common-law partner under 19
Up to Up to Up to
$533 $698 $184
per year per year per year

[Link]/gst-hst-credit

18
Canada Carbon Rebate (CCR)

New

On March 15, 2025, the Government of Canada announced that it will be removing
the fuel charge from Canada’s carbon pollution pricing system and sunset the
Canada Carbon Rebate (CCR) for individuals.

The final CCR payment for individuals will be issued starting April 22, 2025.

Please note, to receive the payment starting April 22, 2025, individuals must have
filed their 2024 income tax and benefit return electronically no later than
April 2, 2025.

Eligible individuals filing their return after April 2, 2025, should receive their final CCR
payment once their 2024 return is assessed.

19
Refundable vs. non-refundable

• Refundable tax credits are paid to you if you are eligible.

• Non-refundable tax credits (NRTC) reduce the amount of tax you might owe.

If you owe $200, and have If you owe $200, and have
$500 in refundable tax $500 in non-refundable tax
credits, it reduces the tax credits, it reduces the tax
amount you owe to $0, and amount you owe to 0$, but
you get a refund of: you do not get a refund.

$300 $0

20
Common deductions and credits for
students

• Moving expenses

• Child care expenses

• Canada employment amount

• Interest paid on your student loan

• Tuition tax credit

[Link]/taxes-students

21
Disability tax credit (DTC)
Helps reduce the income tax people living with a
disability, or their supporting family members, may
have to pay. It is intended to offset costs related
to the impairment.

Non-refundable tax credit

If the total DTC amount available to claim is

more than what is owed in taxes, the CRA
will not refund the difference.

[Link]/disability-tax-credit

22
My Account for individuals
Manage your tax and benefit affairs online.

• Update your personal information.

• Track your refund, view or change your

return.

• View your mail online, such as your notice

of assessment.

• Check your benefit and credit payments

and statements.

[Link]/cra-sign-in-services

23
Digital services

Auto-fill my return
Automatically fills in parts of your return.

Direct deposit
Fast, convenient and reliable option to receive refunds and benefit
or credit payments.

Email notifications
Get notified when there's new mail to view in My Account.

[Link]/cra-digital-services

24
Want to learn more about taxes?

Check out our free online learning tool!

Starting your first job, doing your taxes, and
beyond!

For students
Videos, common tax terms, lessons, and quizzes

For teachers and facilitators

Lesson plans and answer keys

[Link]/learn-about-taxes

25
Be scam smart!

• Question why the CRA needs your personal

information.

• Check My Account to see if you have new

mail or any amount owing.

• Learn what to expect if the CRA contacts

you.

• When in doubt, delete, delete, delete!

[Link]/be-scam-smart

26
Thank you!

Follow us
[Link]/taxes-students
[Link]/cra-outreach-events
@CanRevAgency

canrevagency
CRA general enquiries: 1-800-959-8281
CanRevAgency

cra-arc
Video Relay Service: 1-800-561-6393
canrevagency

27
Students: Get your
benefits and credits! The benefits helped me as a
low-income student by giving me
Why is it important to do your taxes? a little extra money each quarter.
Canada’s tax system helps pay for things like schools, arenas,
Emma
and health care. And by doing your taxes you may get benefits
and credits.

What documents do you need to do your taxes?

Starting a new job? You’ll fill out a Personal Tax Credits Return (Form TD1) which your employer uses to determine how much income
tax to deduct from your pay.

Had a job or multiple jobs during the year? Your employers will give you a T4 slip, Statement of Remuneration Paid, in February. This
includes your income for the year and any amounts deducted, such as taxes, Canada Pension Plan contributions, and employment
insurance premiums. You use this information to do your taxes. Registered for Canada Revenue Agency’s (CRA’s) My Account? Use
Auto-fill my return to complete parts of your tax return using information the CRA has on file. You may get some money back if you
paid more than you should have.

If you receive tips, your employer may include them on your T4 slip. If not, keep track of the total amount of tips you get during the
year and report it when you do your taxes.

Work in Quebec? Your employer will give you a RL-1 Slip, Employment and Other Income to complete your Quebec Personal Income Tax
Return (TP-1-V).

How do you get benefits and credits?

The CRA uses information from your tax return to calculate your benefits and
credits and any related provincial or territorial payments. To get the benefits
and credits you may be eligible for without interruption, do your taxes by
April 30 each year, even if you had no income. Live in Quebec? You also have
to complete a provincial tax return. International student studying in Canada? Want to know more
You may have to file a Canadian income tax return. about taxes and
how to do them?
How much could you get per year?
Check out: [Link]
GST/HST credit – up to $533 for an eligible individual. /learn-about-taxes
You may also be able to claim tax credits and deductions!
Disability tax credit (DTC) – eligible individuals with a disability or their supporting family member may claim $9,872 as a
non-refundable tax credit. Persons under 18 years of age at the end of the year may also be eligible for an additional amount
of up to $5,758. For more information about the DTC, go to [Link]/disability-tax-credit.

Common non-refundable tax credits for students include interest paid on student loans and tuition fees. You can also claim up
to $1,433 for the Canada employment amount. You may be eligible to claim moving expenses if you moved at least 40 km closer
to your educational institution.

Don’t need all your tuition fees to reduce your income tax to zero? Transfer them to an eligible family member or keep them
to claim in future years.

Find ways to do your taxes!

• A variety of tax software packages and web apps are available to do your taxes online, and some are free. To learn more,
go to [Link]/netfile.
• You can let someone else, like a family member or an accountant, represent you with the CRA to help manage your tax
information. To learn more, go to [Link]/taxes-representative-authorization.
• If you have a modest income and a simple tax situation, you may be able to get your taxes done by a volunteer for free. Go to
[Link]/taxes-help or call the CRA. If you live in Quebec, go to [Link]/volunteers or call Revenu Québec or the CRA.

Don’t miss a payment!

• Sign up for direct deposit to get your tax refund and benefit payments deposited into your account at a financial institution.
Go to [Link]/cra-direct-deposit.
• Register for My Account to view and manage your income tax and benefit information online. Make sure your personal
information (such as your address and bank account) is always up to date to avoid delays. You can also view any uncashed
cheques you may have from the CRA, and if necessary, ask that a payment be re-issued. Go to [Link]/cra-sign-in
-services.
• Keep your receipts and supporting documents if you are claiming certain deductions and tax credits, in case the CRA asks
for them.

For more information:

Online By phone
See the benefits you may be eligible for, learn To ask about benefits If you are calling from
how to apply, and estimate how much you could 1-800-387-1193 the 867 area code
get. Get benefits and credits for up to 10 years 1-866-426-1527
back. Go to: [Link]/benefits-credits-st For other questions
or to get forms Revenu Québec
International students can learn more at: 1-800-959-8281 1-800-267-6299
RC629-218 (E) Rev. 25

[Link]/taxes-international-students
Service Canada
1-866-274-6627

Beware of scammers pretending to be the CRA. When in doubt, check your information in My Account or
call the CRA. To learn what to expect if the CRA contacts you, go to [Link]/taxes-fraud-prevention.
 Chapter 2: Income Management
Statutory Deduction
What are statutory deducons?
The statutory deducons are mandatory deducons required to be deducted
from employee pay by their employers on behalf of the government.

