What if you were suddenly pushed up to the highest possible tax bracket?

[Final Lazy]

Recently I read a newpaper article which said last year quite a few people paid over 20 Million dollars of income tax. It makes me wonder, if I suddenly become rich with a big sum of money, would I be courteous/patriot enough to let the Canadian government take almost half of my earnings?

Lets say that you have a distant uncle who recently asked you to lend him $1000 CAD for him to start up a company. In return you are promised to get a share of the company's earnings at the end of the year. You are given 10% stake of his company in the form of a "callable common share". At the end of the year, your uncle's company struck rich. Your uncle has privately informed you that he will soon buy back your 10% for a total price of $10Million dollars CAD. I understand that capital gain has a more relaxed tax retreatment compared to other incomes, but lets just say that the Canadian government will take 40%, which is $4M.

Understanding that this will be a one time income for you, you would:

- declare yourself as non-resident of Canada and move out of the country so you can aviod the tax. (or some other means of avioding to pay $4M)

or

-pay it


edited for silly grammar

[cnbc]

Not sure why would you want to do that? Tax evasion is illegal.
http://www.youtube.com/watch?v=J9bkxhQ6M70 :)
"The best 60% you will ever spend" - CRA

[Final Lazy]

nono, I am not saying that one should evade tax.. that is wrong.

But I am saying if there is a way for you to aviod the tax, would you?

[fakishan]

isn't it 2M. only 50% of capital gains can be taxed..... means you make 10million, 5 million is taxxable, 40% is 2M

2 million out of 10 is actually 20%, i'd pay it, and force anyone holding canadian citizenship to do the same. if they move out, they can never come back.

[Casanova]

Not sure why would you want to do that? Tax evasion is illegal.
http://www.youtube.com/watch?v=J9bkxhQ6M70 :)
"The best 60% you will ever spend" - CRA
hilarious but sadly true!

[manixc]

If it's a one time thing, then (for me) there is no point of going thru all the trouble of being a non-resident.

That being said, I would donate some money as a tax credit.

[Sajjad]

nono, I am not saying that one should evade tax.. that is wrong.

But I am saying if there is a way for you to aviod the tax, would you?

Yeah for sure...doesn't everybody try to do that?

[marc_t]

taxes are the price of living and earning money in an modern country.
Earning that much money is harder in a 3rd world country.
You make more, you're taxed more, but in the end you get to keep more.

[mattpiloto]

nono, I am not saying that one should evade tax.. that is wrong.

But I am saying if there is a way for you to aviod the tax, would you?

Yup. Charitable donations, business write offs, RRSPs, whatever keeps most of the money in my pocket.

[Indeed]

Congratulations, OP.

Can I meet your uncle? :cheesygri

[Sprite_TM]

do u ever wonder where the tax money goes to? heh

[T-Man]

Just keep in mind that the government's private jet is expensive to maintain, and that those golf vacations throughtout the year does really add up, so they're going to need that money somehow. Just kidding, I'm mean I know! :lol:

[coomar]

for most people, there isn't going to be a tremendous difference between 6 and 8 million

[fakishan]

for most people, there isn't going to be a tremendous difference between 6 and 8 million
except for RFD'ers ;)

[Final Lazy]

Congratulations, OP.

Can I meet your uncle? :cheesygri


hahaha, I wish I had an uncle like that. It was just an example that I made up.


Anyways, I see a lot of people who immigrated to Canada in their teens. They get their education in Canada, then end up with a job that they don't like (low pay/low title). They see a well-paid opportunity in their home country, then they leave and declare non-resident. It is very difficult to blame these people because there are some very well paid positions in the Middle-East and Asia. A fresh Ph.D grad in some countries can rack in over 500K CAD per year. In Canada, you'll be fortunate to even touch 6 digits.

I guess the question behind this OP is that maybe our system is not efficient enough in retaining high income individuals in Canada. Of course, lets assume that high income individuals are paid/earn their money because of their value, not because they're overpaid. :P

[BadDrafter]

Most people love to pay taxes. Its true ask anybody on the street.

I am not most people.

[divx]

Most people love to pay taxes. Its true ask anybody on the street.

I am not most people.
80k a year isn't too bad, you want more? after you done ur eng degree, you will get more.

[Sprite_TM]

80k maybe equal to 60k heh

[simms]

80k a year isn't too bad, you want more? after you done ur eng degree, you will get more.

:D

Look, we're both in engineering, but there's no need to flaunt it around. We both start off around 50-60K and go up, but your arrogance and ego can be a bit disconcerting at times...

[brwnhaggler]

This post really made me laugh!!!!

There often times the real world comes around and slams some sense into you..... don't worry it'll be good for you.

80k a year isn't too bad, you want more? after you done ur eng degree, you will get more.

[gordholio]

If I was suddenly moved up to the highest tax bracket, I'd consider myself lucky, since I'd still be making much more money (even with higher taxes) than I am now.
What position would you rather be in?
$16,000 income with no taxes or $100,000 income with 40% taxes.
(I don't know exactly the highest tax rate or income allowed).
I'm in the first income range.

[thelefteyeguy]

if you're paying that much in taxes...who needs free medicare...you could probably get a few friends and hire a doctor for the group.

[Crotchety Old Man]

If I was suddenly moved up to the highest tax bracket, I'd consider myself lucky, since I'd still be making much more money (even with higher taxes) than I am now.
What position would you rather be in?
$16,000 income with no taxes or $100,000 income with 40% taxes.
(I don't know exactly the highest tax rate or income allowed).
I'm in the first income range.
Plus, people forget that you only pay the higher tax rate on the amount of money you earn over the next tax bracket. You still pay the same rates on the first 60K or so.

[gordholio]

Plus, people forget that you only pay the higher tax rate on the amount of money you earn over the next tax bracket. You still pay the same rates on the first 60K or so.
Right. You don't pay the highest rate on your whole income - it goes in increments.
I would consider myself fortunate to be in the highest tax bracket.
Unfortunately, I am disabled and can only work part time, while being on ODSP.
But, I'm still happy. :)
If I want something (I just got a 19" LCD montor) I save up for it.
My brother-in-law works for Samsung now and he said he can get me stuff through them for a good discount, so who know, in 3 years, I might get a big screen LCD or plasma TV.

[charliebrown]

your poll is flawed

you cant simply declare non-residency and make your taxes magically disappear

a qualified tax planner may be able to help you reduce your tax liability, ...there's no simple pay/no pay decision