Tax Terms Every Adult Should Know
Notice of Assessment:
A NOA is completed by the CRA after you file your taxes. Your NOA shows you the date your return was assessed and whether you have a refund, amount owing, or a zero balance.
Your tax return that you fill out to calculate how much you owe or are owed. Also known as the Income Tax and Benefit Return.
You may need to fill out additional schedules, forms or worksheets to calculate specific amounts that you insert on your T1 Return. Examples include Form T1-M, Moving Expenses Deduction, Worksheet for the Return if calculating Interest Expenses, Schedule 7 for RRSP Deduction
All of your income from taxable sources, before subtracting any adjustments, deductions or exemptions.
The total after subtracting all deductible amounts from your gross income.
Expensing lets you treat a certain amount of the expenses that normally would be depreciated over a number of years as current business expenses to be deducted in that specific tax year.
CRA: Canada Revenue Agency
IRS: Internal Revenue Service
Tax Liability: The amount of tax owed by an individual or business.
A deduction to reflect the gradual loss of value of business property as it wears out. Assets are assigned a Class which basically says how long approximately that asset will last and therefore help you figure out which percentage to expense per year.
An amount of money that can be offset against a tax liability
Non-Refundable Tax Credits:
Credits that are capped at your tax liability (aka will bring your balance to zero but won’t result in a refund).
Refundable Tax Credits:
Can be used to generate a federal tax refund larger than the amount of tax paid throughout the year