Statutory Deducon includes:

Employment Insurance (EI)
Canada Pension Plan (CPP)
Income Tax

Employers are required by law to submit these deducons to the government on

behalf of their employees.

The Employer is also required to match the insurance, pension plan and
calculate the taxes payable on behalf of the employee.

1
2
Chapter 2: Income Management
Statutory Deduction -
Income Tax

Once hired, you will complete a form to help your employer's human resources department determine
how much income tax to deduct each pay period.
You will be taxes at approximately 15% if you earn less than $45,196. This means that your expected
$400 becomes $340 (0.15 x $400 = $60). The income tax percentage increases the more you earn; the
more you earn; the more you earn, the more you'll pay.
If you receive employment income or any other type of income, your employer or payer will deduct
income tax at source from the amount paid.

Your employer or payer will calculate how much income tax to deduct by referring to your total claim
amount on Form TD1, Personal Tax Credits Return and using approved calculation methods.
The government requires you to 5ll out and a 5le a tax return form each year to determine if you're
paid su6cient income tax. If your employer hasn't deducted enough to pay all of the income tax you
owe, you are responsible for paying the remainder.

You'll need to submit the di7erence to the government (Canada Revenue Agency - CRA) before the last
day of April, or you will have to pay a penalty. Many businesses deduct slightly more than the
government requires, so you may even discover that the CRA owes you a tax refund. You will usually
receive this form them within two or three weeks of 5ling.

3
Chapter 2: Income Management
Statutory Deducon - Income Tax

Income Tax Rates for Ontario in 2024 are as follows:

Amounts earned up to $51,446 are taxed at 5.05%.

Amounts above $51,446 up to $102,894 are taxed at 9.15%. Amounts

above $102,894 up to $150,000, the rate is 11.16%.

Amounts above $150,000 up to $220,000 the rates are 12.16%.

Earnings exceeding $220,000 the rate is 13.16%.

4
Chapter 2: Income Management
Statutory Deducon– TD1ON Form

5
Chapter 2: Income Management

Statutory Deducon–
Canada Pension Plan (CPP)

To help Canadians prepare for their rerement, the Canadian government requires that
every employee contribute to the Canada Pension Plan.

The contribuon rate will be 5.95% of earnings up to maximum earnings of $66,600. CPP
contribuons will stop for those employees earning more than $ 66,600 when they have
made a maximum contribuon of $3,754.45. Contribuons are based on a calendar year.

The Canada Pension Plan (CPP) rerement pension is a monthly, taxable bene5t that replaces
part of your income when you rere.

The CPP provides basic bene5ts when you, a contributor to the plan, become disabled or
reres. In the event of your death, the plan provides bene5ts to your survivors.

Your employer will calculate how much CPP to deduct with approved calculaon tools, using
the annual CPP contribuon rates and maximums.

6
Chapter 2: Income Management
Statutory Deducon– Canada Pension Plan (CPP)

There is no annual limit as to the total amount of income tax your employer or payer
can deduct in a year.

If you expect to be making less than the total claim amount indicated on Form TD1 for
an enre year, you can ask your employer or payer to not make any deducons.

Your employer or payer will remit these deducons to us through payroll remi@ances.

7
Chapter 2: Income Management
Statutory Deducon–
Canada Pension Plan (CPP)
Divide the basic yearly exempon ($3,500 for 2021) by the number of pay periods in
the year. Do not round o7 to the nearest cent

8
Chapter 2: Income Management
Statutory Deducon– Employment Insurance (EI)

To protect your income in the event of a job loss that you are not responsible for, such
as a layo7, you are required to pay an insurance premium each pay period of 1.63%.

The premium rate will be 1.63% of insurable earnings up to maximum earnings of

$61,500. EI premiums will stop for those employees with insurable earnings of more
than $61,500 when they have made a maximum payment of $1,002.45. Contribuons
are based on a calendar year.

If you are employed in insurable employment your employer will deduct EI premiums
from your pay. There is no age limit for deducng EI premiums.

EI provides you with temporary 5nancial assistance while unemployed and looking for
work or if you're upgrading your skills.

You may receive EI assistance in either of the following situaons:

• Sickness
• Pregnancy
• Caring for a newborn or adopted child
• Caring for a seriously ill family member with a signi5cant risk of death
9
 Chapter 2: Income Management
Statutory Deducon– Employment Insurance (EI)

The maximum insurable earnings (MIE) is the income level up to which Employment
Insurance (EI) premiums are paid. It determines the maximum rate of weekly
bene5ts paid for all types of bene5ts under the EI program.

E7ecve January 1, 2023, the MIE will increase from $60,300 to $61,500. This
means that an insured worker will pay EI premiums in 2023 on insured earnings up
to $61,500.

In 2023, the employee EI premium rate will be $1.63 per $100. This premium rate
and the MIE increase means that insured workers will pay a maximum annual EI
premium in 2023 of $1,002.45 compared with $952.74 in 2022.

10
 Chapter 2: Income Management
Non-Government Deducon
Depending on your employment situaon, there may also be non-governmental
deducons, including:

Union Dues
If you work for a unionized company, a poron of your pay will be deducted to pay
union dues. Your contribuon goes towards paying union management salaries,
strike funds, union literature, and so on. Union dues are usually a percentage of your
pay, oEen between 1.5% and 2%. In Nicole’s case, if she belonged to a union, her
dues would be about $7.50 per week.

Charitable Deducons
Charitable organizaons will oEen instute an arrangement with your employer that
allows you to voluntarily register to donate a percentage of your income to their
charity. The United Way is an example of a charitable organizaon that collects
donaons in this way.

11
Chapter 2: Income Management
Non-Government Deducon

Supplemental Health Care

Although the Ontario Health Insurance Plan (OHIP) covers basic health care needs
such as hospital stays and doctor’s visits, employees are oEen given an
opportunity to extend their coverage by including dental and eye care plans, more
comfortable hospital facilies, drug plans, and so on. The addional coverage may
be parally paid for by the employer, as an employee bene5t, with employees
paying into the plans as well. The extra insurance can be as high as $200 per
month for a single person.

Life and Disability Insurance

Your employer may o7er you a life-insurance package at a very reasonable rate,
oEen paying more than twice your salary to your bene5ciary in the event of your
unmely death. There are also long-term disability plans that protect you against
lost earnings if for medical or health reasons, you are no longer able to work;
these plans can be very expensive.

12
Chapter 2: Income Management
Non-Government Deduction
Company Pension Plan
Most companies require that employees contribute to the company
pension plan, which will provide them with pension payments in addion
to their Canada Pension Plan and Old Age Security payments when they
rere.

Mortgage Payments

Credit Union Deducons

13
 Canadian
tax checklist
We want to make sure you get every tax credit
and deduction you’re entitled to.
So, before you get started on your taxes, make sure you have
all the receipts and income records you need.

