Ontario Canada single under 65: Income $49,850 ... Income tax $00
Recently a friend, an accountant that I met about 7 years ago at an investment group that we both attend, spoke of some Canadians being able to earn, due to a recent change in calculation, over $40,000. annual income, tax free. Later he said that he thought that it is closer to $50,000.
A few years ago it was about $23,000. and by 2005 about $27,000., I think. That was up until 2005, but they changed the method of calculation, last year.
I've been thinking lately that I should calculate it out, and last evening, after doing some prelimiary calculation of my income tax, I did.
It comes out to $49,850.00, for a single taxpayer under 65, with one condition ... s/he won't be entirely tax free, for s/he'll need to pay the recently revived Ontario Health Tax of $600. (at that level of net income). With a few more dollars of income ... the Ontario Tax Reductioon will cease to apply, and that will make him/her liable for about $400.00 of Ontario tax (but there'd still be a substantial extra credit available in the Federal levy, should s/he be fortunate enough to live in a more lightly taxed province).
Impossible, you say?
It does sound quite strange, I agree.
There are, of course, some major provisos - no way are our governments going to allow a large number of Canadians to avoid tax like that!
Three conditions must be met:
1. The "taxpayer" must be reasonably wealthy, and
2. The "taxpayer" must have only one source of income, plus
3. The "taxpayer" can't work.
Well, if the "taxpayer" feels that s/he should work to justify his/her position in society, to pay his/her way in terms of paying for the space that s/he occupies on the planet, and it's reources that s/he uses, fine ...
... but don't take pay for that work.
Should s/he choose to take pay for their work, or should a senior like me choose to accept our pension(s) ...
... the benefits/credits will still apply ...
... we just won't be able to escape paying tax entirely.
If the "taxpayer" has a spouse with low income, or has (fairly high) medical bills, or makes charitable contributions (or political ones - and with a benefit like this shouldn't s/he?) the level of income that's tax free goes even higher.
When the "taxpayer" attains his/her 65th birthday, with certain residence requirements, everyone becomes eligible to receive the Old Age Security ...
... which will add somedthing over $5,000.00 to one's income, and interfere with the tax-free status, though if one's income is over $53,000. or so (and the type of income that I'm referring to carries a substantial artificaial escalator) that income begins to be clawed back, and when one reaches income in the mid to high $80,000.s, it is totally clawed back.
There is an extra benefit, though - at age 65, we become eligible for an extra tax credit relative to age, which decreases as our income increases (and this, too, is affected by the artificial escalator).
The person who has no income but dividends on stocks in Canadian companies qualify for the scenario that I've described.
Since not many quality stocks pay over 3% or so, that would take over $1.5 million invested to produce that level of income.
And since many stocks, especially those in growing companies, pay much less, and some quality stocks pay none at all ...
... one is quite likely looking at invested assets of somewhere in the neighbourhood of $4,000,000. - $5,000,000.
The governments do take care of their wealthy friends!
Have a happy week, everyone.
As I've often said, around here ...
... learning how money works - an interesting hobby ...
... that pays well!!
P.S. I know - I put a thread on here a while ago on this issue, but this figure is much higher than the one that I gave ...
... and I went through several pages looking for it, today, but the system is so darned slow, that it would have taken (allmost) forever to have located it!!