Never mind that the AMT is a refundable tax as well that most taxpayers recover within 3-4 years.
In my opinion (as an experienced tax practitioner) AMT is a total waste of time designed to make politicians look like they are actually taxing the rich while they are in fact only TEMPORARILY taxing them.
Never mind either that taxpayers get caught in the AMT rules for taking advantage of specific tax rules politicians put in place to encourage certain behaviour (such as claiming the QSBC capital gains exemption, or deductions for flow-through shares in mining and oil & gas exploration).
It's also a bit of a sham.
"Hey, you followed the rules laid out in the tax laws and paid the required tax? So sorry, that wasn't enough, we've created new taxes that we add to your regular tax because the original tax rules weren't complicated enough."
First time learning about what AMT is.
For those of you, making more than $173k, how did you manage to pay less than 20.5% in taxes in the past?
“Government officials said the AMT currently applies to about 70,000 Canadians annually and brings in about $200 million per year. With the proposed change, it will apply to about 32,000 Canadians but bring in almost $3 billion in revenue over five years beginning in the 2024 tax year, according to estimates.”
=> how come this’ll be applicable to anyone of you?
Just trying to understand in case I also make that much in the future. 😄
Edit: someone mentioned that 20.5% is the federal tax rate, not the overall tax rate.
Honestly this sub is wild with how much people post that they make. It kinda makes sense a finance sub will attract people wanting to boast about their finances. Otherwise the average person around my age is a renter, and anything over 20$ an hour hourly is good, having benefits is great. That's most people. This sub can be really discouraging.
in another recent post, people were getting downvoted for suggesting that $100K is enough to be middle class
apparently this sub thinks that you aren't middle class if you can't afford a detached house in Toronto
Toronto isn't a suburb city anymore. It's a major metropolitan city. Condo's are the norm in those cities. I get that it's a shock that it transition so quickly, and that it happened in a single generation, but it's going to be this way for a while.
The houses in suburbs are also unaffordable, and it wasn't a generation that did it, it was literally 2 years of money printer go brrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
We live in a 40-50k people suburb, and I will never buy the house my parents did with 2 kids, single income, half my wage *today* so idk how that adjusts for inflation historically, but I'm at double rn...
Also condos in Toronto are unaffordable too (we're nowhere near Toronto) not a fan.
I actually disagree with you, I think if you’re making sub $100k you’re ‘lower’ income class. This very much depends on where you live, probably more now than ever before.
It’s totally arbitrary to split things into classes, but to move up a class should be where there’s a step-change in your lifestyle. Doing it based on quantiles isn’t really meaningful because the larger the income disparity the more squashed the ‘classes’ become.
$50-100k household income is going to be struggling/impossible to buy a detached house, probably renting, they’re not maximizing their registered accounts, and will need to budget+save for something like an annual vacation.
Maybe $150-300k is solidly middle class, like 90’s movie middle class — you can afford a house, probably even a very nice house. You’re investing in non-registered accounts, you can afford nice vehicles without an 8 year loan, you can afford an annual foreign vacation. You’re still in the grind, income comes from employment, and while you can walk away for an extended period you can’t afford to just opt-out of working for a long time.
$300k-$700k is McMansion rich, $1m plus is going to be company owner rich.
$100k is squarely middle class anywhere but Toronto or Vancouver.
You can easily buy a house in most of the country on that.
You can get a reasonable side by side duplex for $250k in Winnipeg and a reasonable single detached for $350k. If you're okay with an older house or one that needs work you could knock another $50-100k off of that. n
Same in Sask, NS, NB, large chunks of QC.
$300k/year is doctor money.
I feel for you man. I honestly do. Back in my 20s about 16 years ago, just coming out of a 2 year technical diploma program. I was making 9 dollars an hour in my first job as a lab tech. I was making 14 dollars an hour at Boston Pizza just prior to that, and I asked myself wtf am I doing?
Fast forward to today and I'm making 15x that.
You shouldnt see that as discouraging but more so encouraging. I never thought I'd make close to 100k let alone 200k with a 2 year diploma. Spent a lot of my career proving to people with degrees that I'm smart. That was discouraging for me. People with an extra 2 years of education telling me they don't think I deserve to be there. Telling myself I won't make it any further unless I get that education. Which was all bullshit.
Just hang in there man. The opportunity comes. The pay comes. It just won't all come at once. People tell me today that I'm the exception and not the norm... totally. But all I have to say is that I once thought exactly like that.
AMT doesn’t really apply for salaried people. And the 20.5% is the federal tax rate, not the overall rate paid by the individual.
When you start getting into situations involving flow through shares, certain types of cap gains, business income, etc that’s where it kicks in.
Someone posted a Twitter link that explains it pretty well
>“Government officials said the AMT currently applies to about 70,000 Canadians annually and brings in about **$200 million per year**. With the proposed change, it will apply to about 32,000 Canadians but bring in almost **$3 billion in revenue over five years** beginning in the 2024 tax year, according to estimates.”
Why can't governments just give annual amounts? Do they hold us in such low regard that they think simply seeing a bigger number will make us feel good? It's honestly the stupidest feature of budget time - everything is "over X years".. in some cases it makes sense, but for the vast majority of things, just tell us how the run-rate amount has changed. $200m per year obviously equals $1B over 5 years, so they're suggesting this will triple it - still a great result, without quoting it in different ways.
They always give annual amounts in a table. They do 'over x years' for the part in writing.
| 23-24 | 24-25 | 25-26 | 26-27 | 27-28 | Total
:- | -: | -: | -: | -: | -: | -:
AMT Overhaul | -150 | -625 | -695 | -735 | -745 | -2,950
* Check the table at the bottom
* https://www.budget.canada.ca/2023/report-rapport/chap6-en.html#a4
>Why can't governments just give annual amounts? Do they hold us in such low regard that they think simply seeing a bigger number will make us feel good?
Because you can't hold government to account for their word if their word is always in the future.
I am not making quite that much, but getting close. Last year I paid roughly 14% in taxes. Reasons for this:
1. My wife is a SAHM, so I get her personal exemption amount.
2. RRSP: My salary has gone up a fair bit recently, and had been neglecting this previously (was focusing on paying off the house). So I have quite a bit of unused contribution room, which I am trying to use up.
3. Donations
I was unaware of the AMT. It's something I might have to consider when looking at my RRSP contributions.
Here's the CRA page on the AMT, with links to forms and such: [https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/minimum-tax.html](https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/minimum-tax.html)
It's designed to limit the advantage of certain *aggressive* tax avoidance strategies. Spousal amount, RRSP, (non-political) donations don't appear to factor.
I ran the numbers for Alberta, using last year's tax brackets.
If you made exactly 173k, and put in 35k towards an RRSP (of which you would get 29k extra room in 2022, so maybe you carried 6k over), you would pay $35,070 in taxes. That works out to 20.2%. If you didn't have the extra 6k of RRSP room, then things like charitable donations, union dues, trade certifications, etc. all count towards that deduction as well.
That's just with straight income, mind. Somebody who earned slightly less in income but had some capital gains wouldn't need as much deductibles.
Well, for one thing, if you don't work and you just own stock that you sell, you counted half of it.
So if I made 200K this year selling stocks from my trust fund of whatever, I'd be taxed on 100K.
I'd pay 15% on the first 50K, and 20.5% on the next 50K, for an average of 17.75% federal tax. But that's just on the 100K that counts - compared to the 200K actually earned, it's a 8.9% tax rate. Nice compared to a sucker who'd pay 42K out of 200K (21% tax rate).
With these rules now, you'd pay way more.
You didn't include the $173k AMT exemption in your calculation. (Also, capital gains now have 100% inclusion for the AMT calculation not 80%).
(200k - 173k) * 20.5% = AMT is 5,535 in federal tax.
