Do You Know What Income is Tax Exempt?

As critical as it is to understand what income is taxable in order to avoid expensive penalties, it is just as important to know what income is tax exempt.

Take note of these tax exempt income sources:

• Income earned within or withdrawn from a Tax-Free Savings Account (TFSA);
• Income exempt by virtue of a statute, including the Indian Act;
• Provincial and Federal Refundable Tax Credits, like Canada Child Tax Benefits, GST/HST credits, including child assistance payments and disability supplements from the province of Quebec;
• Certain Canadian Service Pensions, War Veterans Allowance Act Allowances;
• Compensation by Federal Republic of Germany to a victim of National Socialist persecution;
• Capital gains on publicly traded shares donated to a registered charity or private foundation;
• Foster Care payments;
• Income of Canadian Forces Personnel and Police on High-Risk International Missions;
• Inheritances or gifts;
• Life Insurance Policy proceeds;
• Lottery winnings;
• Military Disability pensions and dependant’s pensions;
• MLA and Municipal Officers Expense Allowances;
• Proceeds from accident, disability, sickness or income maintenance plans;
• Payments for Volunteer Emergency Services—up to $1,000;
• New! Payments from provinces or territories to victims of a criminal act or car accident;
• RCMP Disability Pension or Compensation;
• Service Pensions from some other countries, as well as a NATO official’s income;
• Tax-free benefits of employment, including transportation to a special worksite, certain transportation passes, uniforms supplied to the employee, etc.

Excerpted from Jacks on Tax. © Knowledge Bureau, Inc. All rights reserved.