Return on investment measures the gain or loss from an investment relative to its cost, expressed as a percentage, to compare the efficiency of different uses of money.
Return on investment = (net gain from the investment ÷ cost of the investment) × 100. It is a simple, widely used yardstick for comparing options, a marketing campaign, a piece of equipment, a hire, by asking how much each dollar invested returned.
ROI's simplicity is also its limit: it ignores the time taken to earn the return and the risk involved, so a 20% ROI over one month is very different from 20% over five years. For that reason it is often paired with time-based measures, but as a quick comparison it remains one of the most used business metrics.
A business spends $10,000 on equipment that generates $13,000 of additional profit. Its ROI is ($3,000 ÷ $10,000) × 100 = 30%, letting the owner compare it against other possible uses of that $10,000.
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Current and prior-year forms and publications are free to download from canada.ca, and tax software builds most of them for you as you enter your information. You can also order a paper package by phone or pick one up at participating postal and service outlets during filing season. Which forms apply depends on your situation: a T1 with your slips for employment income, T2125 for self-employment, a T2 for a corporation, T1-ADJ to change a return already filed.
Tax exempt describes an amount or a transaction that tax does not apply to at all, which is different from a deduction or credit that merely reduces tax. Common examples are supplies that are exempt or zero-rated for GST/HST, investment income earned inside a TFSA, and specific receipts Parliament has excluded from income. Registered charities and non-profits can be exempt from income tax while still carrying filing duties. Exemption is never automatic; the rule must fit your facts.
No single figure describes it, because the total turns on income, province of residence, family situation and the credits claimed. A typical household pays federal and provincial income tax, Canada Pension Plan or Quebec Pension Plan and Employment Insurance contributions, GST or HST on most purchases, municipal property tax directly or through rent, plus fuel and excise taxes. Your own income tax for a year is set out on the notice of assessment the CRA issues.
Deductible contributions are those to a registered retirement savings plan, a registered pension plan and a first home savings account. Contributions to a tax-free savings account, a registered education savings plan or a registered disability savings plan are not deductible, since the benefit comes from sheltered growth and government grants instead. Charitable and political contributions produce non-refundable credits rather than deductions, and amounts contributed above your available room can attract a monthly penalty tax.
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Reviewed and fact-checked by Udit Gupta
Ex Big 4 — Ernst & Young, Deloitte · International & cross-border tax specialist · CPA Canada (In-Depth Tax Program) · Chartered accountant, ICAI & MIA
Udit Gupta has over 15 years of experience helping corporations and business owners with corporate structuring, corporate tax filing, bookkeeping, payroll, GST/HST, cross-border tax and CRA representation. Big 4 trained at Ernst & Young and Deloitte, and qualified as a chartered accountant in India and again in Malaysia, he founded his accounting practice in 2014 to serve entrepreneurs, startups and non-resident business owners across Canada. View full member bio.
The Institute of Chartered Accountants of India — member 521458 · Malaysian Institute of Accountants — member CA 44667 · Ex Big 4: Ernst & Young, Deloitte · CPA Canada (In-Depth Tax Program), completed 19 Dec 2023 · In-Depth GST/HST Part I, 12 Jul 2022 · Part II, 5 Jul 2023
Editorial policy. Every page is researched against primary sources — the Income Tax Act, CRA publications and CPA Canada guidance — and every rate or threshold is stated with the tax year it applies to.
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