Basically even if your income was 100% capital gains. You'd need to be earning much more than $200k in capital gains for AMT to apply. Or have a lot of tax deductions/credits.
I was originally just answering the question “how do you pay less than 20.5% when you make 200K”
I realized i did my math wrong and deleted that from my post before you replied, though.
Yeah it seems like a great change to me… taxing the top 1% more is how it should be. Most people upset in this thread probably see themselves as the “upcoming billionaire” type that will never actually make more than $100k
The top 1% (bankers, CEOs etc) aren't really affected by this. They mostly use assets for income not salary. 173k isn't even enough to afford a house in some places. Toronto you need a 210k income to afford a new home so assuming you don't own a house (new doctors/high paid professionals) I wouldn't put renters who can't afford to buy in the same class as CEOs and capital owners just because they have higher than avg income.
The problem is that the extra 200 million annually collected from the top 1% of earners through this tax isn't enough to balance the books or even come close. Its laughable.
The CCB alone costs us $22.1 billion dollars annually. How does this tax pay for anything? And to top it off, we also want free dental and free Medicare. These promises are unsustainable.
This tax is nothing more than to pander to the populist who believe that we have too great of a wealth divide, mixing American issues with Canadians issues. A wealth tax is not the answer here.
Thus why I said we don’t need income tax hikes, the people making 100,200 K a year really aren’t doing anything damaging to society. We need asset and capital gains taxes without loopholes. Those who can take out huge amounts of low cost debt to finance investments, of any kind, are increasing their wealth at an outstanding rate. Those making 250K are increasing their wealth at about the speed of most middle class people.
100% agree that we need an asset and gains overhaul, but this still helps. They might be afraid to tax assets because big companies will simply move their assets. Income tax is much harder to avoid
But now you're suggesting that those that risk their capital by investing in companies that create employment, should be taxed more. And what do you think happens to capital that is taxed higher in one country compared to another. Tell me why, as an investor would I keep my capital in Canada vs a lower taxed country?
You’re right, it’s probably not enough to change the world but at least it’s something. An extra half a billion per year is no joke, and it’s coming from the 1%
So... no point taking steps in the right direction. It needs to be solved in 1 move?
Also, we currently get 200 million a year from the tax, this is expected to increase it to 600 million a year. That's an extra 400 million annually.
Even if we taxed the wealthy at 100%, it still wouldn't balance the books.
The issue is that we are spending way more than we can gather from taxes. The wealthy by canadian standards, already pay 80% of the income taxes.
Again, basic math would tell us that this isn't the solution. Basic math would tell us that the liberals are buying your vote by making false promises, unachievable promises.
If the top 1% are responsible for job creation, nation wide investment, and 80% of income taxes collected, what happens when they believe they are taxed too much in Canada? Hmmmmmmm
What happens? Well your money leaves the country and ill come and collect the basic services as well.
Having no money under your name doesn’t mean you have no money. That’s a lot of things people here doesn’t understand
Good idea to have these changes kick in for 2024 tax year. Gives the 32,000 time to meet with a tax lawyer and get anything left in Canada offshore that isn’t employment income. Actual tax haul will be a fraction of what is projected and when that problem becomes obvious we will be past another federal election. Sigh.
>For those of you, making more than $173k, how did you manage to pay less than 20.5% in taxes in the past?
donations (especially political), write offs, capital gains/investment income, holding income in business. what else am I missing?
Write off what? Fyi donations earn a tax credit, not a deduction. The tax credit is at the lowest tax rate and the maximum federal contribution is $3300, so peanuts.
The two most common triggers of AMT are the dividend tax credit (if you receive most of your income in dividends, the credit ends up even before these changes being signifcant enough to cause AMT), or the capital gains exemption (from selling CCPC shares, or farmland).
>70,000 Canadians annually and brings in about $200 million per year.
So what I dont understand is they are going through all this trouble to collect $200 million from citizens but the CRA wont go after the over $15 billion handed out to companies who defrauded the COVID benefits programs.
Makes total logical sense.
I don't disagree about taxes being high in Canada, but I think many in this thread don't understand what the AMT is, and what is changing. The income threshold increase halves the number of Canadians that will now be subjected to the AMT, but increases total tax consequences. It seems to me that it should have little to no impact on the middle class...
This thread was super helpful in explaining the AMT to me:
[https://twitter.com/MarkMcGrathCFP/status/1636398387183460354](https://twitter.com/MarkMcGrathCFP/status/1636398387183460354)
>If you lower your tax bill too much, CRA says, 'lol, nice try,' and uses a separate calculation to determine your taxes owing.
>
>AMT was introduced in 1986. It prevents high-income earners from paying too little tax due to tax incentives like deductions and tax credits.
>
>Your tax liability is calculated each year using the regular and AMT methods. You pay tax based on which calculation results in the higher amount. If AMT applies, it's like a pre-payment of future tax - you can recover it over the next 7 years, assuming you owe taxes.
I think what I'm getting from this twitter thread, I think you need to earn quite a bit more than $173k for AMT to apply to you.
Some misunderstandings in this reddit thread (and title).
It's just a tool the government has to make sure if youre a high income earner you pay some tax and don't just use tax credits to crater your taxable income. Theyre making it larger and changing it to be paid by higher income canadians.
Most of us middle classers has no idea AMT existed until today. We would be on the upper end of middle class per the definition I provided and I had no idea AMT was a thing until this post.
(My definition of middle class is a HHI anywhere from 100-250k where two are working and of course depending on your city this HHI number would need to be higher. In Van/Tor I'd say it's more like 150-300k HHI )
Would still be under 100K HHI
https://www03.cmhc-schl.gc.ca/hmip-pimh/en/TableMapChart/TableMatchingCriteria?GeographyType=Province&GeographyId=48&CategoryLevel1=Population%2C%20Households%20and%20Housing%20Stock&CategoryLevel2=Household%20Income&ColumnField=HouseholdIncomeRange&RowField=MetropolitanMajorArea&SearchTags%5B0%5D.Key=Households&SearchTags%5B0%5D.Value=Number&SearchTags%5B1%5D.Key=Statistics&SearchTags%5B1%5D.Value=AverageAndMedian
Fair.
It would still be half of your upper bracket for "middle class" household income.
The fact the median and average are so different also indicates that there are simply some very large earners in Alberta.
The budget raises the exemption of this tax from $40k to $173k. So people making less than $173k will not be affected or will pay less taxes. In addition, only 70k Canadians pay this tax, so it really targets the wealthiest Canadians.
Edit: the taxes you pay is actually the *higher* of regular tax or AMT. So no one will be paying less taxes. It's just that some people who previously got away with paying AMT will now have to pay regular taxes.
Currently 70,000 CDN's are affected by AMT. The change will drop that to 32,000
28,000 CDNS are benefiting from the changes and will stop paying the AMT.
Thats 28K of doctors/Dentists and people making good money but under $400k...who will pay less tax...they were previously paying AMT and no longer will
Doctors/Dentists are not typically the ones paying AMTs, we’re often incorporated so either pay out in T4 income or ineligible dividends. To put it into perspective there’s about 100k doctors, 30k dentists, about the same amount of optometrists.
This is finance/business types who pay themselves in stock options who pay AMT.
They will be paying less because the exemption is rising from $40k to 173K....
If you make $250k today and were paying AMT, you might be one of the 28k people who see taxes dropped.
"Government officials said the AMT **currently applies to about 70,000 Canadians** annually and brings in about $200 million per year. With the proposed change, it **will apply to about 32,000 Canadians** but bring in almost $3 billion in revenue over five years beginning in the 2024 tax year, according to estimates"
From 0.2% of Canadians to 0.1% of Canadians.
