Recognizing Tax Exempt Income

The best kind of income is the tax free kind, and indeed, several sources exist. 

For example, the income you earn in your Tax Free Savings Account is, as the name implies, tax free. Income exempted by a Statute, such as the Indian Act, is also tax exempt, as are certain war veterans allowances and pensions. Charitable Canadians can also avoid tax on the capital gains they earn on their investments in publicly traded shares when they donate them to a registered charity or private foundation. Life insurance benefits, inheritances, gains on the sale of your principal residence and lottery winnings all win the prize for tax efficiency: none of them are reported on the tax return.