Understanding Income Definition According to Income Tax Act

Learn what constitutes income under the Income Tax Act, including wages, bonuses, and more.

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Income as defined by the Income Tax Act includes all forms of earnings such as wages, salaries, bonuses, interest from savings, and dividends. It can also encompass capital gains, business profits, and even rental income. The key point is that it covers any economic benefit that can be quantified in monetary terms and contributes to an individual’s total revenue for tax purposes.

FAQs & Answers

  1. What types of income are considered taxable under the Income Tax Act? Taxable income under the Income Tax Act includes wages, salaries, bonuses, interest from savings, dividends, capital gains, business profits, and rental income.
  2. How is rental income treated for tax purposes? Rental income is considered taxable income and must be reported as part of an individual's total revenue when filing taxes.
  3. Are capital gains included in taxable income? Yes, capital gains are included in taxable income and must be reported according to the rules set by the Income Tax Act.
  4. What constitutes total revenue for tax purposes? Total revenue for tax purposes includes all economic benefits that can be quantified in monetary terms, such as wages, investments, and business income.

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