Here’s a handy checklist:

Slips Receipts (continued)
☐ T4 slips (Employment income) ☐ Multigenerational home renovation tax credit
☐ Employment insurance benefits (T4A or T4E) ☐ Charitable donations
☐ COVID-19 relief repayments (T4A) ☐ Political contributions
☐ Interest, dividends, mutual funds (T3, T5, T5008) ☐ Child care expenses
☐ T2202 Tuition and Enrollment Certificate ☐ Adoption expenses
☐ Old Age Security and CPP benefits (T4A-OAS, T4AP) ☐ Moving expenses
☐ Other pensions and annuities (T4A) ☐ Interest paid on student loans
☐ Social assistance payments (T5007) ☐ Carrying charges and interest expenses
☐ Workers’ compensation benefits (T5007) ☐ Exams for professional certification
☐ Advance Canada Workers Benefit (CWB) payments (RC210) ☐ Digital news subscription
☐ All other information slips ☐ Labour Mobility Deduction for Tradespeople

Receipts Other documentation

☐ RRSP contribution receipts ☐ Notice of Assessment/Reassessment
☐ First Home Savings Account (FHSA) contribution receipts ☐ Canada Revenue Agency correspondence
☐ T4FHSA Slip: First Home Savings Account Statement ☐ Sale of principal residence
☐ Support for a child, spouse or common-law partner ☐ Sale or deemed sale of stocks, bonds or real estate
☐ Professional or union dues ☐ Northern residents deductions receipts
☐ Tool expenses ☐ Rental income and expense receipts
(Tradespersons & apprentice mechanics)
☐ Business, farm or fishing income/expenses
☐ Office-in-home expenses
☐ Automobile/Travel logbook and expenses
☐ Other employment expenses
☐ Disability Tax Credit Certificate
☐ Teacher’s school supplies
☐ Declaration of Conditions of Employment (T2200)
☐ Medical expenses
☐ Volunteer Firefighters certification
☐ Home renovations (seniors and disabled)
☐ Search and Rescue volunteers certification
☐ Written certification for eligible educator school supplies
☐ ____________________________________________

[Link] | 1-800-HRBLOCK (472-5625)

 Heart rate Breathing rate
Condition (bpm) ( beats/min ) Group: Ethan Virat Tanoy
Resting 104 24
Immediatly
after exercise 160 84
Immediatly
after exercise 108 60
Immediatly
after exercise 104 40
Immediatly
after exercise 100 32
Immediatly
after exercise 100 24
Immediatly
after exercise 76 24
 Chapter 2: Income Management
Sources of Business Income
There are a number of ways that a business can generate revenue,
gross profit, and net profit, including:
Selling Products
All businesses in the primary industry sector, processing sector, manufacturing sector,
wholesaling sector, and retailing sector earn revenue by selling products. A fishing boat
business sells its catch of haddock to the fish processing company. The fish processing
company freezes the haddock and sells the frozen fish sticks to wholesalers, who in turn sell
them to retailers who then sell them to you.

Providing Services
Selling a service involves performing a specific task for others in exchange for payment.
Doctors, lawyers, cleaning companies, rental businesses, pharmacists, hotels, and hundreds
of other businesses provide services to individuals or other businesses.

Some services, such as advertising and accounting, are mainly for businesses. Others, such as
transportation and financial services, are used by both businesses and consumers in different
ways. Still others, such as hairdressing and childcare, are primarily consumer services.
1
 Chapter 2: Income Management
Sources of Business Income

Selling a Concept
Once a business has developed a proven formula for success, it can earn revenue and
help others earn revenue by selling the concept as a franchise. There are hundreds of
franchise opportunities across Canada. Franchisers make money by selling a turn-key
operation to a businessperson with money to invest.

Selling a Talent
Actors, writers, dancers, artists, and singers all make a living by selling their talent.
Beyoncé owns her own business: herself. Unlike talented computer programmers or
hockey players, who work for companies or play for teams, Beyoncé and thousands of
others sell their talent to various people at various times.

In other words, if you work for one company full time, you are an employee. If you
work for yourself and sell your gifts and abilities to numerous other businesses (film
studios, publishers, art galleries, etc.), you earn revenue from your talent.

2
 Chapter 2: Income Management
Sources of Business Income

Selling Knowledge & Ideas

Those who sell knowledge and ideas work with a number of different businesses, earning
revenue by providing advice and suggestions: an idea for a new store design, knowledge
about the coffee drinking market, information on duties and customs regulations for
products from South Africa.

Public relations people, financial consultants, interior designers, architects, landscapers,

and hundreds of other businesses provide their expertise to others, for a price.

Making Investments
As you’ve learned, businesses can earn revenue from good investments. They use their
surplus cash to purchase other companies, or buy investment products such as T-bills,
stocks, bonds, and investment certificates. Venture capitalists earn revenue by investing in
new businesses. Investments are a significant portion earnings for many companies.

3
 Chapter 2: Income Management
Managing Money for Business Use
Money management for businesses means that they are accountable to the
owners and/or shareholders. The primary goal is profit.

Types of Business Income

Three forms of business income are revenue, gross income, and net income.

Budgeting for a Business

Business success is determined by its ability to stay within a budget.
The two types of business budgets are start-up budgets and operating
budgets.

Setting Business Goals

Managers set company goals that are measurable and specific. Budgets often
involve a variety of different departments, such as production, marketing,
human resources, and finance.
4
Chapter 2: Income Management

Financial Planning For

Businesses

Business Budgets are a Necessity

Without a budget, it would be difficult for a business to determine where they can
make increases or cutbacks. A personal budget is helpful, whereas a business
budget is essential.

Businesses plan for profit, budgeting revenues and expenses, and controlling their
spending in order to maximize the amount of excess revenue they get to keep.

Although the steps you would take to prepare a business budget are very similar
to those for your personal budget, the purposes of the budgets are very different.
With a personal budget, you do not want any money left over; any excess should
be invested or saved. On the other hand, businesses want to see a great deal left
over in their budget, because any excess is considered to be the business’ profit.
5
 Chapter 2: Income Management
Why Do Businesses Need To Budget?

A budget is necessary for businesses to ensure that revenue is

maximized and expenses are minimized because the
difference, is profit. For example:
Revenue $50,000 – Expenses $45,000 = Profit $5000
If the business advertised, increased revenue, and cut back on
staff to decrease expenses, it would significantly impact their
profit:
Revenue $60,000 – Expenses $40,000 = Profit $20,000

6
 Chapter 2: Income Management
Types Of Business Budget – Start-up
Budget

Start-up Budget
A start-up budget allows new business owners to make sure they have enough
capital to cover their expenses until the business generates revenue on its own.

Since it can take businesses up to a year to make a profit, they should have enough
capital on hand to cover expenses for at least that long.

If the business doesn't have sufficient capital, it is considered to be undercapitalized.

Undercapitalization is the primary cause of new business failures.
7
 Chapter 2: Income Management
Types Of Business Budget – Operation Budget

Operation Budget
The other type of budget is an ongoing budget, either for the entire
business or for an individual department.

