The Basics of Taxation and How a Tax Planning Lawyer Can Help

The Basics of Taxation and How a Tax Planning Lawyer Can Help

With all the different types of tax, it’s no surprise people would regularly consult with a tax planning lawyer to help them strategize how to minimize their tax liability. In Canada, taxes, tariffs, and duties are collected by different levels of government to fund their programs and sets. The three levels of taxation include Federal, Provincial/Territorial and Municipal. Understanding the differences and which types apply to you as a regular working citizen or as a business owner is very important. This is where tax management and strategizing becomes truly helpful in terms of making things easier and complying with provisions of tax laws and its allied rules.

The most shared kind of tax is the income tax which is derived from a person’s salary or from the revenue of a specific business. Most of us are familiar with this kind and in most situations, a corporation will withhold an employee’s income tax to ensure it is filed regularly.

Another kind is the consumer and excise tax which is for the production, sale or consumption of goods and sets. This is a form of indirect tax. Excise taxes are collected by the producer or retailer and not paid directly by the consumer, and as such often keep “hidden” in the price of a product or service, instead of being listed separately.

character taxes are charged on the sale and move of ownership on different kinds of similarities or assets. In general, similarities are classified under land, improvements to land (fixed assets like buildings), personal character (moveable assets like vehicles), and intangible character. Many provinces levy character tax on real estate based upon the current use and value of the land. This is the major source of revenue for most municipal governments. While character tax levels vary among municipalities in a province there is usually shared character assessment or valuation criteria laid out in provincial legislation.

Another shared kind of tax is import/export tax. Import duty and taxes are due when importing goods into the country whether by a private individual or a commercial entity. In addition to duty, imports may be unprotected to other taxes such as GST (General Sales Tax), PST (Provincial Sales Tax), or a combination of both known as HST (Harmonized Sales Tax) depending on the kind of importer and province. The amount of duty and taxes due depends on the place of residence of the importer instead of on the location where the goods go into the country.

These are just some of the basic types of taxes people typically pay in Canada. It can get confusing and already overwhelming when you start calculating and already detailing all the different taxes a person needs to pay. This is why it is advisable to consult with a tax specialized and seek their assistance in both managing and strategizing how to pay and minimize your taxes. This is not in any way evading your taxes. You are just making sure you do not need to pay anything over and above what you are required to pay. This is where a tax planning lawyer can be of great help.

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