Net taxable income equals gross pensionable/taxable income less authorized deductions.

Net taxable income equals gross pensionable/taxable income less authorized deductions.

• A. True
• B. False
• C. Only in Quebec
• D. Not applicable

Answer: (A)

The main idea is that taxable income is what you get after subtracting the deductions the tax rules allow from the gross amount that is subject to tax. You start with gross pensionable or other taxable income, then subtract authorized deductions such as RRSP contributions, professional dues, and eligible employment expenses. The resulting amount is the net taxable income used to calculate federal and provincial taxes. Because deductions reduce the income on which tax is calculated, this statement is true. It isn’t limited to Quebec and isn’t “not applicable” in general payroll practice.

The main idea is that taxable income is what you get after subtracting the deductions the tax rules allow from the gross amount that is subject to tax. You start with gross pensionable or other taxable income, then subtract authorized deductions such as RRSP contributions, professional dues, and eligible employment expenses. The resulting amount is the net taxable income used to calculate federal and provincial taxes. Because deductions reduce the income on which tax is calculated, this statement is true. It isn’t limited to Quebec and isn’t “not applicable” in general payroll practice.