Taxes in Canada are Incredibly High, and seniors are losing money every day due to unnecessary taxes.

It seems that every political party before they are elected, promises in some way to make changes to the tax system but when they get into power, they never do.

The percentage of tax that Canadians pay is completely outrageous.  While some taxes appear to be reduced, others are increased and new ones added, to continually increase revenues for our politicians to squander.

It’s the Government’s version of the shell game and their job is to get your money and give it to someone else to get re-elected. 

The average Canadian now pays half of their income in some form of taxes, while the highest income earners pay as much as 75% of their income.  

That is why serious tax planning is more necessary than ever.

Not just for the few of the top income earners but for every Canadian.

You owe yourself and your family to keep more of what you earn. This article aims to start you on your journey on how you can have more control over what is rightfully yours.

That is why you need help from a financial planner who can implement a strategy to get CRA’s hands out of your pockets.

“A mind once stretched by a new idea never regains its original dimensions.”

Oliver Wendell Holmes

Furthermore, since I first wrote this article, Revenue Canada has changed its name twice, with the last being Canada Revenue Agency. Just because a thief changes his clothes, address or name doesn’t make him an honest man of integrity, does it?

Christmas is a time when kids tell Santa what they want, and the adults pay for it. Government debt is when adults tell the government what they want, and the kids pay for it.

 More increases to our Taxes!

Yes, the answer they always come up with is to steal more of our hard-earned dollars. They cannot manage their budgets, forcing us to manage ours by taking money out of our pockets!

It is very sad how poorly the Federal, Provincial, and local leaders are running the financial affairs of our country.

You cannot pick up a paper, or magazine, or watch TV without seeing another story about government debt, budget deficits, cut in service, and government infighting.

Governments have become more devious by devising new and hidden taxes to increase revenues.

Many do not realize that income tax may represent less than half of their total tax bill. These other hidden taxes account for over 2/3 of the average Canadian’s total tax bill.

Taxation impacts your financial future. 

85% of all Canadians retire broke, dependent on friends, family, or the Federal Government for their primary source of income.  According to the Bank of Canada and Statistics Canada, in 2009, most Canadians spent $1.71 for every $1.00 earned.

How much tax do we pay?

First $10,880 is tax exempt.

From $45,021 to $49,020   = 24.15%

From $49,021 to $79,505   = 29.15%

From $79,506 to $90,287   = 31.48%

From $90,288 to $93,655       = 33.89%

From $93,656 to $98,040       = 37.91%

From $98,041 to $150,000     = 43.41%

From $150,001 to $151,978   = 44.97%

From $151,979 to $216,511   = 48.29%

From $216,512 to $220,000   = 51.97%

From $220,000 PLUS = 53.55%

In 2008, the highest tax bracket was 46.41%.  Over the past ten years, our income tax increased by 7.14%, and when you combine this with the average inflation rate over the last ten years of 1.73% per year, it adds up to 17.3%.

The purchasing power of the dollar has dropped by a whopping 24.44%

Let’s look at the list of taxes we all have to pay.

Federal income taxes.

Provincial income taxes.

a/ Basic tax,

b/ Flat tax,

c/ Deficit-reduction tax.

Corporation income taxes.

School taxes.

Then we have employment tax:

Canada Pension Tax

Employment Insurance Tax

Health Tax

Road taxes (road toll fees).

The Consumers Tax

Liquor Tax

Tobacco Tax

HST

Vehicle Tax

Gasoline taxes

Travel Tax (Hotel, airline, air traveller’s security taxes, etc.).

Import duty taxes.

Utility surcharge taxes.

Environmental levy taxes (disposing of tires, etc.).

Then you have Asset Taxes:

Property taxes are 2% of assets every year. After your typical 25 years, the amortized mortgage has been paid off, and you realize that the taxes you paid are equal to 50% of the value of your home. But you do not stop paying these taxes when you stop paying your mortgage. Property Taxes continue to climb at an alarming rate.

Commercial Property tax, 4 – 6% of assets each year.

50% of all property taxes go to education and infrastructure.

Therefore, where does our income tax go?

Capital gains tax, something we never had until 1972, is payable at approximately 25%, subject to your tax bracket.

We have permits that are a form of tax as the money goes to the same place.

Business permits can be anywhere from $10 to $500 per year.

Building permits and renovation permits are from $500 to $5,000.

A home business permit is $50

Fishing and hunting permits.

Special events permit weddings and parties, etc.

Did I mention Drivers licenses and vehicle stickers?

We have Professional licensing for all professions and tradespeople.

Canada is one of the most taxed countries in the world, paying over 800 direct and indirect taxes. When I started this business, it was $300 a year, and now it is $840 a year.

And the list goes on.

How about Government Waste?

We watch as our government funds programs you would not fund in a free market.

In 1995, the Gun control registry was supposed to cost $85 million over five years but ended up being over $1 billion, and then it was scrapped. So, your taxes helped pay for this.