For example, marketing, production, and human resources may each

have individual department budgets that are created as part of the
company's overall operating budget.
8
 Chapter 2: Income Management
Five Steps In Preparing A Business Budget

Steps In Preparing A Business Budget

[Link] Revenue
[Link] Expenses
[Link] Potential Profits
[Link] the Actual Amounts
[Link] Projections with Actual

9
 Chapter 2: Income Management
Steps In Preparing A Business Budget
Scenario A

Assuming that you are starting a new business, you would estimate revenue
based on the market data that is available to you. As an example, assume that
there are 5000 households in your area where the family income is in excess of
$100,000.

Statistics Canada indicates that upper income households spend an average of

$615 per year on their pets. If were to develop a gourmet dog treat to appeal to
the affluent pet owner, the total market available to you would be $3,075,000.
You would quite likely capture 3% of this market, giving you a revenue
projection of $92,250. 10
 Chapter 2: Income Management
Five Steps In Preparing A Business Budget
Scenario B

But what if your business already exists? Assuming that you’ve been in business for
more than a year, you will have previous budgets to compare against and a sales
history to consider.

You could leverage your existing data (the success of sales promotions held during
that same month last year, poor weather conditions that kept customers away during
the same period, etc.) to create actual revenue projections.

In most circumstances, the budget projections reflect a revenue increase that at least
matches inflation. This revenue target becomes the monthly goal for the company.
11
Chapter 2: Income Management
Managing Money for Business Use
Preparing a Business Budget
Step 1: Calculate amount of
business income expected.

Step 2: Calculate expenses,

including fixed and variable.

Step 3: Calculate amount left.

Step 4: Review budget.

12
Chapter 2

Filing Your
Personal or
Individual
Income Tax
Return
 Chapter 2 - Personal Income Tax Return

What is a Personal/Individual Income Tax Return.

Individual tax returns involve the comprehensive reporting of your

personal financial information to the Canada Revenue Agency
(CRA). This information includes income, statutory
deductions, pension deduction, and credits.

You are required by law to file your personal tax return before
April 30th each year unless otherwise informed by Canada
Revenue Agency.
 Chapter 2 - Personal Income Tax Return

You can file your Personal Tax Return to Canada Revenue

Agency by using:
 Paper Tax Return - file manually and mail it in via Canada Post.
 Certified Tax Software - electronic filing on the CRA’s website.
 Using Tax Return software like TurboTax.
 Authorize Representative – a family member, friend or an accountant.
 H & R Block Canada.
 Community volunteer tax clinic – Tax Free Clinics

[Link]
dy-taxes/[Link]
 Chapter 2 - Personal Income Tax Return

You can file your Personal Tax Return to Canada Revenue

Agency by using:
 Chapter 2 - Personal Income Tax Return

Why Should You File Your Personal Tax Return.

You may be eligible for a Tax Refund (where the government repay you for
overpaying your taxes).

 You may be eligible for benefits or credit payments from the CRA:
* Canada Child Benefit (CCB).
* Goods & Services Tax/Harmonized Sales Tax (GST/HST) Credit.
* Or the Guaranteed Income Supplement (GIS).

The CRA will deposit your tax refund, tax credit and benefits to your
bank account or send you a cheque in the mail.
 Chapter 2 - Personal Income Tax Return

What Happens If You DO NOT File Your Personal Tax

Return Before April 30th.
If you do not file your Personal Tax Return before April 30th :

Then the longer you wait to file your personal tax return, the more likely
any benefits or credit payments you are entitled to will be delayed.

It is likely that you may own the CRA. If this is the case, then CRA will
charge you interest compounded daily on the amount owed.

Always file your personal tax return before April 30th each year to avoid
penalties and interest charges by the CRA.
 Chapter 2 - Personal Income Tax Return

What Happens If You File Your Personal Tax Return

After April 30th and Have a Balancing Owing.

The CRA will charge you:

 A late fee for filling your personal tax return late.

 Interest compounded daily on the amount you owe.

[Link]
-return/interest-penalties/[Link]#toc1
 Chapter 2 - Personal Income Tax Return

What Happens If You File Your Personal Tax Return

After April 30th and Have a Balancing Owing.

You should contact the CRA as soon as possible and make the necessary
arrangements with them to pay off the amount you owe.
You can arrange to have the CRA deduct a specific amount from your:
* Bank account weekly, bi-weekly, monthly, quarterly or semi-annually.
* Wages/salary each pay period. The CRA can garnish your wages.
* Or you can make the payments directly yourself to the CRA.

The CRA may charge you a penalty, if your installment payment to pay
off the amount owing is late.
 Chapter 2 - Personal Income Tax Return

What Happens If You File Your Personal Tax Return

After April 30th and Have a Balancing Owing.

If you are unable to pay the balance owing to the CRA due to
circumstances beyond your control, you can make a request for the CRA to
cancel or waive the penalties or interest owed.

[Link]
mplaints-disputes/[Link]
 Chapter 2 - Personal Income Tax Return
What Happens If You DO NOT FILE Your
Personal Tax Return.
To understand the depth and breadth of the financial trouble you could get
into by ignoring your tax filing obligations, consider the following penalties.
(Note this does not represent an exhaustive list.)

Failure to file a tax return. If you owe money to the CRA, you will endure
a late filing penalty of 5% of your unpaid taxes, plus 1% a month for 12
months from the filing due date. That’s just for the first strike. If you fail to
file on time again within a three-year period, that penalty goes up to 10% of
unpaid taxes plus 2% per month for a maximum of 20 months.
 Chapter 2 - Personal Income Tax Return
What Happens If You DO NOT FILE Your
Personal Tax Return.
Gross negligence, false statements or omissions on your return. Turning a blind
eye to your obligations attracts a penalty of 50% of the tax owing. Add interest to
that if you don’t pay promptly.

Tax evasion. This is a criminal offence that involves intentionally understating

income or overstating expenses or hiding assets in Canada or abroad. It attracts a
penalty of up to 200% of the taxes evaded and, potentially, jail time of up to five
years. Tax evaders are fingerprinted and have a criminal record. This can put a big
damper on your travel plans, employment and business ventures.

[Link]
-filed-an-income-tax-return/#:~:text=What%20are%20the%20potential%20penalties%20if%20y
ou%20don%E2%80%99t,the%20tax%20owing.%20...%203%20Tax%20evasion.%20
 Chapter 2 - Sources of Taxable Income
Taxable Sources of Income.
Individuals and corporations are taxed on their total income after
subtracting allowable deductions. There are four general types of income
that are taxed:
[Link] earnings, including tips and gratuities which usually only
apply to individuals.
[Link] Bursaries, Fellowships and grants.
[Link] income (pension received from another country, funds earned
from Social Media).
[Link] made from a business activity.
[Link] income from property or investments.
[Link] gains on the sale of capital property.
 Chapter 2 - Sources of Taxable Income

