# Canada’s top 10% of earners pay 54% of taxes



## like_to_retire (Oct 9, 2016)

I do tire of the notion that taxes need to be raised on the so called rich. If you're in this middle class group you easily pay half your income as a marginal rate. It's ridiculous.

Canada’s top 10% of earners pay 54% of taxes — but here’s the kicker, many are just middle-class.

_"The federal government and 7 of Canada’s 10 provinces in recent years have raised tax rates for upper-income earners. Cross says in 2017, the latest year of comparable data, the top 10 per cent of income-earners earned about a third of total income but paid more than half of the country’s total income taxes".

"Cross says that gap has always been there, but it has grown wider over the past three decades. Between 1982 to 2017, the share of income earned by the top 10% rose 13.2% while their share of income taxes rose 22.4%".

"And here’s the kicker. Being in the top 10% of earners in Canada doesn’t mean you are wealthy. In fact, in 2017, any Canadian making $96,000 (or more) was in that group"_

ltr


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## sags (May 15, 2010)

They pay 54% of all the "income" taxes, but collect 34% of all the income.

*The 34% of all income dwarfs the 54% of all income taxes.*

Who pays the vast majority of sales taxes, gas taxes, municipal taxes, and all other taxes and fees that provide government revenues ?

Hint........it is the other 90% of Canadians.

A better question would be how much of the 34% of total income do the top 10% pay in income taxes and how much do they keep after taxes.


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## like_to_retire (Oct 9, 2016)

sags said:


> They pay 54% of all the "income" taxes, but collect 34% of all the income.


They don't collect, they earn 34% of the income, but pay 54% of all the taxes. So the top 10% of earners pay 54% of all the taxes. Awful nice of them. You obviously feel they should pay more.

ltr


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## sags (May 15, 2010)

Maybe....but then again, maybe not. It all depends on the actual numbers.

How much money does 34% of all income represent ?

How much money is 54% of the income taxes ?

As I said, the other 90% of Canadians earn 66% of the income and pay 46% of the income taxes and most all the other government revenues. 

Incidentally, in 2017 the top 1% earners enjoyed the highest earnings increase by far and paid slightly lower taxes than the year before.

I wouldn't lay awake at night worrying if they can pay their hydro bills this month.


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## like_to_retire (Oct 9, 2016)

sags said:


> As I said, the other 90% of Canadians earn 66% of the income and pay 46% of the income taxes and most all the other government revenues.


Right, and if 90% of the all earners only pay 46% of all income tax, each person in that massive group is paying a heck of a lot less than each of the 10% of people that pay the rest of the 54%. That small group is paying the lions share, and yet you want them to pay more.

That 90% population of taxpayers that only pays 46% of the taxes collected should be saying thank you, thank you, thank you, to those few 10% of taxpayers that pay the rest of the 54% taxes that are required to fund all the free services that the 90% use. Thank you, thank you, thank you - nope, instead, they want more.

ltr


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## Just a Guy (Mar 27, 2012)

As long as it’s not sags paying he’s got no problem where the money comes from


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## Gator13 (Jan 5, 2020)

> Right, and if 90% of the all earners only pay 46% of all income tax, each person in that massive group is paying a heck of a lot less than each of the 10% of people that pay the rest of the 54%. That small group is paying the lions share, and yet you want them to pay more.
> 
> That 90% population of taxpayers that only pays 46% of the taxes collected should be saying thank you, thank you, thank you, to those few 10% of taxpayers that pay the rest of the 54% taxes that are required to fund all the free services that the 90% use. Thank you, thank you, thank you - nope, instead, they want more.
> 
> ltr


Well said. Let's not forget that a good portion of the folks in that 10% group are typically working a lot of hours and dealing with a lot of stress to make that money. And after paying 53.53% income tax, you sure aren't living like a rock star.

The 90% should be pretty grateful that the 10% are footing the lions share the bill for public services.


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## OptsyEagle (Nov 29, 2009)

> That 90% population of taxpayers that only pays 46% of the taxes collected should be saying thank you, thank you, thank you, to those few 10% of taxpayers that pay the rest of the 54% taxes that are required to fund all the free services that the 90% use. Thank you, thank you, thank you -


Thank you.

I have said on here many times that instead of increasing taxes on the rich, I would rather see this. Instead of seeing a guy who pays 30% tax on $1,000,000 income, I would rather see him pay 25% tax on $3,000,000 of income.

That would save me a lot of money and would help the poor considerably by reducing the need of the government and providing more tax revenue to help them out. I have always said, taxing the rich is more about revenge then it is about fair taxation. It, as some point, is also pretty dumb and demotivating for the most productive people in our society...even if we don't like them personally.