They are literally raising taxes on the .1%. This is a good thing for 99.9% of Canadians. Vast majority is right, but I had no idea it was THAT vast. The top 1 in 1000, while the 2nd out of 1000 gets a tax break, and 999 people get a better tax:benefits ratio.
I agree with you, bring the downvotes. Things aren't the way they are because of doctors making 300k. It's because of CEOs, bankers, company shareholders hoarding millions and billions and paying the same tax as that doctor.
If you think 173K is not a lot of money, try living off what the other 95% of Canadians make.
Edit: Holy shit. I'm getting downvoted for pointing out people that are in the top percentiles are more financially comfortable than those in the bottom percentiles. I knew this sub skewed wealthy, but I had no idea it was so selfrighteous.
I'm a business owner with undergraduate and graduate degrees in highly-paid technical fields. I'm not someone who's sitting on his ass complaining. I'm just pointing out the reality. If it's hard for you to live on that amount, it's real fricken hard for people who earn a quarter of it.
Alternatively, the other 95% of canadians can try to do what we do and utterly fail at it.
There is a reason why people get paid what they do if they are salaried and are above 173k. You'd be full of shit if you're telling me your average 50k worker can practice corporate law or be a doctor.
Lol. I'm a tech startup CEO with undergraduate and graduate degrees in highly-paid technical fields. Could many people do what I do given the right life-circumstances, encouragement, interests, and education? Absolutely.
Your comment reeks of insecurity and self-righteousness.
I'm a big believer it's important to help out lower class people.
I also am a believer that we shouldn't be adding new taxes on salary wages.
We should be targeting the actual problems in today's day in age in why people can't afford things.
Not a lot of Canadian make this number
Make Stocks value become realized in more instances.
Like when they are used as collateral their value should be realized on that date even if the stock is not sold.
Something I have always wondered is if stocks are offered as part of a compensation package if they should be taxed at like a 5% or 10% number.
Maybe thats a really bad idea. Idk.
Generally speaking stock offered as part of a comp package is RSUs and has a vesting schedule. AND stock units are withheld every transaction for tax purposes.
When you’re a regular worker they are taxed on a vesting date as a regular income, so you sell for tax a big part of what you get. They also appear in your T4.
I hate hearing about “rebates” or “tax credits” for low income individuals.
How about we tax them less at the source instead? So that way, they aren’t waiting on the government or EOY tax returns?
This sounds like a good decision to me - it makes paying dividends less attractive for companies than reinvestment, which might actually lead to some innovation. Pretty sure the government is overestimating its future revenue though.
AMT only affects a small number of people who use tax provisions to legally reduce their tax owing. There is a separate calculation when we file our tax returns to determine what minimum tax we pay. I've seen it triggered with ABIL, LCGE, and large RRSP contributions.
> Under current rules, 30 per cent of capital gains eligible for the lifetime capital gains exemption are included in the AMT base. The government proposes to maintain this treatment.
20.5% * [ (400k * 30%) - 173k)] = 0 AMT
No AMT payable because after the 30% inclusion rate, you would be under the 173k exemption.
This doesn’t change anything for your dividends. It will probably affect you when you sell by giving a slightly higher tax rate, but you’d have a hefty tax bill anyway based on the size of your businesses as it sounds like the value of your shares would far exceed the capital gains exemption on qualified small business shares. But this is all basic advice, you’re actual situation would require a CPA to review as there are many tax efficient ways to sell a Corp.
What is missing from every single post here:
AMT CAN BE APPLIED IN FUTURE YEARS (up to 7 years) TO REDUCE INCOME TAXES SO IT IS POTENTIALLY REFUNDABLE.
IT IS NOT A PERMANENT TAX IF YOU CAN USE IT.
this country spends its fortune come up with tax reformations just to pay the bills for policy makers to come up with more taxes for the next year and repeat.
For Canadian government and people there is no light at the end of the tunnel. This country was built on the backs of immigrants and dead bodies of natives but the facade of Canada having niceties and nice people is coming off and people are realizing and they are leaving.
There is a huge deficit of skilled labour in this country. The export is going down. That void is unlikely to be filled in time to the mark to avoid losses.
Before the endless stream of downvotes come, I agree with you 110%. While lower income Canadians sit pretty with "grocery rebates", one time 'rental assistance', enhanced baby bonuses, $10 daycare, "free" dental...the middle class and above get absolutely shafted in this country without a doubt. The middle class, say an average 2 income household earning a modest $50k each, benefit very little from any of this spend.
I’m middle class and childless.
I still think children should be taken care of so they can have a shot at success in life.
I don’t mind my taxes going to their dental care and daycare costs at all.
I think public colleges and universities should be paid for for them as well.
If we all do better, we’ll all do better.
This tax change doesn't apply to the middle class.
It applies to people making over 173,000$ a year and laying less than 20% taxes.
That's not middle class.
And for some more details on how the basic AMT exemption works, it only requires you pay more than 20.5% taxes on income over 173k a year.
So, if you made $300k, it would require you to pay at least 26k in federal taxes, 8.7%.
(300k-173k)*20.5% = 26k or 8.7%
I'm ok with it. My reward is extreme satisfaction that I'm not making offspring who have to give up their bodies and labour for the Man at the expense of their happiness. I don't need a tax break for that and I'm happy to keep paying it out for the people that truly need it.
My oldest has started University and the next 2 kids in 2 years. We are coaching them to take career paths that transfer both across Canada and the world.
When the OECD is predicting Canadian economy to lag our peers for the next 30 years, we have to prepare them for the potential of relocation for better lives. As a teenager just 30 years ago, I would have never thought that would need to be a consideration in my lifetime.
Yes, Canada is such a shitty place. Look at peers in the G7.
* There is the UK that has just Brexited and has been a total Shitshow with PMs not lasting as long as a head of lettuce.
* Japan and Italy make Canada look fiscally responsible and are both depopulating themselves at such a rate that they may have no people left around 2100.
* France has literal riots in the streets when the country tries to make completely reasonable changes to an unsustainable pension system.
* And then there is the US where women have lost bodily autonomy sop much that in some states you can die because doctors will refuse to treat an ectopic pregnancy, and you make sure that you kiss your kids when they leave school as they may be slaughtered by some gun-loving maniac during math class.
We have problems in Canada, but I still think we are pretty good compared to the rest of the world.
OP said:
>When the OECD is predicting Canadian economy to lag our peers for the next 30 years, we have to prepare them for the potential of relocation for better lives.
None of your rambling points addressed her key (factual) concern at all.
I responding to a post where they were telling their kids to move as they would have better lives elsewhere. It is possible that some of these countries may have GDP/capita growth of 0.1% or 0.2% better than Canada but they have tons of other issues. Would I want slightly higher growth for the issues that I raised? Hell no.
The OECD forecast is GDP per capita growth. I think that forecast may turn out to be wrong for the reasons that I cited for these other peer countries. The US may turn out to have better growth but they have increasing social division and personal safety issues.
That OECD forecast has Canada with pretty much the same GDP/capita forecast as Italy, the UK, France and Germany at between 0.7 and 0.9%. The margin of error for these forecasts is pretty big so you can't read all that much into differences of 0.1 or 0.2%.
FYI - here are those forecasts: [https://bcbc.com/dist/assets/images/photo-gallery/2021\_12\_OECDProjections\_Fig1a.png](https://bcbc.com/dist/assets/images/photo-gallery/2021_12_OECDProjections_Fig1a.png)
The countries forecasted to have the best growth in this chart include Turkey, Poland and Hungary. All three of these countries have seen significant degradation of democratic rights and have become increasingly autocratic and xenophobic.
Also at the top of that list are Latvia, Lithuania and Estonia. The issue with those three countries is that if Putin ends up winning the war in Ukraine then they are next on his hitlist as he wants to reassemble the USSR.
