The Canadian tax code is a self-assessment system鈥攖axpayers calculate their own tax liability by filing a return with the Canada Revenue Agency by the required deadline.

But that doesn鈥檛 mean that you can just decide not to pay taxes owed without any consequences.

And Canadians are required to report and pay tax on our worldwide incomes, and will receive a credit for any income tax paid in another country.

Our tax system is considered progressive because the higher your income level, the more tax you pay. Income tax is charged by both the federal and provincial governments.

It is collected centrally by the Canada Revenue Agency and then a portion is paid back to the province.

The Canadian Income Tax Act is the document that holds all the rules and regulations governing Canadians and the filing of returns and remitting of tax owing.

Changes to this document must be passed by the government through a legislative process each year.

The method of recording income and expenses for taxes is different than when income and expenses are recorded for accounting purposes.

The accounting rules are different than the tax rules. You would use the accounting rules when you want to manage your business or apply for bank loans and other financing.

The accounting rules are concerned with recording past transactions so that you can plan for the future, while the tax rules are concerned with receiving enough money to maintain the infrastructure of the government, who then use those revenues to provide services for the people.

Canadians are taxed based on residency on the last day of the tax year, Dec. 31. There are some special circumstances whereby someone might be deemed to be a resident of Canada and be required to pay Canadian taxes if they were a visitor to Canada for more than 183 days.

The income tax act begins with 鈥淎n income tax shall be paid, as required by this Act, on the taxable income for each taxation year of every person resident in Canada at any time in the year.鈥�

Then it goes on to expand on that statement by providing more definitions as to what is considered residency, income and deductions.

Municipal governments obtain their income by imposing property taxes and provincial value added taxes on goods produced in the province.

The CRA also controls and maintains the federal Goods and Services Tax, which is a value added tax on products and services.