Employment Income
Employment income is usually a person’s wages or salary paid by
an employer.
It can also include any vacations, gifts, or added perks that you
receive from your employer as part of your employment.
Generally, there are few expenses that can be deducted from
employment income, although there are exceptions for people in
sales.
 Chapter 2 - Sources of Taxable Income
Business Income
The law makes a distinction between employment income and
business income. Business income can be earned by an individual,
a partnership or a corporation, and includes any money you earn
from a profession, trade or any other business where you expect to
make a profit.
Some types of rental income may also be considered business
income. For example, if the landlord offers uncommon services
such as laundry or housecleaning, or if the landlord runs an office
with employees who manage the rental properties. This type of
income generally allows for deductions of business expenses.
 Chapter 2 - Sources of Taxable Income
Income from Property
The law also requires a taxpayer to pay tax on income from
property, which includes interest from investments, loans, and may
include rent from investment properties. Generally, expenses
cannot be deducted from this type of income unless they are
directly related to earning the income.
A common deduction from property income is interest on a loan
that was taken out to purchase the property. There are also rules
specific to property income that prevent you from transferring
property income to a spouse or child for the sole purpose of
reducing the amount of tax you have to pay.
 Chapter 2 - Sources of Taxable Income

Capital Gains
The law applies different tax rules to capital gains. Generally, if
you sell capital property, such as stocks on the stock market, for
more than you paid, the amount of the difference is considered a
capital gain.

If you sell something for less than you paid, the amount of the loss
is considered a capital loss. If you have a capital gain, only 50% of
it will be taxed.
What percentage of the Capital Gains is Taxed?
If you have a capital gain, only 50% of it will be taxed. If you have capital
losses, only 50% of the loss can be subtracted from any capital gains you
made in that year.

Capital losses can be carried back or carried forward. In some cases, capital
gains can also be paid in a year other than the year in which they were
earned. This is possible if you do not receive all of the proceeds of the sale
right away.

In such cases, you would claim a capital gains reserve, and pay only a portion
of the tax each year. Reserves only can be claimed for a period up-to five
years, which means that all tax owing must be paid by the fifth year.
Exemptions from Capital Gains Tax

1. Property that is Exempt

Principal residence: Some types of property are exempt from being taxed for capital gains.
The most common capital gain exemption is the sale of your principal residence. A
principal residence is the home where you ordinarily live or where your spouse, former
spouse, or child ordinarily lives.

Although capital gains on the sale of a principal residence are not taxable, as of October
2016, Canada Revenue Agency requires that the seller report the sale in order to claim the
exemption. You will be required to report information such as: the date of purchase, the
date of sale, the selling price, and a description of the property.

Other types of property: Capital gains from the sale of business inventory, land bought
with the intention of making a profit on its resale, and profit made on the sale of personal-
use property whose cost and selling price were both less than $1,000 are some examples
that fall under the capital gains exemption.
2. Lifetime Capital Gains Exemption
The lifetime capital gains exemption (LCGE) allows people to realize tax-free capital gains, if the
property disposed of qualifies.

The lifetime capital gains exemption for qualified farm or fishing property and qualified small
business corporation shares is $1,016,836 in 2024, up from $971,190 in 2023.
Small business corporation shares qualify under this exemption when:
A. Throughout the 24 months immediately preceding the disposition of the shares:
 The shares have been owned by you or a person or partnership related to you, and
 More than 50% of the fair market value of the assets of the corporation were used in an active
business, carried on primarily in Canada, and

B. At the time of the disposition of the shares “all or substantially all” (at least 90%) of the assets
of the corporation were used to carry on active business.

You will need to determine your total capital gains and losses before filing your tax return. When
you sell stocks or other investments through a broker, you will usually receive a receipt for tax
return purposes that lists your capital gain or loss.
 FILING YOUR
PERSONAL TAX
RETURN AS A
STUDENT
 TAX SLIPS STUDENTS NEED TO FILE THEIR
TAX RETURN

Before a student files a tax return, they must gather all of their necessary tax
slips. Students should be looking for the following slips depending on their
own individual situation:

T4 – Statement of Remuneration Paid:

Many students work throughout their studies or while on summer vacation. They should
receive a T4 slip and remember, if they work in the hospitality industry, they need to also
claim their tips and gratuities as income.

3
 TAX SLIPS STUDENTS NEED TO FILE THEIR
TAX RETURN
T4A – Statement of Pension, Retirement, Annuity, and Other Income:
Students may receive a T4A tax slip showing income received for different reasons. Let’s
look at the different types of income on this slip and where they are reported.
• Educational Assistance Payments from a Registered Education Savings Plan (RESP)
are shown in Box 042 of the T4A slip and reported on Line 13000 – Other Income of
your tax return.

• Students who receive financial awards such as Scholarships, Bursaries, Fellowships,

Artists’ Project Grants, and Prizes will receive a T4A with an amount in Box 105. It’s
important to note the Scholarship Exemption and ensure you enter your Box 105
amount into the correct box of your tax software in order to receive the exemption.
The taxable portion of these scholarships/awards will be entered on
Line 13010 – Scholarships, Fellowships, Bursaries, and Artists’ Project Grants of the
tax return. 4
 TAX SLIPS STUDENTS NEED TO FILE THEIR
TAX RETURN

T4E – Statement of Employment Insurance Benefits:

Students who receive Tuition Assistance will receive a T4E slip showing if the assistance
was taxable or not taxable.
• Box 20 – Taxable Tuition Assistance: This amount is included in Box 14 and also
Box 17 or Box 33 of the T4E. If you receive taxable tuition assistance, you should
also receive a T2202 Education & Textbook Amounts Certificate which allows you
to claim an Education Tax Credit and offset the taxable income.

• Box 21 – Non-taxable Tuition Assistance: If you receive non-taxable tuition

assistance, you are not entitled to claim any offsetting education tax credits and
will not receive a T2202 slip. This amount is also reported on
Line 25600 – Additional Deductions.
5
 TAX SLIPS STUDENTS NEED TO FILE THEIR
TAX RETURN

T2202 – Education, and Textbook Amounts Certificate:

Although some colleges and universities provide or mail tax slips, most schools leave
it up to students to retrieve them electronically. Students can generally download tax slips
from their college or university’s website.

Students who pay tuition to an eligible college or university should download this tax slip
as it has important information for claiming the tuition, education and textbook amounts.

CRA My Account holders may view these slips online in early March, including the
T2202 which many designated educational institutions are already filing online and
having them included in your account.

6
 TAX CREDITS YOU CAN CLAIM AS A
STUDENTS
As a student filing your personal tax return, there are several deductions and credits you
can claim to help reduce the taxes you owe.

Here are some key ones:

[Link] and Education Amounts: You can claim tuition fees paid to an eligible
educational institution. Additionally, you may be eligible for the education amount,
which provides a credit for each month you were enrolled in a qualifying program.

7
 TAX CREDITS YOU CAN CLAIM AS A
STUDENTS
2. Transfer Unused Tuition Credits
A portion of your unused tuition tax credit can be transferred to a spouse, common law
partner, parent or grandparent.

Unused tuition credits can be carried forward to the next year tax return.

8
 TAX CREDITS YOU CAN CLAIM AS A
STUDENTS

3. Textbook Amount:

If you’re eligible for the education amount, you can

also claim a textbook amount for the cost of eligible
textbooks.