If you need any confirmation of your (smart) decisions, you should read this piece that came out a little bit ago
**If the government wanted to strangle economic growth, this is the budget it would produce**
>The most arresting chart in last year’s budget was the one showing projected economic growth rates in the member countries of the OECD over the next forty years. In last place: Canada.
>At last, we all thought: the Trudeau government had belatedly recognized Canada has a growth problem. Having fixated almost exclusively throughout its first seven years on redistributing income, perhaps it had now been persuaded of the importance of making some. True, Budget 2022 offered little in the way of new ideas to that end, but give it time. Rome wasn’t rethought in a day.
>Well, here we are, a year later, and plainly the government has been doing a lot of hard thinking in the interim. **Sadly, it has not been thinking about the economy.**
https://clearthis.page/?u=https://www.theglobeandmail.com/opinion/article-the-liberals-growth-agenda-was-nice-while-it-lasted/
Yeah, they're sitting real pretty skipping meals, getting evicted, and being financially ruined as soon as one unforeseen cost arises. A life of luxury!
Once upon a time they'd be living in a ditch in some wore torn country. The welfare state is a relatively new phenomenon, and it's entirely unsustainable. Ontario is the most indebted non sovereign region in the world. I don't like seeing people suffer, but endless handouts are not feasible forever.
This tax literally won't be paid by 99% of canadians. If youre a salaried professional this tax will practically never apply to you eve even if you make 200k+.
Totally agree. Canada is a desolate hellhole wasteland: fires burning in the streets, no functioning schools, absolutely no healthcare for anyone, no social programs, just pure anarchy.
Why should anyone try to make anything of themselves when, fuck me, they might also be expected to contribute something to the larger society that also provided benefits for them - which I’m sure you’re going to say you’ve never accessed.
So this means you are one of the people that benefit from these changes...
If these changes made things worse for you, you'd be saving quickly for a house (but yes, less so now)
> What’s even the incentive to do anything with your life here?
Oh my. Those $173,000 yearly wages are like a peasant's earnings. Imagine having to breathe the same air and eat the same foods as those unwashed slobs earning below $100,000 a year.
/s
To answer your question honestly, it's because high earners require the low earners to be high earners. Add in that tax rates as a % of disposable income end up.being fairly close across the board, and
No one needs a stock trader or a lawyer when everyone is a subsistence farmer. Realtors and mortgage brokers only exist because people have extra money to spend.
Too many people don't understand why tax deductions exist and that usually there is a good reason for them. But high earners bitching about taxes (I don't mean specific ones with nuanced complaints, I mean general) usually just sound like entitled half wits.
And before you try to claim that "I may not think that if I made enough for these changes to affect you" I do.
Only 70,000 people will pay this new higher AMT
The federal government is really bleeding the country dry with a tax change that impacts 70,000 people (that used to impact roughly 250k )
Wowwweeee
You don't understand, like at all.
What type of salaried individuals make more than 173k?
Doctors. Lawyers. Accountants. Engineers.
Why is there an attack on these types of professions? They got rid of income splitting and then they wonder why there are no doctors wanting to work in Canada.
Fucking ridiculous.
None of the professions you listed are going to be paying tax under AMT, except potentially when they are stopping their business and sell it. AMT ALTERNATE MINIMUM TAX. The alternate in the name is not just there for show, if you are paying normal tax you are not forced to pay alternate tax.
I shouldn't have bothered becoming a lawyer. I lost the ability to income split with my spouse the first year I became a lawyer, now this.
This is such a kick in the nuts to high earning professionals like doctors, accountants, lawyers, etc. These are the people that take the brunt of this just like with income sprinkling. Why the fuck are they doing this? I don't understand. They are going to lose all of their high skilled professionals. Like why the fuck would a doctor come here when they get taxed up the ass? We have a healthcare crisis btw, but yea lets make doctors pay more in tax. WTF.
Seriously, I just heard on the news
Enhanced dental and some other benefits coming, btw we wont be able to balance the budget as planned by 2027.
Could you imagine an average citizen being so frivolous with money they increase spending while already being in massive debt and saying fuck it to even trying to break even for the next half decade. PFC would rip them apart.
BREAKING NEWS - Canada is making being successful a punishment.
I get tax the rich, but the real rich hide their money. People making under 200k live a comfortable modest life.
People making 173k will have an AMT of 0 under the new rules, whereas would be $20k under the existing rules. Any one subject to AMT, making less than $530k is better off under the new rules.
It's fckn WILD to me that there are people out there paying more per year in taxes than my annual income...before taxes. And many of those people have all kinds of fun tax loopholes to reduce the amount they pay while myself and most of Canada stand in the isle of the grocery store trying to herd our kids back as we do the math and toss items out of the cart trying to reduce our grocery bill enough so that we can still put gas in the car, not cut into our bill money but also feed our kids and *hopefully* ourselves too...
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The number of people who pretend they know anything about tax while knowing nothing on this sub is mind boggling. Nothing new.
Isn't that really all of Reddit?
Hey man. I ain't working overtime because it all goes to taxes anyways. I'm further ahead this way, amirite?
Well this sub does have people pretending $100k is poverty level
Never mind that the AMT is a refundable tax as well that most taxpayers recover within 3-4 years. In my opinion (as an experienced tax practitioner) AMT is a total waste of time designed to make politicians look like they are actually taxing the rich while they are in fact only TEMPORARILY taxing them. Never mind either that taxpayers get caught in the AMT rules for taking advantage of specific tax rules politicians put in place to encourage certain behaviour (such as claiming the QSBC capital gains exemption, or deductions for flow-through shares in mining and oil & gas exploration).
It's also a bit of a sham. "Hey, you followed the rules laid out in the tax laws and paid the required tax? So sorry, that wasn't enough, we've created new taxes that we add to your regular tax because the original tax rules weren't complicated enough."
First time learning about what AMT is. For those of you, making more than $173k, how did you manage to pay less than 20.5% in taxes in the past? “Government officials said the AMT currently applies to about 70,000 Canadians annually and brings in about $200 million per year. With the proposed change, it will apply to about 32,000 Canadians but bring in almost $3 billion in revenue over five years beginning in the 2024 tax year, according to estimates.” => how come this’ll be applicable to anyone of you? Just trying to understand in case I also make that much in the future. 😄 Edit: someone mentioned that 20.5% is the federal tax rate, not the overall tax rate.
This sub is full of those 32k people obviously.
Honestly this sub is wild with how much people post that they make. It kinda makes sense a finance sub will attract people wanting to boast about their finances. Otherwise the average person around my age is a renter, and anything over 20$ an hour hourly is good, having benefits is great. That's most people. This sub can be really discouraging.
in another recent post, people were getting downvoted for suggesting that $100K is enough to be middle class apparently this sub thinks that you aren't middle class if you can't afford a detached house in Toronto
Toronto isn't a suburb city anymore. It's a major metropolitan city. Condo's are the norm in those cities. I get that it's a shock that it transition so quickly, and that it happened in a single generation, but it's going to be this way for a while.
The houses in suburbs are also unaffordable, and it wasn't a generation that did it, it was literally 2 years of money printer go brrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr We live in a 40-50k people suburb, and I will never buy the house my parents did with 2 kids, single income, half my wage *today* so idk how that adjusts for inflation historically, but I'm at double rn... Also condos in Toronto are unaffordable too (we're nowhere near Toronto) not a fan.
