Tax Tip: 10 Tax-Exempt Income Sources

Love this tax tip: all income sources are not taxable. Here’s my top 10 favorite “dark horses” – exempt amounts most people don’t know about.

The most common types of exempt income are the following:

1. TFSA income earnings and withdrawals

2. Inheritances

3. Lottery winnings

4. Capital gains on the sale of a home used as a tax exempt principal residence (this year, all such sales must be reported on Form T2091; there’s also a worksheet to go along with the form)

5. Capital gains on publicly traded shares donated to a registered charity or private foundation

6. Proceeds from accident, disability, sickness or income maintenance plans where the taxpayer has made all the (non-deductible) premiums

7. Refundable federal tax credits like the Canada Child Benefit or the GST/HST Credit

8. Social Assistance Payments received for providing foster care

9. MLA and Municipal Officers Expense Allowances (but only until the end of 2018; after that there is a taxable component)

10. Certain tax-free benefits of employment, including transportation to a special worksite, certain transportation passes, uniforms supplied to the employee, and certain education costs

When in doubt, check out what’s taxable and what’s not with your DFA-Tax Services Specialist

Evelyn Jacks is President of Knowledge Bureau, Canada’s leading educator in the tax and financial services, and author of 53 books on family tax preparation and planning.

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