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## sags (May 15, 2010)

On the other side of the ledger, this "small group" of 10%ers earn 34% of ALL the revenue.

The hard numbers would be more useful. How much do the 10% earn and how much taxes do they actually pay on the income ?

Since the Fraser Institute makes the claims to the percentages, they must know the actual dollar amounts.


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## sags (May 15, 2010)

Gator13 said:


> Well said. Let's not forget that a good portion of the folks in that 10% group are typically working a lot of hours and dealing with a lot of stress to make that money. And after paying 53.53% income tax, you sure aren't living like a rock star.
> 
> The 90% should be pretty grateful that the 10% are footing the lions share the bill for public services.


They aren't paying a rate of 53% on their income. The 10% are paying 53% of the total income taxes collected after collecting 34% of all the income.


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## Gator13 (Jan 5, 2020)

According to the 2017 census to get into the top 10% you needed taxable income of $96,000. 

$477,700 to make the top 1%

$740,300 to make the top 0.1%

Again, these numbers are from the 2017 Census so a bit dated.


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## Gator13 (Jan 5, 2020)

> They aren't paying a rate of 53% on their income. The 10% are paying 53% of the total income taxes collected after collecting 34% of all the income.


To clarify. Income over $220k is taxed at 53.53%.


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## ian (Jun 18, 2016)

Depends where you happen to live. In Alberta, until recently, the top incremental rate was 39 percent. Notley boosted it to 48ish. I believe that Nova Scotia is on the top of that tax rate chart, followed closely by Quebec.

I have seen this stat before. My question is always does this include GST, PST, and all of the hidden consumption and service taxes. I suspect that the top ten percent might pay less proportionally of those taxes but that would be a wild guess.


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## Eclectic12 (Oct 20, 2010)

Strange ... the Feds say their top rate is 33% while Quebec's is 25.75% to end up with a combined rate, when income is high enough, of 58.75%.
Nova Scotia's top rate is 21% to end up with 54%.

https://www.canada.ca/en/revenue-ag...iduals-current-previous-years.html#provincial


Maybe there's some sort of surtax based on income that when it is added in, NS jumps higher than Quebec?


The tax tables tend to focus on Federal plus Provincial income tax only. GST, PST and everything else aren't in the mix.


Cheers


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## Eder (Feb 16, 2011)

Canada seems to want to be more socialist every year. If that's what the majority want then its only fair that's the way it should be. The rest of us can vote with our feet or grin & bear it I guess.

I'm pretty sure if fiscal responsibility was taught like French etc in grade school we would have a more prosperous country in a couple generations.


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## gardner (Feb 13, 2014)

Gator13 said:


> According to the 2017 census to get into the top 10% you needed taxable income of $96,000.
> 
> $477,700 to make the top 1%


From this statscan explorer: https://www150.statcan.gc.ca/t1/tbl...0005501&pickMembers[0]=1.1&pickMembers[1]=3.3

The 1%ile threshold in 2017 was $236,000. They earned 9.9% of Canada-wide income and paid 21.1% of overall tax load.
Within this top 1% group, the average income was $478k taxed overall at 37% leaving an after tax income of $303k. One could generally get by.


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## sags (May 15, 2010)

Income tax is graduated in brackets and people only pay the top marginal tax rates on the portion of their income that falls above the lower income brackets.

Thus, their overall tax rate on their total income can never be the top tax rate.

The stats are also "taxable income" not their gross income. One would imagine high earners make use of tax reduction strategies.


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## sags (May 15, 2010)

gardner said:


> From this statscan explorer: https://www150.statcan.gc.ca/t1/tbl...0005501&pickMembers[0]=1.1&pickMembers[1]=3.3
> 
> The 1%ile threshold in 2017 was $236,000. They earned 9.9% of Canada-wide income and paid 21.1% of overall tax load.
> Within this top 1% group, the average income was $478k taxed overall at 37% leaving an after tax income of $303k. One could generally get by.


The actual numbers present a different picture than the rhetoric. Those numbers will likely never be included in a Fraser Report.


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## like_to_retire (Oct 9, 2016)

sags said:


> The actual numbers present a different picture than the rhetoric.


Most of these overtaxed people probably wouldn't consider themselves rich. Consider some retired guy who's worked and saved his entire life and has a $50K pension and qualifies for full CPP of $14,110 and OAS of $7362. He has some investments and gets about $20,000 in dividends and $10,000 in interest income. I'll enter those numbers into Tax Tips Canadian Income Tax calculator for Ontario resident.

If this guy adds $1000 interest income, he will have to pay the government $519. That a 51.9% tax rate on his earnings.