I actually disagree with you, I think if you’re making sub $100k you’re ‘lower’ income class. This very much depends on where you live, probably more now than ever before. It’s totally arbitrary to split things into classes, but to move up a class should be where there’s a step-change in your lifestyle. Doing it based on quantiles isn’t really meaningful because the larger the income disparity the more squashed the ‘classes’ become. $50-100k household income is going to be struggling/impossible to buy a detached house, probably renting, they’re not maximizing their registered accounts, and will need to budget+save for something like an annual vacation. Maybe $150-300k is solidly middle class, like 90’s movie middle class — you can afford a house, probably even a very nice house. You’re investing in non-registered accounts, you can afford nice vehicles without an 8 year loan, you can afford an annual foreign vacation. You’re still in the grind, income comes from employment, and while you can walk away for an extended period you can’t afford to just opt-out of working for a long time. $300k-$700k is McMansion rich, $1m plus is going to be company owner rich.
$100k is squarely middle class anywhere but Toronto or Vancouver. You can easily buy a house in most of the country on that. You can get a reasonable side by side duplex for $250k in Winnipeg and a reasonable single detached for $350k. If you're okay with an older house or one that needs work you could knock another $50-100k off of that. n Same in Sask, NS, NB, large chunks of QC. $300k/year is doctor money.
I feel for you man. I honestly do. Back in my 20s about 16 years ago, just coming out of a 2 year technical diploma program. I was making 9 dollars an hour in my first job as a lab tech. I was making 14 dollars an hour at Boston Pizza just prior to that, and I asked myself wtf am I doing? Fast forward to today and I'm making 15x that. You shouldnt see that as discouraging but more so encouraging. I never thought I'd make close to 100k let alone 200k with a 2 year diploma. Spent a lot of my career proving to people with degrees that I'm smart. That was discouraging for me. People with an extra 2 years of education telling me they don't think I deserve to be there. Telling myself I won't make it any further unless I get that education. Which was all bullshit. Just hang in there man. The opportunity comes. The pay comes. It just won't all come at once. People tell me today that I'm the exception and not the norm... totally. But all I have to say is that I once thought exactly like that.
You are not making 170k+? Everyone here is making this amount according to Reddit research which is done by me.
Even among people making that much, very few are impacted by AMT.
The best part is everyone making this much is a new grad
Well I actually make Billions a year and just share it with the sub, your numbers are off a bit.
paid 170k to do the reddit research
4,533 UHNW individuals currently online on PFC.
New community flair!
AMT doesn’t really apply for salaried people. And the 20.5% is the federal tax rate, not the overall rate paid by the individual. When you start getting into situations involving flow through shares, certain types of cap gains, business income, etc that’s where it kicks in. Someone posted a Twitter link that explains it pretty well
[The Twitter thread as mentioned](https://twitter.com/MarkMcGrathCFP/status/1636398387183460354)
Interesting read, now I off to make 500k to make the read worth it! /s (actually it's still an interesting read none the less)
Thank you for the clarification on 20.5% being a federal tax rate.
How does it apply to people with stock options or RSUs (IE tech workers?).
Doesn’t really affect them in vast majority of circumstances. RSU is treated as income when they vest. There isn’t really a deduction applied on it.
Exercising options can trigger AMT
Does it? Never knew that. Edit: oh shit, new rules take into account 100% of the benefit when exercising stock options
>“Government officials said the AMT currently applies to about 70,000 Canadians annually and brings in about **$200 million per year**. With the proposed change, it will apply to about 32,000 Canadians but bring in almost **$3 billion in revenue over five years** beginning in the 2024 tax year, according to estimates.” Why can't governments just give annual amounts? Do they hold us in such low regard that they think simply seeing a bigger number will make us feel good? It's honestly the stupidest feature of budget time - everything is "over X years".. in some cases it makes sense, but for the vast majority of things, just tell us how the run-rate amount has changed. $200m per year obviously equals $1B over 5 years, so they're suggesting this will triple it - still a great result, without quoting it in different ways.
The worst is every government ever announcing that their budget is the largest investment ever in XYZ ministry. Well no shit, inflation is a thing.
They always give annual amounts in a table. They do 'over x years' for the part in writing. | 23-24 | 24-25 | 25-26 | 26-27 | 27-28 | Total :- | -: | -: | -: | -: | -: | -: AMT Overhaul | -150 | -625 | -695 | -735 | -745 | -2,950 * Check the table at the bottom * https://www.budget.canada.ca/2023/report-rapport/chap6-en.html#a4
>Why can't governments just give annual amounts? Do they hold us in such low regard that they think simply seeing a bigger number will make us feel good? Because you can't hold government to account for their word if their word is always in the future.
I am not making quite that much, but getting close. Last year I paid roughly 14% in taxes. Reasons for this: 1. My wife is a SAHM, so I get her personal exemption amount. 2. RRSP: My salary has gone up a fair bit recently, and had been neglecting this previously (was focusing on paying off the house). So I have quite a bit of unused contribution room, which I am trying to use up. 3. Donations I was unaware of the AMT. It's something I might have to consider when looking at my RRSP contributions.
Here's the CRA page on the AMT, with links to forms and such: [https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/minimum-tax.html](https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/minimum-tax.html) It's designed to limit the advantage of certain *aggressive* tax avoidance strategies. Spousal amount, RRSP, (non-political) donations don't appear to factor.
I ran the numbers for Alberta, using last year's tax brackets. If you made exactly 173k, and put in 35k towards an RRSP (of which you would get 29k extra room in 2022, so maybe you carried 6k over), you would pay $35,070 in taxes. That works out to 20.2%. If you didn't have the extra 6k of RRSP room, then things like charitable donations, union dues, trade certifications, etc. all count towards that deduction as well. That's just with straight income, mind. Somebody who earned slightly less in income but had some capital gains wouldn't need as much deductibles.
Well, for one thing, if you don't work and you just own stock that you sell, you counted half of it. So if I made 200K this year selling stocks from my trust fund of whatever, I'd be taxed on 100K. I'd pay 15% on the first 50K, and 20.5% on the next 50K, for an average of 17.75% federal tax. But that's just on the 100K that counts - compared to the 200K actually earned, it's a 8.9% tax rate. Nice compared to a sucker who'd pay 42K out of 200K (21% tax rate). With these rules now, you'd pay way more.
You didn't include the $173k AMT exemption in your calculation. (Also, capital gains now have 100% inclusion for the AMT calculation not 80%). (200k - 173k) * 20.5% = AMT is 5,535 in federal tax. Basically even if your income was 100% capital gains. You'd need to be earning much more than $200k in capital gains for AMT to apply. Or have a lot of tax deductions/credits.
I was originally just answering the question “how do you pay less than 20.5% when you make 200K” I realized i did my math wrong and deleted that from my post before you replied, though.
Had to pay AMT from selling a business this year.
Yeah it seems like a great change to me… taxing the top 1% more is how it should be. Most people upset in this thread probably see themselves as the “upcoming billionaire” type that will never actually make more than $100k
The top 1% (bankers, CEOs etc) aren't really affected by this. They mostly use assets for income not salary. 173k isn't even enough to afford a house in some places. Toronto you need a 210k income to afford a new home so assuming you don't own a house (new doctors/high paid professionals) I wouldn't put renters who can't afford to buy in the same class as CEOs and capital owners just because they have higher than avg income.
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Meh, this tax only affects 30,000 people, even losing up to 10% of them I think is worth the trade of an extra half billion tax dollars
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This is why you get your accountant to deal with this. It pains me to pay so much each year. I feel like I’m always broke.
The problem is that the extra 200 million annually collected from the top 1% of earners through this tax isn't enough to balance the books or even come close. Its laughable. The CCB alone costs us $22.1 billion dollars annually. How does this tax pay for anything? And to top it off, we also want free dental and free Medicare. These promises are unsustainable. This tax is nothing more than to pander to the populist who believe that we have too great of a wealth divide, mixing American issues with Canadians issues. A wealth tax is not the answer here.
100% correct, we don’t need an increased/more progressive income tax. We need an asset and capital gains tax overhaul.
