Planning 10 – finances – Game of Life – Taxes Lesson

The Guarantees of Life
What are taxes?
 Tax is a compulsory contribution levied on persons, property, or
businesses for the support of government for economic and social
operations. In other words, it is money paid to a government to fund
its programs and services.
Who’s responsible for this!
 Canada uses a self-assessment system
for tax collection. That means that
each individual is responsible for having
their taxes paid according to the Income
Tax Act. It is up to you to calculate how
much income tax you owe and what tax
benefits you should be receiving.
Why is my paycheck so low?
 Your employer makes deductions
from your salary or wages.
 The most common ones are
Canada Pension Plan (CPP),
Employment Insurance Premiums
(EI), and Income Tax.
 Once you turn 18 and until you turn 70 you
have to make CPP contributions based on
your income.
 EI contributions are based on a percentage
of your pay and may change year to year.
Important Information
 Everyone’s tax return is different! Don’t assume that just because your
neighbour got a refund that you will get a refund.
 Know your benefits and where to look for extra benefits!
 There are lots of places where you can get extra tax credits that you may not have thought
For example, if you moved for work or school you can deduct certain expenses from your
net income thus saving you money!
 You can deduct the cost of a monthly public transit pass
from your net income!
 You can claim up to a $500 benefit per child for any
physical activity programs that you paid to register them
We will practice by filling out a tax return
for “Samantha Valcourt” from your
Steps to completing a basic tax return
 Step 1: On Page 1 of the form T1 General 2010 fill in the
Identification Information
 If you do not have a SIN (social insurance number) make one up for the
sake of this exercise.
 Read all descriptions of boxes carefully. You don’t want to provide
inaccurate information.
 If you are under 19 and will not be turning 19 by April of that year you
must check NO for the GST/HST credit
Steps to completing a basic tax return
 Step 2: On Page 2 of the T1 General 2010 form you will be
calculating your Total Income for that year.
 In Box 101 – Enter the total amount of employment income. This is the sum
of all the amounts of Employment Income from any T4 slips that you
 If you received any other sources of employment
income (ie. Tips) you must enter those in box 104
 Be sure to go through each line and see if any areas
apply to you (For example, Interest and other investment
income, or Universal Child Care Benefit, or
Self-Employment Income
 Don’t mix CPP benefits or Employment Insurance
benefits with the amounts listed on your T4.
You need to make sure the box numbers and descriptions all match!
 Step 3: On Page 2 of the T1 General 2010, add all of the amounts
listed in the right hand column for your Total Income. Enter this final
amount in Box 150 at the bottom of the page. This is not your net
income for the year.
 Step 4: Copy the amount from Box 150 on the BOTTOM of page 2
into Box 150 at the TOP of page 3. Page 3 is where we find
deductions used to calculate your Net Income for the year.
 Step 5: Go through lines 207 to 233 carefully to see if there are any
benefits that are applicable to you. There may not be any.
 Step 6: Subtract the total amount from line 233 from line 150.
If you have no deductions on line 235 then enter the same
amount from line 233 in line 236. This is your Net Income.
 Step 7: See if there are any other deductions that apply to you
in the Taxable Income section. If there are none, enter the
amount from line 236 into line 260. This is your Taxable
 Step 8: Remove Schedule 1 from the Forms 2010 booklet. This
is used to calculate your Federal Tax for the year.
 Step 9: You will first calculate the Tax Credits that you will
receive for that year. This is found in lines 300 to 378 (note:
some numbers are skipped)
 Step 10: Everyone is given a basic federal amount of $10, 382.
Enter this amount on line 300. Go through the remaining lines
and see if there are any other tax credits that are owed to you.
 Most people will find they have CPP Contributions (Line 308) and EI
Premiums (Line 312) that can be included. These amounts are found on
your T4’s.
 You can also claim the Canada Employment amount if you entered
employment income on line 101. Enter the lesser of $1,051 and
the total employment income from line 101 and 104 combined.
 If you are unsure about whether or not you can claim a tax credit
refer to the General Income Tax and Benefit Guide.
 Step 11: Add up the amounts from line 300 to 332 and enter
the result on line 335. Multiply line 335 by 15% and enter this
amount on line 338. If you have no donations or gifts to
declare, enter the same amount on line 350. This is your total
federal tax credit.
 Step 12: Enter the taxable income amount from line 260 of the
T! General into the appropriate space (line 29) of Schedule 1.
 Step 13: Find the appropriate table for your taxable income
and complete the calculations to find the amount to enter into
line 36. Enter this amount on line 37 and if the following line
(Federal tax on split income) does not apply enter the same
amount on line 39.
 Step 14: Enter the amount from line 28 onto line 40. If no
other credits (lines 41 – 43) apply then enter the same amount
on line 44. Subtract Line 44 from Line 39 to calculate your
Basic Federal Tax. If the amount on line 45 is negative then the
basic federal tax is 0.
 Step 15: If the basic federal tax is zero, Enter 0 on lines 52 and
55 and Schedule 1 is complete.
 Step 16: Enter the amount from line 55 of Schedule 1 into Line 420 on page
4 of the T1 General form. Add lines 420, 421, 430, 422, 428 and enter this in
line 435. This is your total payable amount.
 Step 17: In line 437 enter the sum of the Income Tax Deducted as listed in
box 22 of any T4 slips. Add lines 437 to 479 (Note: numbers missing) and
enter the total in line 482. This is the Total Tax Credit that you have.
 Step 18: Subtract Line 482 from line 435. If the total is negative you have a
tax refund. If it is positive you have a balance owing. If the amount is $2.00
or less no refund is paid out and no balance owing must be paid.
 Step 19: Sign and date in the appropriate box at the bottom of Page 4.
Time to complete your own!
 You all have been given a T4 statement. You will use this to complete a basic
tax return. If you wish to be a bit more advanced you can use any random
events that impacted you financially for which you may receive tax credits
(IE Moving expense, Tuition costs, Transit expense, etc).
 Your completed Tax Return will be submitted in your final Financial portfolio.