Plain meaning
Income remaining after permitted deductions are applied and used to calculate tax payable.
Key points
- Taxable income starts from income reported for tax purposes and then subtracts deductions permitted by the Income Tax Act.
- Federal and provincial tax rates are generally applied to taxable income, not simply to cash received.
- Taxable income is different from total income and net income, which are separate lines and concepts on the personal tax return.
- Some credits reduce tax payable after taxable income is calculated, while deductions reduce income before tax rates are applied.
- For businesses and trusts, taxable income can depend on specialized rules, elections, and timing adjustments.
Why it comes up
Taxable income affects tax brackets, credits, benefits, surtaxes, and eligibility for many income-tested programs.