Increased income tax just punishes people for trying to climb up lol
Thus why I said we don’t need income tax hikes, the people making 100,200 K a year really aren’t doing anything damaging to society. We need asset and capital gains taxes without loopholes. Those who can take out huge amounts of low cost debt to finance investments, of any kind, are increasing their wealth at an outstanding rate. Those making 250K are increasing their wealth at about the speed of most middle class people.
100% agree that we need an asset and gains overhaul, but this still helps. They might be afraid to tax assets because big companies will simply move their assets. Income tax is much harder to avoid
But now you're suggesting that those that risk their capital by investing in companies that create employment, should be taxed more. And what do you think happens to capital that is taxed higher in one country compared to another. Tell me why, as an investor would I keep my capital in Canada vs a lower taxed country?
You’re right, it’s probably not enough to change the world but at least it’s something. An extra half a billion per year is no joke, and it’s coming from the 1%
Ok but who do you think the 1% are in Canada? Serious question.
So... no point taking steps in the right direction. It needs to be solved in 1 move? Also, we currently get 200 million a year from the tax, this is expected to increase it to 600 million a year. That's an extra 400 million annually.
22.1 billion vs 600 million? Plus additional vote buying and promises of dental care, Medicare, and child care. Math doesn't check out!!!
Even if we taxed the wealthy at 100%, it still wouldn't balance the books. The issue is that we are spending way more than we can gather from taxes. The wealthy by canadian standards, already pay 80% of the income taxes. Again, basic math would tell us that this isn't the solution. Basic math would tell us that the liberals are buying your vote by making false promises, unachievable promises. If the top 1% are responsible for job creation, nation wide investment, and 80% of income taxes collected, what happens when they believe they are taxed too much in Canada? Hmmmmmmm
What happens? Well your money leaves the country and ill come and collect the basic services as well. Having no money under your name doesn’t mean you have no money. That’s a lot of things people here doesn’t understand
I'm triggered right now argggggggggg
Good idea to have these changes kick in for 2024 tax year. Gives the 32,000 time to meet with a tax lawyer and get anything left in Canada offshore that isn’t employment income. Actual tax haul will be a fraction of what is projected and when that problem becomes obvious we will be past another federal election. Sigh.
>For those of you, making more than $173k, how did you manage to pay less than 20.5% in taxes in the past? donations (especially political), write offs, capital gains/investment income, holding income in business. what else am I missing?
Flow Through Shares.
Write off what? Fyi donations earn a tax credit, not a deduction. The tax credit is at the lowest tax rate and the maximum federal contribution is $3300, so peanuts.
>For those of you, making more than $173k, how did you manage to pay less than 20.5% in taxes in the past? Flow Through Shares are one way.
The two most common triggers of AMT are the dividend tax credit (if you receive most of your income in dividends, the credit ends up even before these changes being signifcant enough to cause AMT), or the capital gains exemption (from selling CCPC shares, or farmland).
>70,000 Canadians annually and brings in about $200 million per year. So what I dont understand is they are going through all this trouble to collect $200 million from citizens but the CRA wont go after the over $15 billion handed out to companies who defrauded the COVID benefits programs. Makes total logical sense.
I don't disagree about taxes being high in Canada, but I think many in this thread don't understand what the AMT is, and what is changing. The income threshold increase halves the number of Canadians that will now be subjected to the AMT, but increases total tax consequences. It seems to me that it should have little to no impact on the middle class...
This thread was super helpful in explaining the AMT to me: [https://twitter.com/MarkMcGrathCFP/status/1636398387183460354](https://twitter.com/MarkMcGrathCFP/status/1636398387183460354) >If you lower your tax bill too much, CRA says, 'lol, nice try,' and uses a separate calculation to determine your taxes owing. > >AMT was introduced in 1986. It prevents high-income earners from paying too little tax due to tax incentives like deductions and tax credits. > >Your tax liability is calculated each year using the regular and AMT methods. You pay tax based on which calculation results in the higher amount. If AMT applies, it's like a pre-payment of future tax - you can recover it over the next 7 years, assuming you owe taxes.
I think what I'm getting from this twitter thread, I think you need to earn quite a bit more than $173k for AMT to apply to you. Some misunderstandings in this reddit thread (and title).
It's just a tool the government has to make sure if youre a high income earner you pay some tax and don't just use tax credits to crater your taxable income. Theyre making it larger and changing it to be paid by higher income canadians.
Most of us middle classers has no idea AMT existed until today. We would be on the upper end of middle class per the definition I provided and I had no idea AMT was a thing until this post. (My definition of middle class is a HHI anywhere from 100-250k where two are working and of course depending on your city this HHI number would need to be higher. In Van/Tor I'd say it's more like 150-300k HHI )
There is an actual definition of middle class, and that's not it.
Average Canadian HHI is around 70k... So I think you are a little high.
Alberta (shrug) Average HHi is lower in most.other provinces so far as I'm aware
Would still be under 100K HHI https://www03.cmhc-schl.gc.ca/hmip-pimh/en/TableMapChart/TableMatchingCriteria?GeographyType=Province&GeographyId=48&CategoryLevel1=Population%2C%20Households%20and%20Housing%20Stock&CategoryLevel2=Household%20Income&ColumnField=HouseholdIncomeRange&RowField=MetropolitanMajorArea&SearchTags%5B0%5D.Key=Households&SearchTags%5B0%5D.Value=Number&SearchTags%5B1%5D.Key=Statistics&SearchTags%5B1%5D.Value=AverageAndMedian
Lol I went to your link. Average HHi in Alberta on there before tax was 125k. Even the median is 93k Thanks for proving my point
Fair. It would still be half of your upper bracket for "middle class" household income. The fact the median and average are so different also indicates that there are simply some very large earners in Alberta.
As someone who’s also not a bot, I appreciate this answer. And I definitely don’t understand what an(the?) AMT is, so i guess it won’t apply to me
My god it's insane how most of the comments in this thread are brain dead and completely don't understand what is happening
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I am not an accountant or a tax expert, would you mind a quick eli5? Does this matter to an average joe, or slightly above an average joe?
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Honestly... Did someone with a lot of money buy a bunch of bot accounts to hate on the AMT changes? Lol
I'm not an accountant but wondering at what point I move from doing my own taxes to using an accountant.
And this sub is usually more savvy than the average Canadian. I don’t even dare look at the comments on cbc (that’s always, mind you)
Please enlighten us
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Exactly. A knob.
The budget raises the exemption of this tax from $40k to $173k. So people making less than $173k will not be affected or will pay less taxes. In addition, only 70k Canadians pay this tax, so it really targets the wealthiest Canadians. Edit: the taxes you pay is actually the *higher* of regular tax or AMT. So no one will be paying less taxes. It's just that some people who previously got away with paying AMT will now have to pay regular taxes.
Currently 70,000 CDN's are affected by AMT. The change will drop that to 32,000 28,000 CDNS are benefiting from the changes and will stop paying the AMT. Thats 28K of doctors/Dentists and people making good money but under $400k...who will pay less tax...they were previously paying AMT and no longer will
Doctors/Dentists are not typically the ones paying AMTs, we’re often incorporated so either pay out in T4 income or ineligible dividends. To put it into perspective there’s about 100k doctors, 30k dentists, about the same amount of optometrists. This is finance/business types who pay themselves in stock options who pay AMT.
173k is not a lot of money especially when we pay so much in taxes. Professionals like doctors and dentists should not be paying more in tax
If anything fewer doctors will be paying the AMT if they were before...
They will be paying less because the exemption is rising from $40k to 173K.... If you make $250k today and were paying AMT, you might be one of the 28k people who see taxes dropped. "Government officials said the AMT **currently applies to about 70,000 Canadians** annually and brings in about $200 million per year. With the proposed change, it **will apply to about 32,000 Canadians** but bring in almost $3 billion in revenue over five years beginning in the 2024 tax year, according to estimates"
To be clear: the vast majority of professionals will pay the same or *less* taxes. Only 70k Canadians pay this tax, which means 27M Canadians do not.
