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With all the different types of taxes, it’s no surprise that people will regularly consult with a tax planning attorney to help them strategize on how to minimize their tax liability. In Canada, taxes, fees and charges are collected by various levels of government to finance their programs and services. The three levels of taxation include federal, provincial/territorial and municipal. It is very important to understand the differences and which types apply to you as a regular working citizen or business owner. This is where tax management and strategizing becomes really helpful in terms of making things easier and complying with the provisions of the tax laws and its associated rules.
The most common type of tax is the income tax, which is derived from an individual’s salary or the revenue of a specific business. Most of us are familiar with this type and in most cases, a corporation will withhold an employee’s income tax to ensure that it is filed regularly.
Another type is the consumer and excise tax on the production, sale or consumption of goods and services. It is a form of indirect tax. Excise duties are collected by the producer or retailer and not paid directly by the consumer, and thus are often “hidden” in the price of the product or service rather than being listed separately.
Wealth tax is levied on the sale and transfer of ownership of various types of properties or assets. In general, assets are classified under land, land improvements (immovable property such as buildings), personal property (movable property such as vehicles), and intangible assets. Many provinces impose property taxes on real estate based on the current use and value of the land. It is the major source of revenue for most municipal governments. While property tax levels vary between municipalities in a province, general property valuation or assessment criteria are generally set in provincial law.
Another common type of tax is the import/export tax. Import duties and taxes are payable when goods are imported into the country, whether by a private individual or a commercial entity. In addition to duty, imports may be subject to other taxes such as GST (General Sales Tax), PST (Provincial Sales Tax), or a combination of both, such as HST (Harmonized Sales Tax) depending on the type of importer and province Is known. The amount of duties and taxes payable depends on the place of residence of the importer and not the place where the goods enter the country.
These are just some of the basic types of taxes people usually pay in Canada. It can get confusing and even overwhelming when you start calculating and even detailing all the different taxes that a person needs to pay. This is why it is advisable to consult a tax professional and seek their help, both managerially and strategically, on how to pay and minimize your taxes. This is not dodging your taxes in any way. You are just making sure that you don’t need to pay anything more than the amount you need to pay. This is where a tax planning attorney Can be very helpful.
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