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What is net income? Why do you need to know this definition? The MoneySense Glossary is your resource for learning and understanding financial terms.
Net income is what’s left over from your paycheque after deductions, such as taxes, insurance and benefit payments. At tax time, your net income is your total income from all sources (employment, benefits, pensions, capital gains, etc.) minus all allowable deductions (registered retirement savings plan (RRSP) contributions, child care expenses, etc.). The Canada Revenue Agency (CRA) uses your net income to calculate federal and provincial/territorial non-refundable tax credits, the Canada child benefit, goods and services tax (GST) and the harmonized sales tax (HST) credits and other amounts.
Example: “Olivia donates 5% of her net income to charity.”
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