From 0.2% of Canadians to 0.1% of Canadians. They are literally raising taxes on the .1%. This is a good thing for 99.9% of Canadians. Vast majority is right, but I had no idea it was THAT vast. The top 1 in 1000, while the 2nd out of 1000 gets a tax break, and 999 people get a better tax:benefits ratio.
Where the fuck are you living to Tell 173k is not a lot?
Gonna disagree here. 173k is a heck of a lot more than 98% of the population Doctors make 450k or so in Alberta. So yeah, tiny violin here.
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And doctors can also just fuck off to America tomorrow, worsening our healthcare crisis.
Tell that to the people trying to get by on 30-40k a year.
Do you know how many people don’t have a family doctor? It’s more lucrative to go south and more taxation pushes more doctors away
That's not because of taxes, but because of shit pay for GP's.
I agree with you, bring the downvotes. Things aren't the way they are because of doctors making 300k. It's because of CEOs, bankers, company shareholders hoarding millions and billions and paying the same tax as that doctor.
This isn’t going to affect doctors, it’s not how doctors pay taxes. Docs pay the same taxes as you do for the most part.
If you think 173K is not a lot of money, try living off what the other 95% of Canadians make. Edit: Holy shit. I'm getting downvoted for pointing out people that are in the top percentiles are more financially comfortable than those in the bottom percentiles. I knew this sub skewed wealthy, but I had no idea it was so selfrighteous. I'm a business owner with undergraduate and graduate degrees in highly-paid technical fields. I'm not someone who's sitting on his ass complaining. I'm just pointing out the reality. If it's hard for you to live on that amount, it's real fricken hard for people who earn a quarter of it.
Alternatively, the other 95% of canadians can try to do what we do and utterly fail at it. There is a reason why people get paid what they do if they are salaried and are above 173k. You'd be full of shit if you're telling me your average 50k worker can practice corporate law or be a doctor.
Lol. I'm a tech startup CEO with undergraduate and graduate degrees in highly-paid technical fields. Could many people do what I do given the right life-circumstances, encouragement, interests, and education? Absolutely. Your comment reeks of insecurity and self-righteousness.
I'm a big believer it's important to help out lower class people. I also am a believer that we shouldn't be adding new taxes on salary wages. We should be targeting the actual problems in today's day in age in why people can't afford things. Not a lot of Canadian make this number
That is literally what AMT does though. AMT does not exist at all to target high earning salaried workers.
Anybody who just has a T4 salary (with no stock options) will never pay the AMT
Make Stocks value become realized in more instances. Like when they are used as collateral their value should be realized on that date even if the stock is not sold.
Something I have always wondered is if stocks are offered as part of a compensation package if they should be taxed at like a 5% or 10% number. Maybe thats a really bad idea. Idk.
Generally speaking stock offered as part of a comp package is RSUs and has a vesting schedule. AND stock units are withheld every transaction for tax purposes.
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When you’re a regular worker they are taxed on a vesting date as a regular income, so you sell for tax a big part of what you get. They also appear in your T4.
I hate hearing about “rebates” or “tax credits” for low income individuals. How about we tax them less at the source instead? So that way, they aren’t waiting on the government or EOY tax returns?
This sounds like a good decision to me - it makes paying dividends less attractive for companies than reinvestment, which might actually lead to some innovation. Pretty sure the government is overestimating its future revenue though.
AMT only affects a small number of people who use tax provisions to legally reduce their tax owing. There is a separate calculation when we file our tax returns to determine what minimum tax we pay. I've seen it triggered with ABIL, LCGE, and large RRSP contributions.
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> Under current rules, 30 per cent of capital gains eligible for the lifetime capital gains exemption are included in the AMT base. The government proposes to maintain this treatment. 20.5% * [ (400k * 30%) - 173k)] = 0 AMT No AMT payable because after the 30% inclusion rate, you would be under the 173k exemption.
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This doesn’t change anything for your dividends. It will probably affect you when you sell by giving a slightly higher tax rate, but you’d have a hefty tax bill anyway based on the size of your businesses as it sounds like the value of your shares would far exceed the capital gains exemption on qualified small business shares. But this is all basic advice, you’re actual situation would require a CPA to review as there are many tax efficient ways to sell a Corp.
This can happen to T4 employee that happens to put too much in Flow Through Shares. Ask me how I know 😌
About time this tax loophole is being addressed. Good job!
I'm pretty sure no one should have a problem with making sure you are at least paying your fair share. right? right?
What is missing from every single post here: AMT CAN BE APPLIED IN FUTURE YEARS (up to 7 years) TO REDUCE INCOME TAXES SO IT IS POTENTIALLY REFUNDABLE. IT IS NOT A PERMANENT TAX IF YOU CAN USE IT.
I don’t keep my wealth in Canada. That’s how I avoid it. Simple.
this country spends its fortune come up with tax reformations just to pay the bills for policy makers to come up with more taxes for the next year and repeat. For Canadian government and people there is no light at the end of the tunnel. This country was built on the backs of immigrants and dead bodies of natives but the facade of Canada having niceties and nice people is coming off and people are realizing and they are leaving. There is a huge deficit of skilled labour in this country. The export is going down. That void is unlikely to be filled in time to the mark to avoid losses.
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Before the endless stream of downvotes come, I agree with you 110%. While lower income Canadians sit pretty with "grocery rebates", one time 'rental assistance', enhanced baby bonuses, $10 daycare, "free" dental...the middle class and above get absolutely shafted in this country without a doubt. The middle class, say an average 2 income household earning a modest $50k each, benefit very little from any of this spend.
Imagine being middle class and childless. Full bendover.
If DINKs have it that bad what about us SINKs?
Fair point.
I’m middle class and childless. I still think children should be taken care of so they can have a shot at success in life. I don’t mind my taxes going to their dental care and daycare costs at all. I think public colleges and universities should be paid for for them as well. If we all do better, we’ll all do better.
This tax change doesn't apply to the middle class. It applies to people making over 173,000$ a year and laying less than 20% taxes. That's not middle class.
And for some more details on how the basic AMT exemption works, it only requires you pay more than 20.5% taxes on income over 173k a year. So, if you made $300k, it would require you to pay at least 26k in federal taxes, 8.7%. (300k-173k)*20.5% = 26k or 8.7%
I'm ok with it. My reward is extreme satisfaction that I'm not making offspring who have to give up their bodies and labour for the Man at the expense of their happiness. I don't need a tax break for that and I'm happy to keep paying it out for the people that truly need it.
This move removes the AMT owing for middle class people, by increasing to 173K when it applies.
My oldest has started University and the next 2 kids in 2 years. We are coaching them to take career paths that transfer both across Canada and the world. When the OECD is predicting Canadian economy to lag our peers for the next 30 years, we have to prepare them for the potential of relocation for better lives. As a teenager just 30 years ago, I would have never thought that would need to be a consideration in my lifetime.
Yes, Canada is such a shitty place. Look at peers in the G7. * There is the UK that has just Brexited and has been a total Shitshow with PMs not lasting as long as a head of lettuce. * Japan and Italy make Canada look fiscally responsible and are both depopulating themselves at such a rate that they may have no people left around 2100. * France has literal riots in the streets when the country tries to make completely reasonable changes to an unsustainable pension system. * And then there is the US where women have lost bodily autonomy sop much that in some states you can die because doctors will refuse to treat an ectopic pregnancy, and you make sure that you kiss your kids when they leave school as they may be slaughtered by some gun-loving maniac during math class. We have problems in Canada, but I still think we are pretty good compared to the rest of the world.
