Used in taxation systems, a tax bracket is a cut-off point that progress or regress depending upon income. For example in the US, the brackets are divided into increments of $10,000 US Dollar (USD). These brackets do not include other taxes such as disability insurance or social security payments. You often pay percentages that are different depending on the income you make and the dollar amounts of your income are taxed by bracket. To understand this better, imagine that a person who is making $1-10,000 USD is taxed 10% of their income. If your income is even a dollar more that the first $10,000 USD, you would be taxed at a higher rate. Each person also has allowable deductions. The single person making $10,000 USD wouldn’t pay $1000 USD in taxes because he would have a standard deduction of $5,350 USD and a personal exemption of $3,400 USD. The money made in excess of the deductions would be the amount that is taxable.
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Income tax is levied by the Canadian government in both the federal and provincial levels. April 30 of the current year is the deadline for filing of taxes the previous year. Income tax rates are different for every income and location in Canada; 19% is the lowest combined rate and 46.4% is the highest rate. Once a year income taxes must be paid by any person with a taxable income in Canada. Tax deductions are instances that allow a portion of a portion of a person’s income to avoid paying taxes. A person must pay income tax on all of his income of the year if they do not qualify for any tax deductions. Non-Canadians who are employed in Canada, conducting business in Canada or selling a taxable Canadian property must pay Canadian income tax.
Superannuation is the Australian equivalent of a compulsory pension scheme. This scheme has been praised throughout the world, but a number of critics have also spoken out to suggest that it is an unnatural way of propping up the investment markets in the country (most superannuation is linked to the share market and other similar assets). I am not familiar enough with the scheme to comment directly on these matters, but I would like to take a look at the tax implications of superannuation. As you may know, I am completely against all forms of government taxation and this industry is certainly subject to some complex tax laws.
Reduced tax rate
One of the things that I appreciate about superannuation is that it can be used as a way to minimize the amount of tax that an individual will pay. For example, if you are being paid in the top tax bracket in Australia then a considerable amount is going straight to the government via various taxes. However, if this money is funneled into a superannuation account then the low tax rate of just 15% is applied. Of course, I consider this to still be an excessive amount of tax, but if you have to pay tax then this is one of the best ways to reduce the total tax paid each year. The only problem with this method is the government now limits the amount of money that can be funneled into superannuation.
Tax avoidance and reductions
Australia also has some great ways to avoid excessive tax bills, negative gearing is one great example. Superannuation can also be used as a way to avoid various taxes, especially if individuals choose to manage their own superannuation fund. A self managed super fund (smsf) can be used to purchase a property and all income on this is taxed at a much lower rate than a standard investment property. A smsf can also borrow money to invest for further tax savings (interest payments may also be deductible). These just scratch the surface and there are many more smsf investment strategies that can be employed to reduce tax.
Superannuation cannot be used to completely avoid tax but, since governments are not about to scrap all taxes, it can be a great way to reduce individual tax obligations. Ideally, all taxation would be removed and people would be able to funnel as much money as they like into their pension funds. This would encourage people to save for retirement and allow them to avoid tax as well. There are some worrying signs that the Australian government will be increasing taxes on superannuation – which would be the wrong step to take! In a related thought I have to congratulate the Australian government for increasing the tax free threshold, now Australians can earn more than $18,000 before they need to pay tax. Of course, in my opinion there should be no taxes, but it is a good start.
Superannuation is a great way to reduce taxes and save for retirement at the same time. If only the Australian government had the foresight to remove all taxes from the scheme.
Our biggest gripe with taxes is that they truly serve no purpose. I assume most people think take from the rich and give to the poor but taxes aren’t discriminatory. That’s right, taxes take from all in one way or another. One of the worst places you can tax is education. Why in the world would we want to tax someone who is trying to better themselves? The impact on society can’t be under estimated. Here we will outline education taxes and why they make no sense.
Taxes on education can come in many forms. For instance the fees that you part as part of a student loan for education. They already charge interest on the money you borrow so what is the purpose of the fees? By the way, as we always say at stopthetvtax.ca, “fee” is always just a nice way of saying “tax.” Usually student loan providers will charge a process fee of some kind, paperwork processing fee, and other unnecessary taxes.
There are also fees attached to the classes themselves. We have a friend of the site here in Canada who needed to get his forklift license. He used a website called forkliftcertificationnow to get his forklift certification. Well, at least he tried to get his credential. He ended up backing out. Why? Because when he tried to use that website to get his certification, they not only charged a fee, but charged a tax that had to be paid to the country of Canada. Does that make any sense at all? Of course not! The man is required to get his forklift certification but you are going to charge him a tax to do so? Absurd! How does this help society at all? How is this justified? It baffles us who believe that taxes are the evil of our society. Here, you can see just ONE example of how school boards across the country are constantly considering, implementing, or adding new taxes. It has to stop somewhere!