G20 Convention was supposed to cost $100 million but ended at $1.5 billion.

Then there was The Sky-Dome.

Pearson Airport, etc.

The Canadian Senate is neither elected nor accountable to Canadians.  For nearly 20 years now, politicians have dragged their feet on Senate reform, costing Taxpayers billions of dollars.

 Canadians are seriously concerned about their government’s handling of public money and have lost faith in their politicians.

The Fraser Institute, Canada’s leading financial think tank, reported by the end of 1999, Canada’s gross debt was equal to $3.5 trillion, which at the time was equal to 410% of Canada’s Gross Domestic Product (GDP – all the goods and services produced in Canada, in one year).

In 1961 the government tax grab went from $1,675 in total taxes per average taxpayer to $30,213 in 2007. An increase of 1,700%.

The Fraser Institute concludes that taxes have been Canadians’ biggest expense in the last 46 years. Something is dreadfully wrong with the picture when the government is taking more of your money than you need to live.

The Federal Government has run deficits in 37 of the last 50 years, which has resulted in a federal debt of over $162 billion.  This debt costs Canadian Taxpayers $26 billion a year in interest payments.

Our governments live beyond their means, borrowing dangerously and raising taxes to pay for it. Which means you have less money for your family.

The interest charges on Canada’s federal public debt eat up more than 1/3 of Ottawa’s total annual revenue.

Another major concern is the currency risk associated with the portion of this debt to foreign governments. Deterioration in the value of the Canadian dollar increases the cost of paying the debt in foreign currency. Can you imagine how much more we pay back debt in US dollars?    

I remember alerting my clients in the 1990s that we were becoming too dependent on foreign investment to buy our bonds because our debt level was too high at $700,000,000.

Another alarming issue is that taxpayers cannot afford to pay billions of dollars each year to bail out Government employee pension plans.

Especially when Canadians start to use their RRSP funds, which are 100% taxable when they start to use them.

Did you know that?

The top man at CRA brags that he has an annual budget of over $4 billion and over 46,000 people on staff to make sure you pay the government the money they believe you owe.

The top taxman at CRA spent $40,000 of your money for a new washroom in his office suite in 2007.

CRA receives oversight from a board of 15 members, and these members in 2007 received over $407,000 EACH in fees and retainers for their part-time positions

In the year2005-06, the top 16 CRA commissioners and their six deputy assistants received a total of 3.3 million dollars in salaries.

The Auditor-General says there are 2.4 million more Social Insurance Numbers than Canadians. Still, they cannot put their finger on who they are scamming the system for between $377 million and $2.4 billion.

Let’s do a Reality Check

A 40-year-old Canadian Taxpayer in Ontario earning $100,000 per year will pay CRA $24,550.94 in income taxes.

He will also pay them $2,500 for CPP benefits that he may not collect because of claw-backs if he buys RRSPs [See article on Tax time Bomb].

He also has further deductions of $2,200 for E.I insurance.

That’s $29,250.94 from his pay-cheque.

On average, mortgage and property taxes were $24,000, which has gone up sharply since the 2009 housing boom started, especially in the greater Toronto area.

Electric, gas, and water bills add up to a further $7,600, and these prices have increased since 2009.

Ontario pays some of the highest hydro rates in North America despite having three nuclear plants with multi generators and an influx of windmills added to the grid

.Therefore, household costs are $ 31,600

Car payments, maintenance, and gas add up to another $12,500. Groceries, restaurants, and entertainment add up to another $12,500.

Clothes are another $6,000 per year.

Depending on the size of a family, Personal Dental can add up to another $7,000.

So the total necessary just to live is $98 850.94 per year.

Now add HST OF $6.500

Hidden crown taxes of $5,000 and the total Crown Taxes is a further $11,500

[When you add the payroll and property taxes, the total Crown/CRA taxes are $48,750.94 or 48.75%].

Bank interest [including mortgage] and credit card interest can add another $26,000. Insurance for credit cards, automobiles, houses, and Life insurance can add another $6,000.

So, the 3 big bad wolves take up to 80% of your income, leaving 20% remaining, which is not enough to live on.

Therefore, we are forced to borrow and live in debt.

The same 40-year-old making $100,000 yearly has paid $1.6 million in direct taxes and a further $600,000 in indirect taxes.

He will pay a further $800,000 in interest payments to his Bank, which does not include their fees.

$1.6 million at a 6% return over 40 years would leave a retirement nest egg of $6,973,336.

Let me show you how you can get back some of the above money.

Proper Tax planning will increase your nest egg by 2/3.

90% of financial Planners miss this completely

And it is the best option for everyone for wealth creation. If you are not reducing your taxes, you are not creating wealth for yourself, but you are for the CRA.

Benjamin Franklin said, “An investment in knowledge pays the greatest interest.”

Now you have the knowledge, contact me and start taking back control of your money. I want to help you pay fewer taxes and have more income for yourself and your family so you can live your life to the fullest.