Accumulated income from all sources
Individuals pay income tax on their accumulated income from all sources
except investment income. The sources are classified as agriculture and
forestry, employment, rentals and leases, incidental activities, trade or business,
and capital gains on the sale of property.
The rules defining trade or business
income also apply to the income of corporations unless the Corporation Tax Act
specifically rules otherwise. Thus, there is a degree of conformity in the
determination of the taxable income of businesses, regardless of legal form.
However, the entire income of a corporation ranks as business income by legal
definition.
Investment income of individuals is taxed at a flat rate of 25%. It consists of
dividends, interest, capital gains on the sale of securities and the various
surrogates for these items. If paid through the domestic banking system, it is
taxed at source. If not, the recipient must report it on his tax return and pay the
25% by assessment. Special rules apply to income on investments held as
business assets.
EU Forecast
euf:ba18e:123/nws-01