Tax Freedom Day is coming soon! That’s the day you start working for yourself instead of government. In fact, in Canada, we spend a lot more time working for government than our neighbors to the south do.
This year the US, Tax Freedom Day fell on April 16*, 2019; 105 days into the year. Last year, it was June 10 in Canada, as calculated by The Fraser Institute. This means we spend 45% of our time working just to pay taxes, compared to 29% in the US .
It underscores how important tax-efficient income planning really is, and why working with a tax specialist throughout the year can pay off handsomely.
Financial and tax professionals play a big role in helping their clients reach their personal Tax Freedom Day sooner. According to the CRA’s most recent tax filing statistics, the percentage of EFILE returns has increased from 55% for 2014, to 57.9% for 2018, indicating that the percentage of Canadians utilizing professional services is on the rise.
Returns received from February 19, 2019 to May 20, 2019
|Filing Method||Number of Returns||Percentage of Total|
|File My Return (FMR)||65,478||0.2%|
|Total - Electronic||24,142,178||89.2%|
|Total - All Methods||27,064,877||100%|
Because the largest revenue line item for government is personal income taxes, it makes sense that your tax freedom should begin by filing a tax return every year and doing so on time and to your best advantage.
Tax pros make it their business to stay on top of new tax changes and how they affect your return. A good example of this was the new Climate Action Incentive payments available in the four provinces the federal carbon tax was imposed upon. It turns out that an encouraging number of households claimed the available credit. In fact, of the estimated 7.9 million eligible households who filed taxes by May 21, more than 7.7 million claimed the Climate Action Incentive on their income tax return. This works out to 97%.
A tax specialist can also work with you to recover errors or omissions on prior filed returns. That’s an important way to recover overpaid taxes for up to 10 years back. This professional can also help you through a CRA audit, a frightening proposition for most tax filers.
Canadians who make it a priority to exercise their rights to pay only the correct amount of tax and no more, win on another front: their larger take-home pay pays off more debt and contributes to long term savings for their future financial freedom.
What matters is what you keep. If you think it’s time to see a professional about the amount of taxes you are paying, include a tax specialist as you find and form your financial advisory team of the future. Ask your top three most burning tax questions; then sit back and listen carefully. Is this person a good educator making complicated provisions understandable to you? Will this pro advocate on your behalf to CRA? And will he or she work with investment professionals to steward your family’s wealth into the future.
Those hallmarks of service are what can bring valued advice to your tax filing equation. Deep, broad, up-to-date knowledge is a must.
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