He pays the government more than half of what he makes for every _new_ dollar he earns. Where's the incentive to invest. Should he paying more tax? Is this guy really rich?

ltr


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## OptsyEagle (Nov 29, 2009)

ian said:


> I have seen this stat before. My question is always does this include GST, PST, and all of the hidden consumption and service taxes. I suspect that the top ten percent might pay less proportionally of those taxes but that would be a wild guess.


I am pretty sure they don't include GST/PST etc. since those are not really based on income. That said, since the wealthy earn more money and have more money, one could probably make the assumption that they spend more money. If that is the case, the wealthy could not prevent themselves from going to the top of the list of GST and PST payors. 

On that point, I don't really care because spending is something that a person can elect to do or not do, but income taxes are a confiscation, no matter what we call it. They are confiscated from almost all of us, but that is how they are collected. When someone else makes the decision on what you pay, fairness becomes important...and it is what is fair that keeps us beating this one to death over and over again, without changing too many people's minds, no matter what points are laid out.


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## Gator13 (Jan 5, 2020)

> The stats are also "taxable income" not their gross income. One would imagine high earners make use of tax reduction strategies.


A quick example for Ontario. The average tax rate continues to climb as your income gets higher and does go over 50%. If you are earning T4 income there is very little for tax reduction strategies. If there are, please share.

Total income$ 350,000
Federal tax$ 92,262
Provincial tax$ 57,170
CPP/EI premiums$ 3,609
Total tax$ 153,041
After-tax income$ 196,959
Average tax rate 43.73 %
Marginal tax rate 53.53 %


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## Mortgage u/w (Feb 6, 2014)

I totally disagree with the argument that the top 10% should pay more taxes. Its not a coincidence they earn more money so why should they be taxed more? And lets face it, $96k to be considered top 10% is not a whole lot of wealth.

There is a distinction to be made......salaried peopled earning $96k+ are not any wealthier than those earning $56k. If we move into the top 1%, I think its clear that the majority are not salaried but in fact, business owners. And I think its unfair to look to them and ask them to pay more taxes. They are creating employment, collecting, remitting taxes, and paying more than their fair share. If you ask me, they should be encouraged to pay less in order to create more employment.

If the government needs more money, they need to look in their own yard and see what can be cut. I have no pity when they want to cut in certain areas. Union jobs need to go. Government work pensions need to go. I would even be in favor of removing the OAS - I can save for my own retirement, I don't need to contribute throughout my career and hope to get it back.


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## ian (Jun 18, 2016)

We both pay a great deal of tax. But I think that we get our money's worth. We have traveled extensively. There are not many places in the world that can compare to Canada in terms or standards of living, public safety, Government services, healthcare, etc.

Sure, we complain and yes the monies can always be spent more efficiently. This will always be the case. But on balance we are happy. Just look stateside. Taxation may appear to be less but I do not think it is. Healthcare is such a huge issue for those who have no coverage or those who want to retire before 65.

I believe the top 10 percent are already paying their fare share. This tax the rich business is nonsense. Why choke the goose?


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## sags (May 15, 2010)

The top 10% of Canadians made an average income of $134,900, with the top 5% making one third more ($179,800) and the top 1% almost triple that amount ($381,300).

Meanwhile, the bottom 90% had an average income of $28,000.

These are also single incomes, not family incomes. If the spouse isn't earning employment income, there would be tax deductions available.

_I believe the top 10 percent are already paying their fare share. This tax the rich business is nonsense. Why choke the goose? _

Perhaps but I would still like to see the unfiltered numbers. Knowing some successful business people among family and friends, they have ways of reducing taxes.

Anyone who questions that isn't rich and probably never will be.


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## like_to_retire (Oct 9, 2016)

sags said:


> Meanwhile, the bottom 90% had an average income of $28,000.


Income they paid essentially near zero taxes on, and yet they enjoy the same free, public services all those "rich" people enjoy and also pay for through their high taxes. Thank you, thank you, thank you.

You're welcome.

ltr


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## sags (May 15, 2010)

You seem stuck on the idea that income taxes are the only source of revenue for the government.


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## like_to_retire (Oct 9, 2016)

sags said:


> You seem stuck on the idea that income taxes are the only source of revenue for the government.


Oh, so we're totally switching topics now to sources of government revenue?

ltr


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## ian (Jun 18, 2016)

There are some people out there who will always be in favour of increasing taxes....just so long as their tax is not raised. Same as those encouraging Government cutbacks in spending....as long as those spending cuts do not impact them.


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## gardner (Feb 13, 2014)

Gator13 said:


> If you are earning T4 income there is very little for tax reduction strategies. If there are, please share.


You get some RRSP room but it's kind of thin after your income goes above 155k. You might arrange investment income to yield dividends for the tax credit rather than interest. You can defer CGs to after retirement. On balance though, you're right: there's not much you can really do. When I was employed, I just forked over the 43%.