By adding taxes to education it actually makes some would be students go other routes. Most people would assume that education is the key to a better future and so would we. In fact, college graduates would go on to make more money and pay more in income taxes (which we don’t agree with either but hey). So, this proves that adding taxes to education is counter productive. You are stopping would be students from educating themselves and going on to make more money, and thereby paying more in taxes. This is a great example of how backwards our tax system is. That is true for both the United States and Canada as well.
To summarize we feel that adding a tax of any kind onto anything related to education is just plain wrong. Allow people the right to educate themselves without putting financial barriers in place. This is the true sign of an advanced society when we can offer education without massive taxes on those trying to obtain an education.
In many countries there is an us against them mentality. That “us” is the poor people and the “them” is usually the rich people. Class warfare at its finest. When issues of taxation come up many of the blue collar workers point to a luxury tax as a good thing. What is a luxury tax? That is defined as a tax on a good or service that isn’t necessary. The fallacy in this type of thinking is that what items, besides food, is really necessary? By the way, food is a non-taxable item in most countries.
Let’s examine the affect of a luxury tax. First, and this is where most people point to a potential benefit, is that it will raise money for programs like education and welfare. While that is true, the opposite effect must also be taken into account. What I mean is, that don’t you think that sometimes a person buying a luxury item will forgo that purchase due to the high tax? We think so! What impact will this have? Well, what about the people selling the luxury item? That is one less sale for them! What about the jobs of the people who actually built or produced that item? That’s less work for them! You see, any time there is a tax it is a direct downside for any business.
I have a personal experience with this. My brother in law, who by no means is “rich”, went to purchase a boat he was very surprised by the process. He had found his dream boat on this used boat website http://sacsmarine.com/. When he made an offer on the boat he didn’t take into account the luxury tax that would be imposed by the state he lived in. That tax increased the purchase price of his boat by seven percent. You know what he did? He cancelled the sale. He simply didn’t have the money to purchase the boat once the luxury tax was factored in. Now, how counter productive was that to society? Everyone lost! The salesman, the manufacturer, that website who would have got a commission, everyone. I often joke with him that it was fine he lost the boat because he would have just needed to pay a tax to launch it at the harbor!
The point to all this is that we are definitely against any sort of luxury tax. While on the surface it might seem to make sense it simply doesn’t. It really affects everyone negatively and for that reason should be abolished. As with most things of this nature, we urge you to write your political representatives and speak out against this and other taxes. It is only through our grass roots leadership that we can affect change. They will listen. They need to! Your vote is what put them in office. Keep them accountable for their actions and let’s not allow them to steal our money via a “legal” tax system. Even if you don’t believe we should abolish the income tax (like I do), hopefully this article will at least change your mind on the luxury tax.
Choosing an affordable mortgage can be a difficult task for any homebuyer. Whether you are a first-time homeowner or not, it is likely a rare chance that you keep up with mortgage trends on a regular basis. Finding the right mortgage for your specific situation is an important decision, and one that can cost you thousands of dollars if not researched properly. For calculating mortgage payments see http://www.rateline.ca/
If you’re looking at mortgages for properties in Toronto, or anywhere else in Ontario, here are five tips that your wallet doesn’t want you ignoring:
1. Scout Around For The Best Rates
The biggest mistake that most home buyers commonly make is that they don’t end up with the best rate available to them. Don’t just meet with your bank’s loan officer – talk with mortgage brokers, and a few of them, to see the widest range of mortgages that are on the market.
2. Look At All Of The Costs
It is important to keep in mind that interest rates aren’t everything when comparing mortgages. Different loan packages have different fees. Be sure that the loan officer or mortgage broker you’re meeting with carefully breaks down each of the fees for you. Compare these lists side by side to see how the loans will affect your closing table requirements or amount of long-term debt.
3. Consider Your Long-Term Plans
If you’re planning on living in your new home for a few years, betting on its value to increase and provide you with equity when you sell, then choosing a loan with a standard 25-year amortization schedule may be the right answer for keeping monthly payments low. On the other hand, if you have no intentions on moving in the near future, choosing a mortgage with a shorter <a href=”http://www.mortgagecalculatorx.ca”>amortization period</a>. such as 15 years may be your best choice. This will increase your payments, but will save you money in the long run though less interest accumulating and the paying more principal at current low interest rates.