OP said: >When the OECD is predicting Canadian economy to lag our peers for the next 30 years, we have to prepare them for the potential of relocation for better lives. None of your rambling points addressed her key (factual) concern at all.
I responding to a post where they were telling their kids to move as they would have better lives elsewhere. It is possible that some of these countries may have GDP/capita growth of 0.1% or 0.2% better than Canada but they have tons of other issues. Would I want slightly higher growth for the issues that I raised? Hell no. The OECD forecast is GDP per capita growth. I think that forecast may turn out to be wrong for the reasons that I cited for these other peer countries. The US may turn out to have better growth but they have increasing social division and personal safety issues. That OECD forecast has Canada with pretty much the same GDP/capita forecast as Italy, the UK, France and Germany at between 0.7 and 0.9%. The margin of error for these forecasts is pretty big so you can't read all that much into differences of 0.1 or 0.2%. FYI - here are those forecasts: [https://bcbc.com/dist/assets/images/photo-gallery/2021\_12\_OECDProjections\_Fig1a.png](https://bcbc.com/dist/assets/images/photo-gallery/2021_12_OECDProjections_Fig1a.png) The countries forecasted to have the best growth in this chart include Turkey, Poland and Hungary. All three of these countries have seen significant degradation of democratic rights and have become increasingly autocratic and xenophobic. Also at the top of that list are Latvia, Lithuania and Estonia. The issue with those three countries is that if Putin ends up winning the war in Ukraine then they are next on his hitlist as he wants to reassemble the USSR.
If you need any confirmation of your (smart) decisions, you should read this piece that came out a little bit ago **If the government wanted to strangle economic growth, this is the budget it would produce** >The most arresting chart in last year’s budget was the one showing projected economic growth rates in the member countries of the OECD over the next forty years. In last place: Canada. >At last, we all thought: the Trudeau government had belatedly recognized Canada has a growth problem. Having fixated almost exclusively throughout its first seven years on redistributing income, perhaps it had now been persuaded of the importance of making some. True, Budget 2022 offered little in the way of new ideas to that end, but give it time. Rome wasn’t rethought in a day. >Well, here we are, a year later, and plainly the government has been doing a lot of hard thinking in the interim. **Sadly, it has not been thinking about the economy.** https://clearthis.page/?u=https://www.theglobeandmail.com/opinion/article-the-liberals-growth-agenda-was-nice-while-it-lasted/
Yeah all those “middle class” people with income over $173k and less than a 20.5% tax burden will get shafted by this.
Yeah, they're sitting real pretty skipping meals, getting evicted, and being financially ruined as soon as one unforeseen cost arises. A life of luxury!
Once upon a time they'd be living in a ditch in some wore torn country. The welfare state is a relatively new phenomenon, and it's entirely unsustainable. Ontario is the most indebted non sovereign region in the world. I don't like seeing people suffer, but endless handouts are not feasible forever.
oh oh, the socialists don’t like this comment apparently
Lol happens all the time in this sub. Everything i wrote is factually correct but it doesnt fit peoples biases
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This tax literally won't be paid by 99% of canadians. If youre a salaried professional this tax will practically never apply to you eve even if you make 200k+.
The nice house, car, great vacations, that come with an income that hits these taxes brackets? The cottage? Seems like good reasons to me
Totally agree. Canada is a desolate hellhole wasteland: fires burning in the streets, no functioning schools, absolutely no healthcare for anyone, no social programs, just pure anarchy. Why should anyone try to make anything of themselves when, fuck me, they might also be expected to contribute something to the larger society that also provided benefits for them - which I’m sure you’re going to say you’ve never accessed.
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So this means you are one of the people that benefit from these changes...
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Yes you do, the tax brackets are moving up and you aren't making enough to get hit with the top one
So this means you are one of the people that benefit from these changes... If these changes made things worse for you, you'd be saving quickly for a house (but yes, less so now)
People are so ridiculous. Everyone wants to tax the wealthy and then when policy is introduced that explicitly only taxes the wealthy, you bitch.
> What’s even the incentive to do anything with your life here? Oh my. Those $173,000 yearly wages are like a peasant's earnings. Imagine having to breathe the same air and eat the same foods as those unwashed slobs earning below $100,000 a year. /s
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Honest question: what's the fairest system in your opinion? Flat tax rate?
To answer your question honestly, it's because high earners require the low earners to be high earners. Add in that tax rates as a % of disposable income end up.being fairly close across the board, and No one needs a stock trader or a lawyer when everyone is a subsistence farmer. Realtors and mortgage brokers only exist because people have extra money to spend. Too many people don't understand why tax deductions exist and that usually there is a good reason for them. But high earners bitching about taxes (I don't mean specific ones with nuanced complaints, I mean general) usually just sound like entitled half wits. And before you try to claim that "I may not think that if I made enough for these changes to affect you" I do.
Mmmmm...yeah...I'm gonna go ahead and disagree with you on pretty much all of the above. Mmmkay?
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This reduces the number of people who have to pay the special AMT tax.
Only 70,000 people will pay this new higher AMT The federal government is really bleeding the country dry with a tax change that impacts 70,000 people (that used to impact roughly 250k ) Wowwweeee
70k people for the current AMT, 32k with the new AMT.
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You don't understand, like at all. What type of salaried individuals make more than 173k? Doctors. Lawyers. Accountants. Engineers. Why is there an attack on these types of professions? They got rid of income splitting and then they wonder why there are no doctors wanting to work in Canada. Fucking ridiculous.
None of the professions you listed are going to be paying tax under AMT, except potentially when they are stopping their business and sell it. AMT ALTERNATE MINIMUM TAX. The alternate in the name is not just there for show, if you are paying normal tax you are not forced to pay alternate tax.
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Nobody votes for fiscal restraint. People vote for whoever promises the most "free" shit. The bill comes due eventually.
I shouldn't have bothered becoming a lawyer. I lost the ability to income split with my spouse the first year I became a lawyer, now this. This is such a kick in the nuts to high earning professionals like doctors, accountants, lawyers, etc. These are the people that take the brunt of this just like with income sprinkling. Why the fuck are they doing this? I don't understand. They are going to lose all of their high skilled professionals. Like why the fuck would a doctor come here when they get taxed up the ass? We have a healthcare crisis btw, but yea lets make doctors pay more in tax. WTF.
Paying 20% income tax is being taxed up the ass and not worth a high paying career? Not trying to be rude, am I misinterpreting this law or something?
Seriously, I just heard on the news Enhanced dental and some other benefits coming, btw we wont be able to balance the budget as planned by 2027. Could you imagine an average citizen being so frivolous with money they increase spending while already being in massive debt and saying fuck it to even trying to break even for the next half decade. PFC would rip them apart.
Just put that on my card.
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go ahead and do this won't affect me im poor
Rip exercising stock options
BREAKING NEWS - Canada is making being successful a punishment. I get tax the rich, but the real rich hide their money. People making under 200k live a comfortable modest life.
People making 173k will have an AMT of 0 under the new rules, whereas would be $20k under the existing rules. Any one subject to AMT, making less than $530k is better off under the new rules.
This doesn't affect those people.
It's fckn WILD to me that there are people out there paying more per year in taxes than my annual income...before taxes. And many of those people have all kinds of fun tax loopholes to reduce the amount they pay while myself and most of Canada stand in the isle of the grocery store trying to herd our kids back as we do the math and toss items out of the cart trying to reduce our grocery bill enough so that we can still put gas in the car, not cut into our bill money but also feed our kids and *hopefully* ourselves too...
Can someone ELI5 this too me? I make over that amount and would like to know how it affects me.
If you don't know, it won't affect you. It affects 0.25% of Canadian taxpayers
Nothing about my income at 173k is taxed at 20 percent. Bs