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## Pluto (Sep 12, 2013)

Supposing all the income of the top 1% were distributed to the bottom 90%, each tax filer in the bottom would get $3594. Not that much. Sags makes it sound like we'd all be fat cats with fancy cars, boats and huge houses. Not likely. 

"Tax reduction strategies" are typically claiming expenses such as supplies, rent, leases, new equipment, loan payments, employee salaries....it isn't some magic wand the rich have to reduce tax.


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## ian (Jun 18, 2016)

Sags...do a little work and see exactly what income sheltering opportunities are available for someone who is T4'd for $350K . You might be surprised at how few deductions are available. Do you think that these individuals have access to different categories of income offsets for tax purposes because of their income level??


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## gardner (Feb 13, 2014)

To the original topic:



like_to_retire said:


> Canada’s top 10% of earners pay 54% of taxes


So what? Am I supposed to be outraged or appreciative? Because it is the top 10% and not 5%? or because it is not 50%? Is this just a random factoid, or something you have some specific comment or feeling about?

Although I have personally experienced the harshest end of the progressive tax system, I don't think I would advocate for the system to be any other way. With an income north of 1/4M, who better is positioned to pay up? Also, I have a lot more to lose in the instance of civil or economic problems -- it really is in my interest to fund the activities that keep peace order and good government in steady operation.


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## OptsyEagle (Nov 29, 2009)

There is no doubt that the rich should pay more tax then the poor. Not only does that makes sense from a "how else could it work" point of view, but there is no doubt, the poor helped the rich get rich. Because of that, this is about as good of way of paying the poor their share as any other way. Now many may dispute my point about the poor helping the rich, but my point is confirmed once it is acknowledged that a rich person could never have become rich, living in a world alone. That world being populated mostly with people who are poorer then themselves. They needed the poor for employees and they definitely needed the poor for customers. Taxation is the proper time to pay them their share.

So, with all that in mind, the question will always be; what is the fair amount the rich should pay (to the poor)? Here we tend to have the poor, thinking the rich should pay more and of course we have the rich, thinking they should pay a lot less. We also have one last point to consider, in that at some level of taxation, the motivation to make more money reduces in almost all of us. This not only hurts the rich a little, but hurts the poor a whole lot more.

With that in mind, I really think the rich are paying about what they should, but definitely under no circumstances should anyone think they can squeeze more out without ramifications that take away completely the benefit of that newly squeezed tax revenue. Only my opinion, of course.


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## like_to_retire (Oct 9, 2016)

gardner said:


> So what? Am I supposed to be outraged or appreciative? Because it is the top 10% and not 5%? or because it is not 50%? Is this just a random factoid, or something you have some specific comment or feeling about?


I guess you didn't read the thread. To recap, my comment or feeling is that there always appears to be a push to increase taxes on this top 10% that generally fund the lions share of tax revenue. The writers of the article I posted used the 10% figure, so I had no control over that.



gardner said:


> With an income north of 1/4M, who better is positioned to pay up?


Well, the fact is that the taxes starting with incomes around $96K get rather onerous in my opinion. These people are considered middle class, yet they pay very high taxes. Do you feel they should pay more to avert problems with peace and order and ensure good government. One of the best ways we could get some good government wouldn't be raising my taxes, but getting rid of the Liberal government.[/QUOTE]

ltr


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## ian (Jun 18, 2016)

I read an article by Jamie Golombek today about CRA changes for the 2019 tax returns. In it he states that starting this year, CRA will accept credit card payments for taxes due on filing. I logged into my CRA account but could not find any data on this. I am hoping that we will be able to make installment payments via our credit card and get the point credit.


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## sags (May 15, 2010)

ian said:


> Sags...do a little work and see exactly what income sheltering opportunities are available for someone who is T4'd for $350K . You might be surprised at how few deductions are available. Do you think that these individuals have access to different categories of income offsets for tax purposes because of their income level??


I know of few people who would earn $350,000 as employment income. People in that income range tend to have accountants set them up as small businesses.

Well, a Supreme Court Judge does earn that level of income, so I expect there are some rare examples.

The yearly salaries of the judges of the Supreme Court of Canada are as follows: (a) the Chief Justice of Canada, $403,800; and. (b) the eight puisne judges, $373,900 each.


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## gardner (Feb 13, 2014)

like_to_retire said:


> These people are considered middle class, yet they pay very high taxes. Do you feel they should pay more to avert problems with peace and order and ensure good government.


Pay more than low-income earners? Yes, of course. But if you think they pay more than the 1% crowd, your kidding yourself. Personally I would advocate pushing the tax burden higher still up the food chain than the Libs already did, but whatcha going to do?


