As evidenced by the ability to deduct these items in the calculation of Taxable Income, the government does not intend to tax social assistance payments or worker's compensation payments. Given this, why are these amounts included in Net Income For Tax Purposes?

Question

Quizplus · Accepted Answer

The Answer is They are included in Net Income For Tax Purposes because that figure is used in a variety of eligibility tests. For example, to get the full tax credit for an infirm dependant over 17, the dependant's income must be less than a threshold amount. Since the policy is to reduce this credit in proportion to the dependant's income in excess of that amount, it is important that all types of income be included in the Net Income For Tax Purposes calculation. To accomplish this goal, social assistance and workers' compensation payments are included in the calculation of Net Income For Tax Purposes and then deducted in the calculation of Taxable Income.

As Evidenced by the Ability to Deduct These Items in the Calculation