knowledge topics
Foundations of Tax
KNOWLEDGE EXPECTED OF: Both CFP® Professionals and QAFPTM Professionals
- Define taxation.
- Explain the purpose of taxation.
- Explain types of taxation that exist in Canada, such as:
- Income taxation
- Sales taxation
- Excise taxation
- Property taxation
- Explain the impact of taxation.
- On income
- On consumption
- Define income taxation (income tax) structures, such as:
- Progressive
- Flat
- Surtax
- Define types of income tax rates, such as:
- Marginal income tax rate
- Average income tax rate
- Effective marginal income tax rate
- Compare a marginal and average income tax rate.
- Define income tax avoidance.1
- Define income tax evasion.1
- Compare tax avoidance and tax evasion.1
- Letter of the law versus spirit of the law
- Potential for criminal consequences
- Explain the purpose of the General Anti-Avoidance Rule under the Canadian Income Tax Act.
- Explain the purpose of income tax advice, such as:
- Minimize income tax
- Defer income tax
- Explain the factors that may affect income taxes, such as:
- Fair market value of assets
- Adjusted cost base of assets
- Liquidity of assets
- Ownership structure of assets
- Potential for capital gains / losses
- Availability of capital gains exemptions
- Availability of capital losses
- Sources of income
- Eligible tax deductions and credits
- Marginal tax rates
- Family circumstances
- Business interests
Glossary of Verbs (mouse over to see definition)
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Define
To state exactly the meaning of
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Identify
To be aware of / to recognize and correctly name / to locate an appropriate resource
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Explain
To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it
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Compare
To note the similarities and differences between two or more things
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Estimate
To determine an approximate value for
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Calculate
To find the value using mathematics
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Convert
To change from one form or purpose to another
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Evaluate
To reach a conclusion or make a judgement through careful study
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Interpret
To give the meaning of / to construe or understand / to translate orally
Read more about the Taxonomy used in the FP-BoK