Know More About Tax-Free Income from S&W LLP CPAS
There are many sources of income and expenses that are tax-free. If you plan well, bit by bit, they can help you save considerably on taxes. This applies whether you work for a company or collect Social Security benefits.
Is Tax Fee Income Legal?
Tax-free income is completely legal. You just need the right professional guidance to learn more about it and give you a hand in planning.
A Few Types of Income That Cannot be Taxed
Tax law does not allow the CRA to tax income from these following sources, among others:
1. Expenses for Families with Dependent Children (AFDC)
2. Expenses on qualifying for Adoption
3. Damages from physical injury
4. Payments for Death
5. Life insurance dividends
6. Welfare benefits such as TANF and food stamps
7. Security Income (SSI)
8. Accident and/or health Insurance benefits
9. Worker’s Compensation (and FECA payments)
10. Benefits on Disability or Disability Pension payments
11. Expenses on Child Support
12. Payments for Long-term Care Insurance
13. Grants for Qualified scholarships
14. Rewards on Credit card and non-cash prizes below $600
15. Frequent flyer miles
16. Veterans’ Benefits
17. Medical Savings Account withdrawals
18. Life insurance benefits
19. Reimbursements for theft or casualty loss
20. Disaster relief grants
21. Up to $102,100 of foreign earned income (for 2017)
22. Sickness and Injury Payments
23. Federal income tax refunds
24. Payments to the beneficiary of a deceased employee
25. Social security benefits (if it is your only form of income)
Other Non-Taxable Income Sources
● Gifted Inheritance: Gifts and life insurance benefits are not taxed by the Canada Revenue Agency. Taxes on any income is paid by the deceased person’s estate before the money is released to you. But if you invest the money for personal gains such as house rent, you need to pay taxes on the gains received.
● Travelling Expenses: You are allowed to deduct some food and beverage expenses if you are away on a business trip for at least 12 consecutive hours from your area of work. The most you can deduct is 50% of the amount you paid on food and beverages on your business trip, including such expenses on an airplane, train or bus. Travelling expenses can be deducted if you meet certain conditions such as not receiving a non-taxable allowance for travel expenses from your employer. Ensure you have all records with a copy of Form T2200, Declarations of Conditions of Employment, completed and signed by your employer. Worker’s compensation benefits are also not taxed, provided you mention them clearly in your tax claim form.
● Social Security: If you have no other income beyond Social Security, it is generally tax-free. But you must still include it on your tax return to ensure that calculations on your benefits are correct.
● Canada Child Benefit Payments (CCB)
● Child assistance payments and supplements for handicapped children paid by the province of Quebec.
● Goods and Services Tax (GST) and Harmonized Sales Tax (HST)
S&W Chartered Professional Accountants: Are there ways to bring down your taxable income? Are there Federal Income tax exemptions? Are there types of incomes that fall into taxable or non-taxable categories? Do you have to file a tax return if you have tax-free income? If you have any such questions and wish to learn more about income tax exemptions from S&W LLP Chartered Professional Accountants. Call our knowledgeable and dedicated team at S&W LLP Chartered Professional Accountants who have the skills and tools to prepare you for your taxes on time.