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## gardner (Feb 13, 2014)

sags said:


> I know of few people who would earn $350,000 as employment income. People in that income range tend to have accountants set them up as small businesses.


I think the ones that earn that kind of dough as employees in big business will earn a fair chunk in the form of stock options that are (for now) taxed akin to capital gains at half the normal rate. So you get huge T4 income, but with a huge security options deduction too. But if you're an actual employee, you won't necessarily be able to rearrange how you're paid. Doctors and dentists and some lawyers would go the small business route, sure.

Having a look through the Ontario sunshine list will reveal a fair few big earners. Lest it seem like the big earners are all silly servants, you have to remind yourself that businesses that pay their execs huge amounts don't have the level of disclosure/transparency requirements as governments do, so most of the high earners out there are just random folks with a private job you wouldn't realize pays what it does.


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## Gator13 (Jan 5, 2020)

Most folks automatically think of doctors, dentists and lawyers when you talk about high salaries. Often overlooked are store managers at Costco, Walmart, GM's at a car dealership, sales reps in all sorts of industries, etc. These are employees with T4 income with very minimal options for income sheltering opportunities.


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## sags (May 15, 2010)

How about a guy who owns a trucking business and gives his wife a Lincoln Navigator because she is listed as a VP ? She also gets insurance, gas, cellphone paid for by the company.

I wonder if they could buy a million dollar property on Lake Muskoka and call it their corporate headquarters.

I suspect there are creative ways for high earners to either reduce their taxes or spend the tax money on something that benefits them.

The worst off is the poor schlubb who works everyday, gets paid an income on a T4 and can't afford to pay an accountant or invest in assets with favorable tax treatment.

Even as retirees, we have it much better off than when we earned T4 income. Age credits, pension credits, and income splitting make a difference. 

Our gross income is significantly less but the net income is pretty much the same.


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## ian (Jun 18, 2016)

I worked in an industry where it was not unusual for some senior managers and successful sales people to be T4'd anywhere from $200-$350K, sometimes more depending on bonus and commission. Smetimes more in a good year.

Business owners do get a chance at write offs. No doubt about that. But also remember that the are the same folks who go out everyday and live by their wits, risking their equity, working 12 hour days, often six days a week. No pension either! 

They are also the people behind the greatest growth in employment in Canada.


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## sags (May 15, 2010)

I have no grievance with high earners enjoying some tax relief, because I think the "tax rates" are calculated with those reductions in mind.

In other words, the tax rate may be 50% but nobody should expect that wealthy people actually pay 50% of their income in taxes.

The tax courts are kept very busy with tax lawyers and accountants finding new ways to challenge the tax code.

The notion that high earners are unjustly taxed just isn't true.


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## ian (Jun 18, 2016)

I do not believe that high earners are unjustly taxed sags. High T4 earners have no 'leg up' over lower income T4 earners. They all have the same opportunities for tax avoidance. The difference is the effectiveness of those opportunities based on a persons incremental tax rate. Does not matter if it is spousal loans, income splitting, flow through shares, stock option deduction, etc.


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## roman71 (Jan 11, 2020)

*Options*

Is there any other option than RRSP to defer taxes if you make over $147k on T4?


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## Jimmy (May 19, 2017)

roman71 said:


> Is there any other option than RRSP to defer taxes if you make over $147k on T4?


Company pension plan contributions are a deduction like the RRSP. They cap the total of either in any combo at 18% of income up to a max of $27,230 in 2020. Deferred Profit Sharing Plans also defer tax payable. RESPs - no deduction but you get a 20% grant.


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## roman71 (Jan 11, 2020)

Jimmy said:


> Company pension plan contributions are a deduction like the RRSP. They cap the total of either in any combo at 18% of income up to a max of $27,230 in 2020. Deferred Profit Sharing Plans also defer tax payable. RESPs - no deduction but you get a 20% grant.



Thank you! I was looking for a scenario where yo make for example 200k/year work 20 years and pay taxes the same as somebody making 100k per year but working 40 years...


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## james4beach (Nov 15, 2012)

Bit of an aside, the RRSP and TFSA contributions (at their maximums) also add up to a lot on their own; these are amazing tax shelters and deferrals. Doing a rough calculation, ignoring inflation, assuming you put in the maximum each year over 20 years of work including the TFSA maximum as of today, and get 6% return in your investments, the two shelters combined end up with about $1.5 million, in today's dollars, and all growing tax-free.

Capital gains in non-registered accounts also offer a significant deferral perk. You get to enjoy _mostly untaxed growth of arbitrarily large amounts of capital_ until you eventually cash it out in the future. Assuming cap gains taxes stay low in the future and/or a low tax rate at retirement, this is an awfully good deferral.

