Posted by Dave on August 16, 2011
This is a guest post by Dave, who is also looking to retire no later than 45, but unlike Tim has no kids and doesn’t want any. Dave is from Ontario and is working towards his CGA certification.
Over the past few years, I would have to say that my fiscal and political views have definitely taken on a more libertarian flavour. I see waste and inefficiency in government that just makes me angry. We have people in office that don’t seem to understand (in my opinion) that running deficit budgets for years at a time is probably not the best way to do things, especially since they leave the repayment of the accumulated debt to the next generation or next party to get into office who starts the whole thing over again…..
But I digress (please read the disclaimer on the bottom far right sidebar, my views probably don’t reflect Tim’s at all, who owns the blog) even though I don’t agree with how most of the revenue is brought in, I will not (purposefully, I may by accident) cheat on my taxes. In the several taxation courses I have taken on-route to a CGA designation, I have realized that it really just isn’t worth it.
There are many, many ways that an individual can cheat on their taxes – they can decrease their level of income, Increase the amount of expenses claimed, a person can hold onto money that should have been remitted as sales tax, or claim credits that they shouldn’t have. An interesting site (if you’re into that kind of thing) to read about tax convictions on Canada Revenue Agency’s convictions page,which gives details of larger convictions and the reasons why they occurred.
I have come to realize that if I wish to live in this country (which I do), I need follow the tax laws as prescribed. It’s not something I enjoy doing by any means, but rather then grumble about it, or try to cheat to get around paying them, I attempt to pay what I’m supposed to and keep good enough records that if I’m questioned on anything I would be able to explain what I did. I never want to be in a situation where I have the CRA auditing me over my past 5 year’s worth of filings and knowing that I owe a substantial amount of money. From a personal finance perspective, this would probably clean out my savings and set back my plans significantly, which is far from ideal.
What I don’t think most people realize (especially those cheating on their taxes) is that they have a choice – if they don’t agree with how things are working here, they can go somewhere else with a more favourable system. Most people will not, and will continue to grumble and cheat and then wonder why they have to pay $84,547 in taxes and penalties (an example from the CRA site). I know of several people who actively sneer at the government and continuously cheat on their taxes – I just wouldn’t want to take the risk a few years down the road via a random audit. I figure if they don’t like the way things are running here, nobody is forcing these cheaters to stay in Canada.
What’s your stance on taxes? How do you try to minimize the amount paid? Would you consider moving due to your country’s taxes?
Posted by Tim Stobbs on March 23, 2011
Typically I do a little coverage on the federal budget pointing out either the main things that will affect your bottom line or some of the little covered items. This year I’m taking a different stance since all three opposition parties have indicated that they are not supporting the budget. Thus this budget will never go into law as it current stands and we are just a debate and vote away from an election. Yet at the same time there is this interesting idea that this budget could also be the Conservative election platform. So what is a poor blogger to do?
Well that is going to be easy. Keep my nose out of it. I don’t have a clue what the other parties will be offering in an election platform, so there isn’t much point worrying about comparing something to nothing for now. Instead I will point out an important piece of advice…if you don’t like how things are going, go vote. If you don’t understand something, find out and then go vote. If you don’t like any of the options, pick your least offensive and go vote. Why?
Because in a democracy a vote is basically your only weapon of choice. It’s a one chance every four years once in awhile to voice what matters most to you. Do you favour tax cuts to corporations or social programs or debt reduction? Have your say and remember to vote. Now I will put my little soap box back in the corner of the room.
Posted by Tim Stobbs on February 25, 2011
I’ve started working on our 2010 taxes for both my wife and I and so far the preliminary estimate shows that we owe about $2000 (I’m still waiting for some tax forms to confirm the final numbers). Strangely enough I’m actually damn happy over that bit of news. Pardon? Happy?!? Did I hit my head or something?
Well actually the answer is a bit more simple that that. At the start of each year I do a quick estimate of what my wife and I should make and then adjust my TD1 forms at work if required. I generally aim for us to have a $0 tax refund when I do the estimate as such when we owe money that means we earned more together than we expected. So the $2000 owing between the two of us means we earned roughly $5000 more than my original estimate (a combination of investment and business income).
So the tax bill in my view point is a good thing since I haven’t been giving the government an interest free loan for the last calendar year. Instead I’ve been using that money for the last year to either invest or pay of some mortgage. The trick I’ve noticed is you have to keep the amount owing reasonable and be prepared to pay if you suspect that you are doing better than you initially guessed. The potential pitfall of this method is you don’t want to get your guess too far off from your income. Why? Well because if you are consistently owning more than $3000/year in taxes you will end up having to pay the government tax in installments (see here for information).
In the end I will now likely go back and adjust my TD1 forms for 2011 to have a little bit more tax taken off or another alternative would be to contribute more to an RRSP. Either method would work depending on what your goals are and what your free cash flow is. Also remember these are you last few days for an RRSP contribution so if you want to make a lump sum now for your 2010 taxes you still have time.