Taxable Income

Employment Income

Employment Income Overview:

Employment Income: Employment income is the most common type of income in Canada and includes all amounts received as an employee's salary. This income is generally outlined on the T4 slip provided by employers.

Types of Employment Income:


Employment income is subject to various deductions that reduce taxable income:

Want to know more about deduction>>>>>



Understanding the various types of employment income and applicable deductions is crucial for accurately reporting income and calculating taxes owed when filing your Canadian tax return. Always refer to the most current CRA guidelines and tax laws for the most accurate and relevant information, as these may have changed after my last knowledge update in January 2022. For complex situations, consider consulting with a tax professional.

Other Employment Income

Understanding Tax Implications of Employer-Paid and Employee-Contributed Premiums in Wage Loss Insurance Plans

Capital Gain/Loss

What is Capital gain/Loss? 

The term "capital gain" refers to the profit realized from the sale of a capital asset, such as stocks, bonds, or real estate. Conversely, a "capital loss" occurs when there's a decrease in the value of a capital asset below the purchase price upon sale.

Reporting Capital Gain/Loss on T1 Form:

When filing your T1 income tax return in Canada, you need to report both capital gains and losses. Here's how it's done:

Capital Gains:

Capital Losses:

Required Documents:


Understanding and accurately reporting capital gains and losses is crucial when filing your T1 income tax return in Canada. If this process seems complicated, consider consulting a tax professional to assist you in accurately completing your tax return. Always refer to the most current Canada Revenue Agency (CRA) guidelines and tax laws, as these may have changed after my last knowledge update in January 2022.

Self-Employment Income (If you have) 


In Canada's T1 Personal Income Tax Return form, “Self-employment income” is an item that is reported, not subtracted. When filing taxes, you need to report all income earned from self-employment activities. This includes income derived from your business, profession, commission, farming, or fishing activities.


However, when calculating your “Net self-employment income”, you are allowed to subtract reasonable and necessary business expenses directly related to your self-employment activities. These expenses might include:

Net income

After subtracting these expenses, you arrive at your net self-employment income, which is included in your taxable income and used to calculate the taxes you owe. These deductions are in place to ensure taxpayers are taxed only on the net income they actually earn, rather than their gross income.


For accurate completion of the T1 form and correct reporting of self-employment income and associated expenses, you might need to seek the help of a professional tax advisor. These professionals can assist you in understanding allowable expenses and ensure you fill out the tax forms correctly to avoid any potential tax issues or audits.

Note: tax laws and policies may change over time, so it's advisable to consult with professionals for the most accurate and current information when planning your taxes or completing tax forms. The information I provided may not be entirely accurate or may be outdated, so you should refer to the most recent tax laws and policies or consult a tax professional to get the most accurate and relevant information.

Taxable Income

How to Determine Taxable Income?

Formula Representation:


In Canada, to determine the "Net Income", one must subtract basic deductions from the total income. When calculating "Taxable Income", additional specific deductions are considered. Such deductions encompass Worker’s compensation payments, Social assistance payments, Net federal supplements, and Income exempted under tax treaties. Hence, "Taxable Income" differs from "Net Income".