I know these are just the simplest shelters but one should not overlook the potential here. Ending up with $1.5 million sheltered, plus perhaps a couple million $ more non-registered with capital gain deferral, is a pretty sweet position to be in.


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## sags (May 15, 2010)

I think that is the argument by those who say that high income earners enjoy tax advantages because they have the funds to "max out" their RRSP's and TFSAs.

Increasing the limits as the Harper government did for TFSAs benefits only those with the ability to fund their TFSAs at the higher limits.

Wealthy families can max out the TFSAs of all family members, earn tax free income on the investments and then cash out the TFSA tax free.

I don't know what the statistics are but I would guess very few people max out their own TFSA annually, let alone the TFSA of other family members as well.

Avoiding paying taxes is a lot easier for people with money than people who live pay to pay and their tax is collected at the source of employment.

Many people have nothing left every month to invest or to deploy to lower their taxes. There is a savings problem because there is an income problem.

Governments don't seem able to figure out a solution to the income problem, and as a result consumer debt keeps piling up every year.

At some point in the future, people won't be able to acquire more debt because their homes (key collateral) have stopped going up in value or they can't service more debt.


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## off.by.10 (Mar 16, 2014)

sags said:


> I don't know what the statistics are but I would guess very few people max out their own TFSA annually, let alone the TFSA of other family members as well.


That's true (few being about 10% apparently), but it's more a knowledge and spending problem than it is an income problem. People would rather have the latest cell phone, take a family vacation south or across the ocean, drive a big SUV, live in a big house, etc. It's easy to come up with something else to spend the money on.


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## hfp75 (Mar 15, 2018)

Just a Guy said:


> As long as it’s not sags paying he’s got no problem where the money comes from


HAHAHA


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## gardner (Feb 13, 2014)

sags said:


> I think that is the argument by those who say that high income earners enjoy tax advantages because they have the funds to "max out" their RRSP's and TFSAs.


I think it might be more correct to say that people with high wealth have more ways to arrange to reduce their taxable income while maximizing wealth accumulation and utilization.

All the figures we can see from Stats Can are derived from income tax data and are basically only going to show us people who have conventional taxable incomes. Folks with large WEALTH and comparatively small incomes won't show up. Stats Can doesn't have convenient stats for the offshore family trusts, private businesses and so forth where likely a lot of the real money is sitting. There's a reason that piercing the corporate veil is amongst the most often litigated issues in business law.


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## sags (May 15, 2010)

Well said.......


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## james4beach (Nov 15, 2012)

gardner said:


> Stats Can doesn't have convenient stats for the offshore family trusts, private businesses and so forth where likely a lot of the real money is sitting. There's a reason that piercing the corporate veil is amongst the most often litigated issues in business law.


As I posted in another thread, I prefer the RRSP & TFSA mechanisms on the fairness angle because at least they are accessible to all Canadians and the same maximums apply to everyone. As gardner points out, they are also transparent. Yes of course someone with more money gets to invest more but at least they do it on the same framework (and within same maximums) as everyone else.

To me, this looks more fair. Even if they raised the RRSP & TFSA max to above what I could use personally, I would still consider that pretty fair. When you can say to the public "everyone gets to put up to a maximum $27,000 into their RRSP" that seems more equitable, to me.

I have a bigger problem with the various special structures enjoyed by the very rich like those corporate structures when they are used as investment vehicles. For example, the CCPC which is meant to grow a small business. Very nice for running a small business with active operations, but it's not intended to be a shelter for huge amount of investments... yet that's how many people use it.

There is also about $200 billion of investments in Canada which are using another loophole, the corporate class mutual funds, to avoid paying the taxes they should be paying. Horizons ETFs use this method. This is another example of something that is unfair, a form of tax evasion IMO. Horizons's defense on this point is: "well everyone does it"

That's a huge amount of money using that loophole. For context, the entire iShares Canada ETF offering contains $60 billion.

You will notice that rich people think they deserve to have these kinds of freebies. An example is this rich whiner, the Loonie Doctor, who moans when tax loopholes are closed, and complains that the government is going to come after his millions of $. But of course the government is not coming after his millions... the government (the public) is asking the rich whiner to at least pay the taxes he should be paying on the income it generates.


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## kcowan (Jul 1, 2010)

james4beach said:


> the CCPC which is meant to grow a small business. Very nice for running a small business with active operations, but it's not intended to be a shelter for huge amount of investments... yet that's how many people use it.


It id s case of the tiny business growing into a medium sized business. It is not a vehicle created for the purpose. And such decisions forego RRSP contributions as well. So it is not as one-sided as you portray.


