Notice to Reader (NTR)

Income tax is tax charged on the income you earn in a year, levied by both the federal government and your province or territory. Rates are graduated, so successive slices of taxable income are taxed at higher rates, and credits such as the basic personal amount reduce the tax calculated. Employment income is taxed through payroll withholding and settled on your T1 return. Quebec residents also file a separate provincial return with Revenu Quebec.

Non-taxable income is money you receive that never enters taxable income. Common examples are lottery and most gambling winnings, gifts and inheritances, growth and withdrawals inside a TFSA, the GST/HST credit and Canada child benefit, most life insurance death benefits, and child support under current-rule agreements. A few amounts are reported and then deducted, such as workers' compensation and social assistance, because they still affect benefit calculations, so report anything that arrives on a slip even when no tax results.

Holding a share outright cannot leave you owing money. The worst outcome is that it becomes worthless. You can end up owing money if you bought on margin, sold short, or invested with borrowed funds, because the debt survives the loss. On the tax side, a fall in value creates nothing to report; a loss only crystallises when you dispose of the shares, and a capital loss is applied against capital gains rather than against ordinary income.

Zero-rated supplies are taxable at 0%: you charge no tax and can still claim input tax credits on the costs of making them. Exempt supplies sit outside GST/HST entirely, so you charge nothing and recover nothing. Basic groceries, prescription drugs and most exports are zero-rated. Long-term residential rent, most health services, childcare, tuition and financial services are exempt. Everything else carries the 5% GST for 2026, or 13% to 15% HST in the harmonised provinces.