Personal Income Tax (PIT)
What is Personal Income Tax (PIT)?
Personal Income Tax (PIT) is the income tax that is levied by the Canada Revenue Agency (CRA) on individuals.
The funds collected through personal income taxes are used to pay for services that the government provides, including health and social services, law enforcement, national defense, transportation, and other national programs.
According to the IRS, earned income is money earned as an employee or as the owner of a business or farm.
The list of taxable earned income includes the following:
- Wages, salaries, tips, and other taxable employee compensation
- Merge strike benefits
- Disability retirement benefits received prior to minimum retirement age
- Net earnings from self-employment as a business owner, farm owner, minister, or statutory employee
Understanding how benefits interact with the personal income tax can help employers choose the best options to help employees balance their personal finances, retirement savings, and medical expenses.
Most countries collect taxes in order to fund public goods and services. Personal income taxes are one of the most common types of taxes, and they are necessary in order to fund the government. Without personal income taxes, the government would not be able to function.