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## nobleea (Oct 11, 2013)

This tidbit of information makes it rounds in social media and such, lacking any critical thinking.

I have no doubt that the number is correct. The oft repeated conclusion is that most people are free loaders and only a small portion of people are carrying the load.

We have an aging population. The boomers have started their retirements, and this will continue. Most seniors do not pay a lot in income tax. So if that demographic group (low/non tax paying seniors) is growing, which it is, then for sure the percent of people who pay most of the taxes is going to get smaller still.
Students pay almost no taxes, but I don't think that's a demographic that's growing.
I think the wage growth at the upper end of the pay scale has done well, whereas the wage growth at the bottom end has not. So proportionately, yes more taxes would be collected from the upper end.
Has the number of people on welfare drastically increased? I don't think so, but if anyone has any data, please share.


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## gardner (Feb 13, 2014)

james4beach said:


> a form of tax evasion IMO


Tax avoidance, sure. But never tax evasion -- that would be illegal.


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## james4beach (Nov 15, 2012)

gardner said:


> Tax avoidance, sure. But never tax evasion -- that would be illegal.


Ok right, these methods are legal. But anything that is avoidance (tricky loophole) is in danger of being corrected by government.


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## Eclectic12 (Oct 20, 2010)

off.by.10 said:


> sags said:
> 
> 
> > ... I don't know what the statistics are but I would guess very few people max out their own TFSA annually, let alone the TFSA of other family members as well.
> ...


It is true that for 2017 the reported 1.43 million reported to maxed their TFSA divided by the number of TFSA holders of 14.1 million TFSA holders does indeed work out to about ten percent.

There seems to be lots of people who haven't opened a TFSA, never mind made use of it. The 2017 population estimate says that ages twenty and up works out to about 28.55 million. I'd be happier if the category wasn't "ages fifteen to nineteen" which includes more TFSA eligible people but I'm not going to sweat it. :biggrin:


Cheers


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## ian (Jun 18, 2016)

Tax avoidance certainly does not imply ‘tricky’

It simply means taking advantage of all legal ways to reduce or eliminate taxable income. RSPs, RESPs, TFSAs, spousal loans, flow through shares, incoming splitting, and other legal tax shelters as prescribed by the Income Tax Act. We did a motion picture tax shelter years ago. The only thing that saved our bacon that by the time income had to be added back to our taxable income we had moved to Alberta. The incremental tax rate was ten percent less than British Columbia.

It is actually shocking to me that more people do not take advantage of TFSAs for example.


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## hfp75 (Mar 15, 2018)

ian said:


> It is actually shocking to me that more people do not take advantage of TFSAs for example.


Well, as a dual citizen (USA/Canada) I cannot have a TFSA...... would have one if I could.

So, I am sure more people would use the tfsa if they could, how many duals are in Canada ? Right there alone is a ton of tfsa room sitting dormant. I am sure there are other reasons people don’t use their tfsa but would like to.

I even have some avail us tax credits, so I could technically use it, and try to be marginally ahead. Since I cannot buy mutual funds or ETF’s outside a registered acct (rrsp/pension) it’s just to much of a hassle right now to invest anytime into dealing with all the technical rules....


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## Synergy (Mar 18, 2013)

Gator13 said:


> To clarify. Income over $220k is taxed at 53.53%.


That's the marginal tax rate. For total taxes paid you'd want to take a look at the average tax rate. As an example, $250,000 income in Ontario has a 39.80% average tax rate. https://simpletax.ca/calculator

With that said, it should be no surprise that the top earners pay the majority of income tax. RRSP's, TFSA's, etc. don't really take a dent out of the taxes paid by true high income earners. Do the math...


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## Synergy (Mar 18, 2013)

james4beach said:


> As I posted in another thread, I prefer the RRSP & TFSA mechanisms on the fairness angle because at least they are accessible to all Canadians and the same maximums apply to everyone. As gardner points out, they are also transparent. Yes of course someone with more money gets to invest more but at least they do it on the same framework (and within same maximums) as everyone else.


A lot of people don't make enough money to take advantage of an RRSP. How is this fair? It's like saying that anyone could start their own business, take advantage of the existing corporate tax structure, grow their business, build massive wealth, etc. Is it really "fair" to say that everyone has equal opportunity?


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## ian (Jun 18, 2016)

Retirees in high income brackets get their OAS clawed back. Is that fair in the same sense that some can contribute more to an RSPs because of their income. Low wages will get GIS....is that fair? Low wage earners who saved for retirement via an RSP may not get any GIS. Is that fair?

I really do not understand the convoluted logic that high income earners should pay more tax, at higher rates, but not have access to the same income sheltering programs. RSP contributions are subject to a cap but basically there is a scale up to that cap. Why should high earners be penalized over and above the cap. There will always be disparities between the amounts that a person can contribute. Just as there are disparities in taxable income and assessed tax.