9
 TAX CREDITS YOU CAN CLAIM AS A
STUDENTS
4. Moving Expenses:
If you moved more than 40 kilometers to attend school, you may be able to claim moving
expenses related to your [Link] eligible expenses include:
 Transportation costs for packers, movers, in-transit storage and insurance.
 Travel expenses for your car, meals and hotels.
 Temporary living expenses for meals and lodging for up to 15 days

Also, you can claim moving expenses to move back home at the end of the school year.

10
 TAX CREDITS YOU CAN CLAIM AS A
STUDENTS
5. Interest on Student Loans: You can claim the interest paid on
your student loans.
The student loan tax credit gives back 15% on any money you put
toward your government student loans.
 You can save up unclaimed credits for up to five years so you can
use the credit when you need it.
 To claim this credit, you have to be a Canadian citizen, permanent
resident, or protected person and have an eligible student loan.
This deduction helps reduce the overall amount of tax you owe.
[Link]
-a-tax-return/deductions-credits-expenses/[Link]

11
 TAX CREDITS YOU CAN CLAIM AS A
STUDENTS
6. Public Transit Amount: If you used public transit to commute to school, you can claim
the cost of eligible transit passes.

12
 TAX CREDITS YOU CAN CLAIM AS A
STUDENTS
7. Childcare Expenses: If you paid for childcare while attending
school, you may be able to claim these expenses.

You or your spouse or common-law partner may have paid for someone
to look after your child so one of you could earn income, go to school,
or conduct research. These expenses are deductible only if, at some time
in the year, the child was under 16 or had a mental or physical
impairment.

Generally, only the spouse or common-law partner with the lower net
income (even if it is zero) can claim these expenses. However, the
individual with the higher net income may still be able to claim the
child care expenses if their spouse or common-law partner was enrolled
in an educational program or if another specific situation applied.
13
 TAX CREDITS YOU CAN CLAIM AS A
STUDENTS
8. Medical Expenses: While not exclusive to students, medical expenses can
be claimed if they exceed a certain threshold.
You can claim medical expenses if you paid for healthcare-related costs. These expenses
include a wide range of products, procedures, and services, such as medical supplies, dental
care, and travel expenses. Generally, you can claim all amounts paid, even if they were not
paid in Canada. Points to note:

 You must have paid for the medical expenses in any 12-month period ending in the year you
are claiming. For example, you are claiming for 2023 (although we are currently in the
year 2024).
 Keep records of your medical expenses for documentation.

Remember:
 That you can only claim the portion of an eligible expense for which you have not been or
will not be reimbursed.
 The medical expense tax credit is non-refundable, but it can help reduce the tax you paid or
may have to pay.
14
 TAX CREDITS YOU CAN CLAIM AS A
STUDENTS
How to Claim Medical Expenses:
You’ll report medical expenses on your tax return using specific lines:
 Line 33099: You can claim the total eligible medical expenses for yourself, your spouse or
common-law partner, and your children under 18 years old.

 Line 33199: You can claim the part of eligible medical expenses for other dependents who
depended on you for support. This includes children 18 years or older, grandchildren, and other
family members who were residents of Canada during the year.

15
 TAX CREDITS YOU CAN CLAIM AS A
STUDENTS

In filing your personal tax return as a student, remember

to:
 Keep records of all your expenses.
 Consult with a tax professional.
 Or use tax software to ensure you’re maximizing your
eligible deductions.

16
Even if you don't make enough
money to owe taxes to the
If you don't make enough money
government,
to owe taxes to youthemight still be
government,
you might
eligible forstill be eligible benefits
deductions, for
deductions, bene-ts and credits
and
thatcredits that could
could result in a taxresult
[Link] a
tax
Yourefund.
could even get extra bene-t
payments like the GST/HST credit.

You could even get extra benefit

payments like the GST/HST PARIS,
FRANCE

credit.

17
 CRA LINK FOR STUDENTS TO
FILE THEIR
PERSONAL TAX RETURN

[Link]
ms-publications/publications/p105/p105-students-inco
[Link]#P69_2358
Filing Your Personal Tax Return As a Student With:
Turbo Tax ultimate personal tax return guide for students.
[Link]
%20as%20a%20student%20can%20be,to%20reduce%20the%20taxes%20they%20owe.%20More%20
items

H & R Block guide personal tax return for students.

[Link]
_source=bing&utm_medium=cpc&utm_campaign=FY24%20%7C%20H%26R%20Block%20%7C%2
0Search%20%7C%20Brand%20%7C%20Retail%20%7C%20ROC%20%7C%20EN&utm_term=h%2
6r%20block%20tax%20office&utm_content=H%26R%20Block%20%7C%20Office&gclid=95a844d0
8cd31302212f22d8a1a2b0ad&gclsrc=[Link]
 SOURCES

Classroom Connection – Toronto Star

Money Matters

20
Chapter 2: Income Management

Minimum Wage in Ontario

1
 Chapter 2: Income Management

Minimum Wage in Ontario

General minimum wage

This rate applies to most employees.

Example for calculating general minimum wage: One week, Julia works 38 hours.
She is paid on a weekly basis. The minimum wage applicable to Julia is $16.55 per
hour. Since compliance with the minimum wage requirements is based on pay
periods, Julia must be paid at least $628.90 (38 hours × $16.55 per hour = $628.90)
in this work week (prior to deductions). (Note that eating periods are not included
when counting how many hours an employee works in a week).

Student minimum wage

This rate applies to students under the age of 18 who work 28 hours a week or less
when school is in session or work during a school break or summer holidays.
2
Chapter 2: Income Management

Minimum Wage in Ontario

Minimum wage calculation for employees who earn commission

If an employee’s pay is based completely or partly on commission, it must amount to at
least the minimum wage for each hour the employee has worked.

A typical case
Luba works on commission and has a weekly pay period. One week, she was paid $300.00
in commission and worked 25 hours. The minimum wage applicable to Luba is $16.55 an
hour. The minimum wage ($16.55) multiplied by the number of hours worked in the pay
period (25) is $413.75. Luba is owed the difference between her commission pay ($300)
and the required minimum wage ($413.75). Luba’s employer owes her $113.75.

Note: Where overtime hours are worked, the calculation is more complicated.

3
Chapter 2: Income Management

Minimum Wage in Ontario

4
 Chapter 2: Income Management
Things You Need to Know About Working Hours

Hours of Work
In Ontario, 8 hours is the established standard working hours in a day.
The standard work week consist of a total of 40 Hours.
Employees are entitled to a 30 minutes eating break after 5 hours of work.
Your work week is not necessarily Monday to Friday with Saturday’s &
Sunday’s off. If you work on shifts, you may get your “2 Days Off” during the
week instead of on the weekend.

See Video Link [Link]

1
 Chapter 2: Income Management
Things You Need to Know About Overtime

Overtime Hours
The standard work week consist of a total of 40 Hours.
Your employer cannot demand you work overtime. Overtime is something
the employee can agree to, if s/he choose to do so.
If you work in excess of 40 Hours in a given week, you are entitled to be paid
1 ½ times your hourly rate for the number of hours your worked in excess of
the 40 hours.
If you are required to work on a Public Holiday, you are entitled to be paid
double or two times your hourly rate.
2
Chapter 2: Income Management
Overtime Pay Calculation

Example 1.
A nonexempt employee earns a salary of $1,200 for an expected 40
hours of work per week. One week, the individual puts in an extra two
hours to meet a deadline.

