Let's all Celebrate Tax Freedom Day!
It is said that there are only two certainties in life - death and taxes. Since we have not yet discovered how to elude death, perhaps we can at least lessen the impact of taxes. Depending in which province you live, dates in May and June can be times to celebrate for Canadians. The Fraser Institute says June 6 is the day when the average Canadian family has worked enough to pay its total tax bill to all levels of government for 2009. That is assuming, of course, that they have forked over every last red cent earned since the start of the year.
The same study also calculated the dates provincially:
- Alberta - May 16
- New Brunswick - May 31
- Ontario - June 1
- Prince Edward Island - June 3
- Manitoba - June 7
- British Columbia - June 8
- Nova Scotia - June 11
- Quebec - June 12
- Newfoundland and Labrador - June 16
- Saskatchewan- June 20
The study bases its annual tax freedom day calculation on a slew of levies including income taxes, property taxes, sales taxes, profit taxes, health, social security and employment taxes, import duties, license fees, and taxes on the consumption of alcohol and tobacco, among others. It has calculated that the average Canadian family will earn $88,432 and pay a total of $37,699 in taxes this year.
What is shocking about this study is that the total tax bill paid by Canadians is much more than just income tax. A total of 43 percent of an average family's annual income is consumed by taxes when assessed by all levels of government.
So what should you be doing?
Tax reduction is like all forms of planning - it takes the discipline to sit down and look at your current situation and form a strategy. Some of the approaches could include:
- the use of tax-advantaged investment products
- income splitting
- contributions to a registered retirement savings plan
- tax-free savings accounts
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