Counting our blessings, understanding government benefits, and where our tax dollars go

When I took my first tax course, the professor told us “There are two things in life that are guaranteed… death and taxes.” Before I talk about taxes, let’s talk about the positives.

Counting Our Blessings

I thought I would do a top five list, just because.

  1. Oh Canada! Our home and native land!
    As a young child coming to Canada in the early 1980s, I have been blessed by a country that welcomed my family and I with open arms, where opportunity was given based on work ethic and not race.
  2. Family
    My wife says that I’m the “head of the household.” If that’s the case, then she is the neck! Kids are great, nothing like a hug from daddy’s girl at the end of long day… and having a caring and smarter-than-me wife. What a wonderful world!
  3. Friends
    I am blessed with meeting so many wonderful people who helped shape me along this journey. A shout out to my fellow Chartered Professional Accountants of Canada (CPA Canada) Financial Literacy volunteer friends with whom I have had the pleasure to work and laugh!
  4. Health
    Exercise and being smart with what we put in our bodies
  5. Breathing fresh air

So, if you’re ever stuck in a rut about something that happened yesterday, count your top five blessings about being alive today. Isn’t today also known as the present?

Understanding government benefits: Three pillars

Old Age Security (OAS)

If you are 65 years or older and have resided in Canada for at least 10 years after the age of 18, then you qualify for this benefit.  For those born after March 31, 1958, the minimum age of eligibility is being gradually raised to 67. $564.87/month is the maximum benefit.

Canada/Quebec Pension Plan (CPP/QPP)

CPP/QPP is designed to provide a maximum retirement benefit at age 65. The maximum is $1,065/month. Your actual monthly pension payment is based, in part, on the contributions made on pensionable employment earnings over your working life. You could start applying as early as age 60, but your benefits are reduced, whereas they are increased if you choose to start between the ages of 65 and 70. As well, even if you are getting your CPP and continue to work, you will be paying into CPP until you quit working or reach age 70.

Guaranteed Income Supplement (GIS) 

At age 65, those with little or no income other than OAS may get this monthly income benefit. It is income tested based on your previous year’s income, excluding your OAS pension. $765.93/month is the current maximum. 

There are other government benefits too, so stay tuned for my future blogs.

Show me the money

Ever wonder where our tax dollars go? Let’s do a top five list again:

  • elderly benefits (OAS, GIS — sound familiar?)
  • provincial/territorial programs (health care, education, social assistance)
  • national defence (about eight cents per tax dollar, according to the Department of Finance Canada)
  • public safety (RCMP, border security, prison system)
  • Canada Revenue Agency (Yes, taxes. To make sure we can pay for all of this, we need to make sure we pay those people whose jobs it is to collect our taxes.)

Design or default?

I always ask my newer clients this question: “Do you want your retirement to be by design or default?” Relying solely on government benefits to ensure a comfortable retirement is not what I would recommend. Retiring on your terms means working with a qualified financial planner who addresses all facets of your life, not just your investments.

Keep the conversation going

When was the last time you sat down with your planner to review your income tax return or your will? 

 

Disclaimer

The views and opinions expressed in this article are those of the author and do not necessarily reflect that of Chartered Professional Accountants of Canada (CPA Canada).

 

About the Author

David Duong, CPA, CMA, CIM., B.Comm, CPA, CMA, CIM.


David is a consultant in the Greater Toronto area. He works with career-oriented professionals, such as accountants, medical professionals, and IT and engineering experts. Small- and medium-sized businesses that are past the start-up phase also engage his services to help them strategically plan for growth, succession, risk management and exit. David has enjoyed volunteering as area leader for Chartered Professional Accountants of Canada (CPA Canada)’s Financial Literacy Volunteer Program for the past two years, and serves on our Financial Literacy Advisory Board. He has conducted over 50 workshops on various financial literacy topics ranging from how to teach kids about money to estate planning.

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