The employee’s total pay due, including the overtime premium, for the
workweek can be calculated as follows:
$1,200 / 40 hours = $30 regular rate of pay

$30 x 1.5 = $45 overtime premium rate of pay

$45 x 2 overtime hours = $90 overtime premium pay

$1,200 + $90 = $1,290 total pay due

3
 Chapter 2: Income Management
Overtime Pay Calculation

Example 2.
A nonexempt, hourly employee earns $10 per hour and works 46
hours in a workweek.

This worker’s total pay due, including the overtime premium, can be
calculated as follows:
$10 x 40 hours = $400 base pay

$10 x 1.5 = $15 overtime rate of pay

$15 x 6 overtime hours = $90 overtime pay

$400 + $90 = $490 total pay

4
Chapter 2: Income Management

Things You Need to Know

About Shift Work

Shift Work
Depending on the nature of the company you work for, your working hours
maybe different from the standard shift.
Your shift for a work week is not necessarily Monday to Friday with
Saturday’s & Sunday’s off. If you work on shifts, you may get your “2 Days
Off” during the week instead of on the weekend.
Your shift could rotate for example:
 6:00 am – 2:00 pm
 2:00 pm – 10:00 pm
 10:00 pm – 6:00 am
If you are a student, your work shift maybe different from above, possible
4 hours shift at a time and sometimes more. 5
 Source
Government of Canada
[Link]
l#h3.01.01

6
Chapter 2: Income Management
Managing Money for Personal Use
Money management is the daily financial activities
aimed at satisfying a person’s needs and wants
within a limited income. Individuals need to carefully
plan, save, and spend their money to get the most
out of it.

Why We Buy
Consumers choose among marketplace
alternatives. Five key factors that influence
consumer buying decisions include
1. income and price
2. status
3. current trends
4. custom and habits
5. promotion
1
Chapter 2: Income Management
Spending Money
Today’s society is known as a consumer-driven one. This means that
the economy offers consumers a never-ending supply of exciting and
innovative goods and services.

Comparison Shopping
Comparing price, quality, features, and services helps consumers
make smart purchases.

Comparing Price and Quality

Comparison shopping means selecting the least expensive product or
service that best meets the consumer’s needs and wants.

Features
The features of goods and services are often the most important
requirements for consumers when they purchase these items.
2
Chapter 2: Income Management
Spending Money

Services
Retail stores often offer services that complement their merchandise.
Some of these are free delivery for large purchases or warranties on
these items. Warranties are usually written promises that products
comply to high standards.

Planning and Comparing

Prices and features of products or services can be compared using
catalogues, newspapers, calling stores, or Internet searches.
3
 Chapter 2: Income Management
Purchasing Decisions

What Factors That Affect Our Purchasing

Decisions?
The factors influencing us to buy things include:
Our personal needs.

Our personal wants.

Things that our neighbours and friends own.

Advertising.

Promotion campaigns.

Special sales
4
 Chapter 2: Income Management
Purchasing Decisions

Making Effective Purchasing Decisions

One thing is: businesses and consumers both spend money. To spend
money effectively, businesses and consumers both need to consider cost,
quality, guarantees, service, product information, money available, and
style, each in different ways.

How do you make purchasing decisions? Imagine you would like to

purchase a laptop for school, and you are shopping around. Rate each of
the above factors in order of their importance to you and your decision.

5
 Chapter 2: Income Management
When to Buy
What is comparison shopping?
Comparison shopping is the task of comparing product
prices and the product details before making a purchase.

It helps a person find the best value for money. In fact,

comparison shopping is the only way to get the best
value for money

Consumers need to consider doing comparison

shopping for the same or similar product at other stores
before making a purchase.

6
 Chapter 2: Income Management
When to Buy – Comparing Shopping

7
Chapter 2: Income Management
When to Buy – Comparing Prices

8
Chapter 2: Income Management
When to Buy

Promotional Sales
Promotional sales happen when goods are sold below
regular price to build acceptance for new products or
to publicize store openings. These sales can create
opportunities to sell future non-promoted products to
consumers.

Sales incentives
Sales incentives are everywhere in retail stores. They
include:
Clearance sales.
Special promotions.
BOGO sales.
Seasonal sales.

9
 Chapter 2: Income Management
When to Buy
Clearance Sales
Retailers often have clearance (end-of-season) sales
where seasonal goods are sold below the regular price
to clear out old stock and to make room for new items.

Clearance sales usually take place when a business or a

store vendor has too much inventory or wants to make
room for new inventory or products. They reduce or
discount the price of products by a significant amount
to encourage their sale.

An example is when stores try to clear out products at

the end of a season or holiday event, such as after
Christmas or Halloween.

10
 Chapter 2: Income Management
When to Buy

Second-hand Shopping
Second-hand shopping involves the purchasing of goods that have been previously
owned by someone else. Buying such merchandise supports the three Rs of waste
management—reduce, reuse, and recycle.

11
 Chapter 2: Income Management

When to Buy
Seasonal Sale
Seasonal sales refer to the discounts and
promotions offered by retailers during specific
times of the year, usually corresponding to
holidays, seasons, or events.

Some great examples of seasonal sales are:

Boxing Day.
Black Friday.
Pre-holiday sales for:
* Christmas.
* Halloween.
* Easter.
* Back-to-school shopping.
* Valentine’s Day 12
Chapter 2: Income Management

When to Buy – Seasonal sale

13
Chapter 2: Income Management

When to Buy

Avoid Impulse Buying

What exactly are impulse purchases?
Impulse purchases (or impulse buying) are
unplanned, spur-ofthe-moment decisions to make a
purchase.

They occur when you experience a random,

inexplicable urge to buy something.

Stores often entice you to make an impulse purchase

(displays of chocolate at a cash register line, for
example)

14
Chapter 2: Income Management

When to Buy

15
 Chapter 2: Income Management

When to Buy
Avoid Impulse Buying
Avoiding impulse purchases Here are tips to avoid
impulse purchasing:
(1)Make a shopping list and buy only the items on
that list.
(2)Do not shop for groceries when you are hungry.
(3)Do not shop when you are feeling emotionally
unsettled.
(4)Do not go window shopping just because you are
bored
(5)Always remember the reason why you went
shopping in the first place.
(6)Research your purchase before buying.
(7)Do not buy items that cannot easily be returned.
16
Chapter 2: Income Management
When to Buy

17
 Chapter 2: Income Management

When to Buy
24 Hour Rule
What is the 24-hour rule?
The idea is that, after you decide to buy a big-ticket item, wait 24 hours to give
time for it to sink in — to be sure you want it and can afford it.

This is good advice when shopping for a high-priced item (like a TV or a

computer)

18
 Chapter 2: Income Management

When to Buy
Before Making A Purchase
A person should keep in mind three things before
making a purchase.

