Money A tax cage match: government vs your savings

04:51  22 february  2018
04:51  22 february  2018 Source:   MoneySense

When saving into an RRSP instead of a TFSA could cost you dearly

  When saving into an RRSP instead of a TFSA could cost you dearly RRSPs aren't for everyone.It's the time of year when Canadians are bombarded with ads about filling up their Registered Retirement Savings Plans, or RRSPs. Maximizing your contribution before the March 1 deadline is simply the wise and financially responsible thing to do, the message goes.

The government then matches the money up to a certain percentage and deposits it into your The extra funds the government deposits are called the Canadian Education and Savings Grant. (There may be other tax breaks you are missing out on. Check out Tax Breaks For Canadian Families.)

Personally I pay about double in US vs . what I payed in Canada for equivalent income. Property taxes : too dependent on the location, hard to tell. Tax benefits for retirement savings : Canada. This is not a tax item, but it's a big expense for many families and something the government can do

a close up of a piece of paper© Used with permission of / © Rogers Media Inc. 2018.

One of the first moves by Justin Trudeau’s government in late 2015 was to signal to savers this message: Forget about saving; the government will take care of you. The new government telegraphed this by reducing the amount Canadians could stash in their Tax Free Savings Account by nearly half. The TFSA annual contribution limit was chopped to just $5,500 (from $10,000 in 2015). The federal government soon thereafter announced Canada Pension Plan premiums would rise, as of 2019. The direction was clear: High-cost, interventionist government was back in vogue, if it ever left.

It may be time to rethink RRSP contribution limits

  It may be time to rethink RRSP contribution limits The Registered Retirement Savings Plan (RRSP) has been one of the mainstays of saving money for retirement since it was introduced in 1957. IGM

The RRSP deadline looms and the new year brings an additional ,500 of contribution room for Tax -Free Savings Accounts. The government will match 20% of your contributions for each child to an annual maximum grant of 0 and a lifetime limit of ,200.

Prioritizing Savings vs . Debt Payoff. Tax Implications of Retirement Plans. If your employer is willing to match your 401(k) contributions, it may be worth it to take this free money, which can make up for the interest you’ll accumulate on unpaid debts.

Readers might be Liberal, Conservative, or a member of the resurrected Rhinoceros party; partisan identities don’t matter to taxpayers and savers (the same people, incidentally, if politicians need the reminder).  What does count is if actions taken by a government make it easier for Canadians to save: For their kids’ next amateur sports adventure, the family summer holiday or their own retirement.

By this measurement, Canadian governments are failing, by making saving more difficult. Since 2015, the federal government and provinces have busily hiked taxes, other fees and introduced new taxes in wordsmithing drag—“carbon levies”. All that and the TFSA action have reduced the ability to save, this by exposing more income to more tax.

Here’s what taxes can do to your savings if you’re not careful

  Here’s what taxes can do to your savings if you’re not careful Mind the tax bite.

It’s a question that comes up at tax time every year. People want to pay less to the government and save as much However, that doesn’t mean every tax - saving tactic is right for you. If not, invest up to your match , then open a Roth IRA so you don’t miss out on the opportunity to enjoy tax -free growth.

Why not withhold the correct amount and invest the money instead of letting the government earn interest on it? You’ll defer taxes on that income while saving for your retirement and taking the greatest advantage of compounding over time. If your employer offers a matching 401(k) program

It all began in 2015

Start with Alberta as an example. It first began to raise taxes in 2015: Four new personal income tax brackets, this in what was once Canada’s lower-tax refuge. It then added a carbon tax. Alberta’s taxes are still lower than other provinces, but given those other provincial tax rates, that sets the achievement bar really low.

The picture is similar elsewhere. Last year, British Columbia, Quebec and Saskatchewan all raised taxes. Manitoba joined the chorus with an announcement of a new carbon tax effective this year. The party label didn’t matter: NDP, Liberal Conservative: all have introduced or announced higher provincial tax measures.

Atlantic Canada’s government have busily raised taxes for years. New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador have all hit the tax reset button to: “higher”.

There have been exceptions. Quebec reduced some taxes and plans to do more. And federally, while Ottawa reduced the middle tax bracket in 2016, recall how it added a new hit for “higher income” earners.  (No one should get excited about the middle bracket cut. The Fraser Institute calculates as of 2018, due to all the various changes, three million families will pay $2,218 more this year than they did in 2015.)

