Income Tax

Each year as a resident of Canada you are required to submit your income taxes (T1 Tax Form), for the year, for assessment. If you are employed you are required to compile and submit all T4 (Statement of Remuneration Paid) accrued during the year. Also required are Statements of Income from Capital Gains (investment), pension, i.e., and any other income that you made during the year which you are filing for. These different income sources get added to your personal income (fractionally), this sets the rate at which you are taxed on both provincial and federal levels.

Each year, by the end of February, your employers are required to send you a copy of your T4 in the mail. These documents are submitted by each company for all employees as wage expenses and again by all employees as personal income, these amounts should be the same if not they are flagged and potentially audited. On your T4 it will have indicated how much federal and provincial taxes that have been paid for directly on your part by your employer. By this time the Government will have sent or posted any required tax information and also any bank accounts managing capital gains or other assets to be taxed will have sent corresponding tax forms.

The total of your income is known as your personal income and is subject to both federal and provincial taxation. The rate at which you are taxed is equal to the rate of the bracket of income in which you fall.
The Government incentivizes certain spending's and activities by allowing those expenditures to be deducted from your personal income. Some of you may not be employed in a traditional sense, or furthermore may run your own business. These are both conditions where money that is in your possession, but not in your name will be taxed separately from your personal income. There is a separate category of taxation policies for that of a business to consider but this is beyond the scope of this article.

Financial Instruments

Included are concepts such as; whole life insurance policies, RRSP, RESP, investments, equipment, land, assets, loans.
These are vessels which intrinsically hold value but are used to leverage certain financial situations.
For example purchasing life insurance is beneficial to the beneficiary of the deceased in the event it is paid out. However during the term of the policy it holds special value in which it has a cash equivalent value that can be borrowed against. Similarly to an RRSP, it can be used to help in securing a mortgage for a house. The value being that you are taking initiative to secure your finances for adversities. The banks will take the insurance policy in place of cash for a portion of the down payment. It also makes the purchase of mortgage insurance unnecessary.
Non-registered Investments provide people with ease of access and fewer restrictions. They do not have the attribute held in registered investments, these are incentivized by the government.

Your net worth is the combined value you hold in all the financial vessels you possess. These values can be exact or estimated depending on the type of asset it is. Less any loans you have.
Identifying which financial vessel is right for you is a personal choice in most instances. Weighing the pros against the cons

Financial Practices

It is important to have exposure to healthy financial habits in terms of relationships.
It is good practice for couples in a relationship that is common law to have three bank accounts: one that is shared, and one personal account for each.
Personal account for each party receives pay cheques and it is agreed between the couple an amount which is to be combined in the shared account which go to pay for the shared bills. Such as; rent, vehicles, food, i.e. This allows each person to have control over their own finances and makes separations less devastating.
It is good practice to automatically contribute 10% of there income to a financial vessel of choice. This practice allows the realization of compound interest. People who share this quality, to have discipline, will become financially independent.
When making large purchases, buyers can have more than one option for purchase. Buying outright with cash or a cash equivalent is one way to buy a car or house, the advantage is no premium payments or interest, also you have more leverage in negotiating.
When you get a new job, that is a financial milestone as there is significant importance in how you should position yourself.
The more risk you hold the higher potential you have for growth but the more exposure you have. You can offset risk using strategies like diversification.

Accounting Principles

It is preferential how one decides to track the finances. Many tools are available through commercial bank accounts and can very in there analysis. The basis of your needs is your own personal interest in how thorough your tracking is. One person is happy knowing exactly how much they were paid and only there current balance. Others may track and categorize some or all of there expenditures and in instances multiple avenues of income.
Accounting in its most basic definition is tracking income and expenditures over a period of time. It is to personal requirements; how and what information is included.

Depreciation is an example of an accounting principal that is used differently depending on the individual needs of the person in-charge of the asset. It is also something that is often diverted.
Perpetuity is the idea of giving or having an investment that pays interest forever. In the scope of finance it is a principle investment that pays an interest incrementally... It is typically held in an investment with guaranteed or relatively stable growth and/or dividends

Credit

The credit system was established to help assess the risk individuals hold when applying to borrow. It is a score between 300-900 and signifies lenders willingness to loan. If you have never made a transaction that reflects on your credit you may have no credit, which notifies lenders to establish credit alternative ways like employment history. A credit score of 560 is one of the requirements for a mortgage. With a credit score above 679 banks will be less likely to require a 20% down payment requirement.

Before you can begin receiving income legally in Canada you must apply for and be issued a SIN, that tracks financial aspects about you and attributes to your social construct. This is a ledger of information about enquiries and notices for purchase in which your SIN was used as a guarantee of payment.
The enquiries made on your credit history are indications of employment and salary, credited services like phone bills, loans like leases or mortgages; there amounts and history of missed payments, other fines and settlements can also be considered.
The process of building credit begins with no credit, this means you will probably be denied large loans with collateral. The idea is to get a small amount of credit for something you would normally pay. Using the credit and paying the amount in full each month. Making minimum payments or holding debts for long periods can effect it negatively.
There are three different agencies TransUnion, Equifax and Experian that report on your SIN and most lending terms will report to both agencies. The significance is that you could potentially have two scores that indicate differently.
The importance of protecting your SIN is because someone can use this number to apply in your name for credit, or worse yet to steal your identity.