The impact of Taxation on your financial future.

95% of all Canadians retire broke, dependent on friends, family or the federal government for their primary source of income.

According to Bank of Canada and statistics Canada in 2009.

The majority of Canadians spend $1.60 for every $1.00 they bring in.

How much tax do we pay?

First off Ontario has a progressive Tax system in place the more you make the more tax you pay.

First $10,000 is Tax except.

From $10,000 to $20,000 you pay 20.05%

From $20,000 to $37,000 you pay 26.05%

From $37,000 to $75,000 you pay 37.15%

From $75,000 to $127,000 you pay 47.16%

From $ 127,000 up you pay 48.16%

That is income tax only.

Then Employment tax

Canada Pension tax

Employment Insurance tax

Health tax.

Then Consumer taxes

Liquor tax

Tobacco tax HST

Vat Tax is coming where manufactures pass on the Value added tax to consumers up to 20-25%.

Vehicle tax.

Travel tax.

Then we have Asset tax

Property taxes 2% of assets every year.

Commercial property tax 4-6% of assets each year.

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

So where do our income taxes go?

Capital Gains tax that we never had until 1972 which is payable at approximately 25% depending on your tax bracket.

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

Business permits which can be anywhere from $10 -$500 a year.

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

A home Business permits $50.

Fishing and hunting permits.

Special events permit for weddings parties etc.

Did I mention Drivers Licenses permit and Vehicle stickers?

Then we have Professional licensing for all professions and trades people.

Canada is one of the most taxed countries in the world. Paying over 800 direct and indirect consumer taxes...

How about Government waste.

Gun control registry was suppose to cost $2,000,000 but ended up being over $1billion.

G20 convention was suppose to cost $100 million but cost $1.5 billion

Then there was…

Sky Dome

Pearson airport etc.

Let’s do a reality check.

A 40 year old Canadian Tax payer in Ontario earning $100,000 a year

Will pay CRA $32,000 in income taxes.

He will also pay them $2,500 for CPP benefits that he may not collect because of claw backs.

He also has a further deduction of $2,200 for E.I. Insurance.

That is $36,700 from his pay cheque.

Mortgage and property taxes are on average $22,000.

Electrical, gas and water bills add up to a further $7,300

a year.

Therefore his household costs are $29,300.

Car payments, maintenance and Gas add up to another $12,000 a year.

Groceries, restaurants and entertainment adds another $12,000

Clothes is $6,000

Personal Dental etc depending on size of family is another $7,000

So the total needed just to live is $103,000 a year.

Now add his HST of $5,800

Hidden crown taxes of $4,500

And the total to CRA or the Crown is a further $10,300

[When you add the payroll taxes and property taxes.

The total Crown /CRA taxes are

$51,000 or 51%]

Bank interest [including mortgage] and credit card interest can add another $26,000.

Insurance for credit cards, automobiles, house and Life Insurance can add another $5,000.

So the 3 big bad wolves take up to 80% of your income.

This leaves 20% remaining which is not enough to live on.

That is why are forced to borrow and live in debt.

That same 40 year old making a $100,000 a year during his life time has paid $1.6 million in direct taxes and a further $600,000 in indirect taxes.

He also will pay $800,000 in interest to Banks and a further $200,000 to insurance companies.

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

proper tax planning will increase your retirement nest egg by 2/3.

Which means it is your best option for wealth creation.

A wise man once said”An investment in knowledge pays the greatest interest.”

That man was Benjamin Franklin.