ITA research and Tax Payable
7 How do you get from Net Income for Tax Purposes to Taxable Income to Tax Payable?
Gurveer Brar
After determining Net Income for Tax Purposes using the Section 3 ordering rules, Division C deductions are subtracted to get to the Taxable income (note, don’t confuse Division ‘C’ deductions with section 3(c) deductions). Then Marginal rates are applied to the Taxable Income to calculate the Tax Payable before credits. Lastly, credits are deducted to get to the Tax Payable. This is best illustrated with an example using 2024 marginal rates and tax credits.
Interactive Content
Author: Anthony Au, June 2019
Author: Sam Newton, June 2019
This is a video walkthrough of a tax payable worksheet originally prepared at BCIT (author unknown). Note: Some tax rates and credits used in the video may be slightly outdated but the concepts remain the same.
References and Resources
ITA – 3(a)-(f), 109-114, 117, 118
September 2024
All media in this topic is licensed under a CC BY-NC-SA(Attribution NonCommercial ShareAlike) license and owned by the author of the text.
Feedback/Errata