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## like_to_retire (Oct 9, 2016)

ian said:


> I really do not understand the convoluted logic that high income earners should pay more tax, at higher rates, but not have access to the same income sheltering programs.


And now the Liberals made changes to the tax system that extends the unfairness to the upper income earners. They modified the Basic Personal Exemption (BPA) to be less fair to higher income individuals. This is a first as BPA has always applied to all individuals equally. 
They increased the BPA for the lower and middle class and excluded the upper income workers from the program.

ltr


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## Eclectic12 (Oct 20, 2010)

hfp75 said:


> Well, as a dual citizen (USA/Canada) I cannot have a TFSA...... would have one if I could ...


My understanding is that some high income dual citizens do have a TFSA or at least consider it. 
For lower income types, the hassle isn't worth it.




hfp75 said:


> So, I am sure more people would use the tfsa if they could, how many duals are in Canada ? Right there alone is a ton of tfsa room sitting dormant.


Doubtful ... I've seen estimates of 1 million to 2 million American citizens in Canada, where self-reporting is at something like 600 K.

Using the 2 million number, it looks like there's another 12 million plus that don't have the issue, are eligible and have not opened a TFSA




hfp75 said:


> I am sure there are other reasons people don’t use their tfsa but would like to ...


A common one I've read and have run into is that people assume a deposit account that pays little interest is all that a TFSA can be. Another one common to financial boards is that the annual limit is too small to bother sheltering stocks or other investments that have a high growth rate.

Probably the most widespread is that people spend then look for what's left instead of building things like a TFSA contribution into their plan.


Cheers


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## ian (Jun 18, 2016)

My spouse does not get OAS. It would all be clawed back. We don’t qualify for programs like GIS. Do we think this is fair. Of course we do because we do not view these programs as entitlements. It is part of Canada’s social benefits.



On the other hand, don’t exclude us or artificially limit our participation in income deferral programs simply because of our income level.

The gist of what we continually read is don’t tax me, don’t limit my deductions, and increase my tax credits. But you are welcome to do the opposite to all the other folks out there. In the long run that just does not work.


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## Nononymous (Jun 10, 2015)

Eclectic12 said:


> My understanding is that some high income dual citizens do have a TFSA or at least consider it.
> For lower income types, the hassle isn't worth it.


Specifically, dual citizens who are compliant with US taxes may choose not to use TFSAs because the income earned is taxable by the US and/or the paperwork requirements are daunting or risky, particularly if there are mutual funds involved. (See the minor scandal this past year with rampant $10k fines for "late" 3520-A forms.) However, nothing prevents a US citizen from opening a TFSA. It's up to them if, when and how they report it to the IRS.



> Doubtful ... I've seen estimates of 1 million to 2 million American citizens in Canada, where self-reporting is at something like 600 K.


The current estimate for US citizens in Canada, both dual citizens and permanent resident expats, is around 1 million. It could be higher of course. What we know about US tax compliance rates is that they are quite low, under 10 percent. The last IRS data available (either 2011 or 2015, I don't recall) claims only 55k returns filed from Canada. That number will have gone up due to the FATCA law and ensuing publicity, but it certainly has not increased tenfold.

PS on edit: All registered accounts - RRSP, RESP, TFSA etc. - are not included in FATCA reporting, for those who've identified themselves to their banks as US persons. So the only way the IRS learns of their existence is by taxpayer declaration. Probably better not to file anything at all rather than a partial or incomplete US return, but that is one way US citizens who are otherwise in compliance can take advantage of TFSA accounts.


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## roman71 (Jan 11, 2020)

Synergy said:


> A lot of people don't make enough money to take advantage of an RRSP. How is this fair? ...... Is it really "fair" to say that everyone has equal opportunity?


 It is fair.... when I went to school other vent to bars.....when somebody risked his money and time for a business, I was comfortable to have my 8-5 job... big incomes don't come without sacrifice, stress, long hours...


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## Synergy (Mar 18, 2013)

roman71 said:


> It is fair.... when I went to school other vent to bars.....when somebody risked money and time for a business, I was comfortable to have my 8-5 job... big incomes don't come without sacrifice, stress, long hours...


Is it fair that some breeze through school with little effort while other struggle just to get by? Some of the hardest working people make the least amount of money. Life is not really all that fair in more ways then one. Also, fairness is somewhat in the eye of the beholder. What is fair to one is unfair to another.

We all may have equal opportunity, but not equal ability. Hard work is not always enough.

My post however was a little tongue and cheek. And now I seem to be playing devils advocate with myself.


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