You should
Ask yourself why you need this item.
Apply the 24-hour rule (wait a day, especially if
it is an expensive item).
Do some comparisons to find the best price.

These steps are helpful because they allow a

person to re-think their purchases and can save
them a lot of money

19
 Chapter 2: Income Management

When to Buy
False Advertising
False advertising is the use of misleading or
deceptive statements, graphics, or other forms of
communication to promote a product or service.

It can take many forms, including:

Making exaggerated claims about the
effectiveness of a product.
Omitting important information that would affect
a consumer’s decision to purchase a product.
Making false comparisons between a product and
its competitors

20
 Chapter 2: Income Management

When to Buy
Buyer Beware
Caveat Emptor! (Buyer Beware!)
People generally purchase what they believe they need or want.

Advertising informs them of their choice. This is the theory at least, But
advertising can also convince people to buy things they do not need or want.
So, in Latin, “caveat emptor.”

21
 Chapter 2: Income Management
T4 Slip

What is a T4 Slip?
A T4 slip identifies all of the remuneration paid by an employer to an
employee during a calendar year.

Your employer is required by law to provide you with a T4 slip within 2

months after the end of the calendar year.

1
Chapter 2: Income Management
T4 Slip

2
 Chapter 2: Income Management
T4 Slip

When to Issue T4
If you are an employer (resident or non-resident) and you paid your
employees employment income, commissions, taxable allowances and
benefits, fishing income, or any other remuneration, you must issue a T4
slip if any of the following apply:

You deducted CPP/QPP, EI, PPIP, or income tax from remuneration

paid to your employee.

If the remuneration paid to your employee is not included on the

exception list , the total of all remuneration paid in the calendar year
was more than $500 (under the CRA administrative policy).

3
Chapter 2: Income Management
T4 Slip

4
 Chapter 2: Income Management
T4 Slip

What is required to be
reported on a T4 Slip.

5
 Chapter 2: Income Management

T4 Slip
What is NOT required to be reported on a T4
Slip.

6
Chapter 2: Income Management
What Is Income?
Income is money that an individual or business receives from sources,
such as wages or sales, interest, and dividends. Closely related to
income is the need for a financial plan that looks at how to make money
grow.
Types of Personal Income
Forms of Employment Income
• salary • piecework
• wages • profit sharing
• commission

Employees Benefits
Other sources of income can include dividends, allowance, interest, gifts,
part-time jobs, and inheritance.
•medical insurance •paid holidays
•paid sick days •drug and dental plans
 Chapter 2: Income Management
Categories of Income – Gross Income

Gross Income
Gross income is the total amount of money received by a person before any deductions.

Gross income for an individual—also known as gross pay when it’s on a paycheck—is an
individual’s total earnings before taxes or other deductions. This includes income from all
sources, not just employment, and is not limited to income received in cash; it also includes
property or services received.

For companies, gross income is interchangeable with gross margin or gross profit. A company’s
gross income, found on the income statement, is the revenue from all sources minus the
firm’s cost of goods sold (COGS).
2
 Chapter 2: Income Management
Categories of Income – Gross Income

KEY POINTS TO REMEMBER

Gross income for an individual consists of income from wages and salary plus other forms of
income, including pensions, interest, dividends, and rental income.

Gross income for a business is total revenues minus the cost of goods sold.

Individual gross income is part of an income tax return and—after certain deductions and
exemptions—becomes adjusted gross income, then taxable income.

Individuals may also be required to report gross income when attempting to secure a loan.

Businesses often use gross income instead of net income to better gauge the product-specific
performance of the business.

3
 Chapter 2: Income Management
Categories of Income – Disposable Income

Disposable income, or take-home-pay, is the amount of income that

is left after statutory or government deductions of income tax, Canada
Pension Plan (CPP), and Employment Insurance (EI).

Disposable income, is also known as disposable personal income

(DPI).

4
Chapter 2: Income Management
Categories of Income – Disposable Income

KEY POINTS TO REMEMBER

Disposable income is net income. It's the amount left over after taxes.

Disposable income is the net income of a person's take-home pay and is used
to pay for all expenses (both essential and nonessentials).

Economists monitor these numbers at a macro level to see how consumers

save, spend, and borrow.

Shelter, food, and debts are usually paid using disposable income.

The government uses disposable income when deciding how much of a

paycheck to seize for money owed in back taxes or child support.
5
 Chapter 2: Income Management
Categories of Income – Discretionary Income

Discretionary income is the amount of money that is left over after all
necessities have been paid from the amount of money you have as disposable
income. Necessities consist of rent or mortgage, food, transportation,
insurance, electricity, and so on.

Discretionary income is the amount of an individual's income that is left

for spending, investing, or saving after paying taxes and paying for
personal necessities, such as food, shelter, and clothing. Discretionary
income includes money spent on luxury items, vacations, and nonessential
goods and services.

6
 Chapter 2: Income Management
Categories of Income – Discretionary Income

KEY POINTS TO REMEMBER

Discretionary income is the amount of net income remaining after all
necessities are covered.

Discretionary income is money left over after a person pays their taxes and
essential goods and services like housing and food.

Nonessential items like vacations and luxury goods are usually paid for
with funds from discretionary income.

Disposable income and discretionary income are two different things.

Discretionary income is used by economists to measure economic health.

7
Chapter 2: Income Management
Categories of Income – Passive Income

8
Chapter 2: Income Management
Categories of Income – Passive Income

9
Chapter 2: Income Management
Categories of Income – Passive Income

10
Chapter 2: Income Management
Categories of Income – Passive Income

11
 Chapter 2: Income Management
Passive Income Ideas
 Create a course  Invest in a high-yield CD or saving
 Write an e-book s account
 Rental income  Rent out your home short-term
 Affiliate marketing  Advertise on your car
 Flip retail products  Create a blog or YouTube channel
 Sell photography online  Rent out useful household items
 Buy crowdfunded real estate
 Sell designs online
 Peer-to-peer lending
 Dividend stocks  Set up an annuity
 Create an app  Buy a local business
 Rent out a parking space  Buy a blog
 REITs  Preferred stock
 A bond ladder
 Sponsored posts on social media  A municipal bond closed-end fund

See [Link]
12
 Chapter 2: Income Management
Categories of Income – Passive Income

Passive income is usually investment income. It is earned from ownership

of assets that generate revenue such as property.

Example:
•Rent earned from an investment property.

•Dividends earned on corporate shares you have purchased.

Passive income is taxed by the CRA at a higher rate than active income.

Businesses earns active business income by producing products or selling

services.

13
 Chapter 2: Income Management
Categories of Income – Passive Income

Selling a principal residence

Your principal residence is where you live. You do not
have to pay tax on the money you get from selling your
principal residence.

If it is not your principal residence, the profit (what you

sold it for minus what it cost you to buy it) is taxed as
“capital gains.” HOW ARE CAPITAL GAINS
CALCULATED? If the capital gains rate is 50%, you
must pay tax on 50% of the profit as part of your
personal income for the year if the capital gains is less
than $250,000.

If the capital gains is more than $250,000 you will be

required to pay capital gains tax of 66.7%.
14