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Wealth management implications of Tax Freedom Day
2/18/2019 5:55:58 PM
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Tax and investment know-how from a leading Canadian financial education institute.

By Knowledge Bureau  | Monday, June 11, 2018



By Evelyn Jacks

Every year there is a milestone date when Canadians can shift their focus from paying taxes to using their income to secure their financial future. Several countries track “Tax Freedom Day” annually, and Canada’s falls this year on June 10. That is weeks later than in other countries, which can have negative repercussions to wealth management and retirement planning.

In 2017, Canada’s Tax Freedom Day was June 9, two days later than in 2016. Compared with the U.S. date of April 19 and Australia’s April 13, it turns out we work the equivalent of almost two months longer to pay all our taxes – federal, provincial, and municipal – and that’s not likely to change anytime soon.

According to the Washington, D.C.-based Tax Foundation, a think tank that tracks Tax Freedom Day down south, Americans will pay $3.4 trillion in federal taxes and $1.8 trillion in state and local taxes, for a total bill of $5.2 trillion, or 30% of the nation’s income in 2018. But the American Tax Freedom Day has come three days earlier than in past years thanks to recent tax reforms.

Meanwhile, back home in Canada, the Fraser Institute, which publishes Canada’s Tax Freedom Day, has estimated that all households will pay over $2,000 more in taxes each year going forward, starting in 2019. It found, “…when looking at all 2.988 million families with children in Canada (excluding those in Quebec), 2.756 million, or 92.2%, will pay higher taxes - $2,218 more, on average, each year. Indeed, once the increase in CPP payroll taxes is fully implemented, nearly all Canadian families – regardless of where they stand in the income distribution – will pay higher taxes.”

The federal government appears to concur. Its largest revenue line item is personal taxes, but due to a labor force slowdown that will result from large numbers of boomers retiring over the next decade, it will be difficult to maintain the current tax base.

The Finance Department has noted in a long-term forecast, issued on December 22, 2017, that “no single initiative can guarantee sustainable growth in our prosperity…(but) in particular, improving the economic participation of groups traditionally under-represented in the labour market, including women, Indigenous peoples, older workers, newcomers, and persons with disabilities, is key to Canada’s long-term fiscal and economic performance.”

This year, Tax Freedom Day once again fell well into the first week of June, but with a declining population and all levels of government carrying increasing debt into a significant demographic reduction, Tax Freedom Day could be pushed out even further into the summer as time goes by.

Sadly, for many Canadian households, that means less money available for retirement savings. For these reasons, it is important to find ways to invest sooner rather than later. With an eagle-eye to tax efficiency, money can be freed up for saving and investing, and investment performance can also be propelled forward. Be sure to see a qualified financial advisor, such as a Real Wealth Manager, for help in developing and securing a well-rounded family wealth management plan.

Also, Canadians looking to expand their financial literacy and make tax-efficient decisions at all life stages should pick up a copy of my recent book Essential Tax Facts.

© 2018 The Knowledge Bureau, Inc. All rights reserved. Reprinted with permission.

Evelyn Jacks is the founder and President of Knowledge Bureau, which brings continuing financial education in the multiple areas of specialization to advisors and their clients. She is the author of 52 books on tax and wealth planning. This article originally appeared in the Knowledge Bureau Report. Follow Evelyn Jacks on Twitter @EvelynJacks. Visit her blog at

Evelyn Jacks’ latest book, NEW ESSENTIAL TAX FACTS: How to Make the Right Tax Moves and Be Audit-Proof, Too is available now.

Notes and Disclaimer

The foregoing is for general information purposes only and is the opinion of the writer. No guarantee of investment performance is made or implied. It is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting or tax advice.

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