Tinder update to give women control of conversation

  Tinder update to give women control of conversation Dating app plans to add option allowing women to initiate conversations.During an interview with Marketwatch, Match Group CEO Mandy Ginsburg said it plans to add a "women-talk-first setting" to Tinder, where any time a woman is matched by swiping right, she starts the dialogue.

Merrill Edge Ally Invest E-Trade TD Ameritrade Wealthfront Wealthfront vs . Betterment E-Trade vs . TD Ameritrade. Popular tools. Compare online brokerages Retirement calculator Roth IRA calculator 401(k) savings calculator Calculate my net worth Capital gains tax calculator Federal tax calculator.

one-year league studs for the next decade plus, here it’s all about picking a winner, so that’s the tough task in store when these two step into the cage ! This match is another illustration of fantasy value being tied as much, if not in some cases more so, to factors beyond a player’s control as to a his pure

The result of all this: Higher marginal rates that kick in much at much lower levels relative to top tax rates in the United States.

For example, as of 2018, federally, the 33% bracket begins at $205,842 in taxable income. In the United States, the top federal bracket is 37% (down from 39.6%). But it is effective only at US$500,000 or about C$616,400. In the United States, in contrast to Canada, you’d need to earn three times as much to hit their top federal tax bracket.

The same problem exists when federal and provincial tax brackets are combined and calculated. In Canada, the top combined tax rate exists in Nova Scotia. There, taxpayers face a top marginal rate of 54 per cent. (The top federal bracket, as per above, is $205,842; the provincial rate of 21% is effective at $150,001.) In the lowest-taxed province, Albertans faced a top marginal rate of 39% as recently in 2014. Now it is 48%. The highest provincial rate (15%) is effective at $307,547.

In the United States, the top federal-state combined tax rate exists in California, at 50.3%. That includes the federal 37% rate plus California’s 13.3% rate. But here’s the catch: Californians don’t pay that top rate until $1 million in taxable income, or almost $1.25 million Canadian. In America’s highest taxed state, a Californian only hits that high rate with income four times of what an Albertan would earn when they crash into their province’s top marginal rate. And California is an anomaly. Other states have far lower income tax rates, many have flat tax rates, and seven states levy no personal income tax at all.

Spanish police detain at least 10 in match-fixing raids

  Spanish police detain at least 10 in match-fixing raids An investigation into match-fixing in Spain has led to at least 10 people being detained following raids across the country, reports Reuters' Andres Gonzalez. "There's ten who have been detained and more are expected," an anonymous source told the news outlet. "They were rigging matches for the Chinese betting market." "There's ten who have been detained and more are expected," an anonymous source told the news outlet. "They were rigging matches for the Chinese betting market.

Symbol Starts With. Company Matches . Related: 401(k) vs . Roth 401(k): Which one's right for you? Instead of paying the taxes now, you'll pay them when you withdraw your money during retirement. Roth IRA: For savers who are in a lower tax bracket and can do without the immediate tax savings , a

Financial Government Solutions Legal Reuters News Agency Risk Management Solutions Tax & Accounting Blog: Answers On Innovation @ Thomson Reuters.

Is there a justification for Canada’s recent higher tax, anti-savings approach? Not really. While Canada’s politicians tax citizens less than some northern European countries—those are the ones interventionist politicians love to praise—the useful, contrary example is Switzerland. The Swiss do much more with less tax and no one thinks Switzerland is uncivilized. That nation’s scores high on health care, perceptions of well-being and other outcomes that surpass Canada. The Swiss manage that with taxes and other government revenues at a smaller percentage of GDP (34.7%) than Canada (40.6%)

Back to the cross-Canada government/politician tendencies since 2015: There’s an old joke about the scariest phrase one might hear in life: “I’m from the government and I’m here to help you.”

We should update that: “I’m from the government and I’m here to help you save.”

No. Not at present.



  • Capital gains tax when selling a rental property
  • Should I withdraw from my RRSP to contribute to a TFSA?
  • Coming clean to the CRA
  • How to ‘find’ cash for your RRSP contribution
  • Transfer assets to your TFSA with minimal tax impact
  • How seniors can use TFSAs to have more in retirement
  • Feds provide more details on changes to small business tax
  • Avoiding Canadian tax on U.S. property

Mark Milke is the author of Tax Me I’m Canadian: A Taxpayer’s Guide To Your Money and How Politicians Spend It.

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