4. Watch Out For Prepayment Penalties
Do you plan on refinancing your mortgage within the next few years? Given today’s low interest rates, this is most commonly the situation with homebuyers who are still working to improve their credit. By spending a year or two bringing your score up and then refinancing, locking in a lower rate can mean significant savings. Watch out for closed or partially closed loans then – these mortgage types impose fees for early prepayment, and in some cases do not allow it at all.
5. Figure Out What’s Happening With Interest Rates
Even if you don’t follow economic news at all, now is a good time to catch up on the current trends. Knowing whether interest rates are on the rise, or sloping downward, can make a big impact on the type of loan you should choose. Presently, interest rates are at all-time lows, and are likely to rise in the future. For these, a fixed-rate would be best. If rates were expected to go down, a variable-rate mortgage would be a wise choice.
By taking advantage of these five tips, any homebuyer can potentially save thousands by selecting the perfect mortgage. Everyone’s financial situation is different, and there is no one best mortgage for all cases – finding the best deal will require some research on your part based on your own needs. With a little bit of due diligence though, what could likely have been an extra up-front fee or additional monthly interest payment can transform into a remodeled bathroom or just a greater disposable income.
As the old saying goes, cash flow certainly is king. However, when it comes to ruling the small business kingdom, the individuals from within government agencies assessing your business finance and taxation hold the power.
The bottom line is that if you do not manage your cash-flow and keep accurate financial records, you are heading into trouble. Let’s get you on the right path with these business finance basics.
Maintain Your Records
Having a good accounting system and working with a reputable, experienced accountant will both help you enforce accountability. Outsourcing bookkeeping is one of the ways in which you can improve the quality of your financial records.
Be Careful about Corporate Expenditure
Many business owners have their habits about corporate expenditure formed at the time when they were employed by somebody else. Spending the money that a boss gives you for business purposes is one thing, spending your own money is completely different. You will have to do some readjustments and think about the items and the processes you are investing money into.
How Much Do You Pay Yourself?
Every business experiences tough periods. Eventually, your company will suffer from the loss of a major client or from some unexpected expenditure that will disrupt the financial balance.
Rethink the amount of money you are paying yourself during such moments. Sometimes, keeping money inside the business and reinvesting it is going to be much better for your future than receiving the monthly payment that you are used to.
Avoid Carrying Cash Around
The money that you make should be immediately deposited in your bank account. This way, the funds will be working for you and you will also be freed from the temptation of spending. Carrying corporate cash around can easily result in irrational purchases. Receiving electronic payments will easily deprive you of the opportunity to spend the money.
Cash flow management takes time to master but it is necessary for the longevity of your business idea. A good accountant and accurate bookkeeping are probably the most important step on the road to financial success.
http://www.ustr.gov/trade-topics/small-business (US readers)
http://www.cra-arc.gc.ca/E/pub/tg/rc4070/rc4070-11e.pdf (Canadian readers)
The stock market can feel a lot like legalized gambling for new investors. If the price of your stock goes up, you win and if it drops, you lose. The stock market is the reason why so many people got rich during the dot-com boom and also why so many people lost their saving and retirement in the recent recession.
Many new investors think of the stock market as a short-term investment that brings either huge monetary gains or devastating losses. The stock market is as reliable a form of investment as a game of roulette if you think that way. The more you understand how the stock market investment works, the smarter you will be able to manage your money.
It can be intimidating to be involved in the stock market, but being more informed can help ease your fears. Starting with some basic definitions is a good idea.
A share of stock is the ownership of a part of the company. You’re entitled to a small fraction of the assets and earnings of that company when you purchase a share of stock. Assets are everything the company owns such as buildings, equipment, trademarks. Earnings are income of the company from selling its services or products.
A company shares its assets and earnings with the general public because it needs additional capitalization. There are only two ways for a company to raise money for the start-up costs or expansion of the business. They can either borrow money also known as debt financing or by sell stock or equity financing.
The negative side of borrowing money is that the company will need to pay back it back with interest. However, if they sell stock the company gets money with very little strings attached. There is no requirement to pay the money back there is no interest to pay. The risk of doing business is distributed among a big group of stockholders. The founders don’t lose all of their money if they fail. They lose several chunks of other people’s money.
The stock market is like an auction. The share price may move around wildly as millions of investors throughout the world make decisions about how much they are willing to pay, but the ultimate value of your shares will come from the profit the company generates.
It can even show how solid an economy is. The markets drop when the economy is in trouble, because people tend to stop buying stocks when money is tight and they focus on necessities instead. Bullish markets on the other hand indicate that individuals can afford to invest and make purchases again.