Toronto, ON – According to the Fraser Institute, “the average Canadian family with two or more income earners will earn $94,259 and pay 44.2 per cent of their income or $41,627 in taxes on wages and salaries, interest and dividends, as well as pension payments and other transfers to government.”
This year, Tax Freedom Day was June 11. It means every penny you earned up to that day was for the government, and going forward, if you are the average Canadian family, the remaining $52,632 now belongs to you.
“There has to be a way to make Tax Freedom Day occur earlier next year,” says Jeffrey Schwartz, executive director of Consolidated Credit Counseling Services of Canada, Inc. “Income taxes, pension payments and other transfers to the government are eating up almost half of our annual income. By reducing personal debt Canadians will be able to keep more money in their pockets.”
Harvey Taraday, a chartered accountant at TCH Partners LLP, offers advice on how to make Tax Freedom Day happen earlier in 2013.
“If taxpayers receive more of their investment income by way of dividends, versus interest income, their overall tax rate will be less as the tax rates on dividends are less than on interest income,” said Taraday. “In addition, if taxpayers are making regular monthly RRSP contributions, they can ask their employer to reduce their monthly tax deductions so they will have more net cash during the year rather than waiting for a large refund at the end of the year when they file their taxes.”
Taraday also notes taxpayers should keep track of their tax deductable expenses, such as medical, donations, memberships and professional dues, and safety deposit box fees, for example.
Although Canadians are still averaging about $1.52 of debt for every dollar they earn, somehow we need to safeguard our finances for our future and reduce our debt. Start by making a formalized budget. A budget allows you to:
- list how much you are spending
- determine if you are spending it in the right places
- make informed decisions about your finances
- focus on paying off your debt
- save for your future
Consolidated Credit offers its free booklet on their website: Taxes: Save Money, Solve Problems.