Retirement and Income Tax

[Topaz]

I don't know how many of you are retired, not many I think, but when it comes to retirement and income tax, IT SUCKS, to put it nicely!! I admit I don't know the ins and out of taxes but when people retire and they are paying MORE taxes than they did when they worked full time, something is wrong with the system. My spouse is making less than half of what he did full time and paying more income taxes. It seems to me , that someone's income is between 15- 75,000, you pay more taxes than the higher income. Am I wrong in thinking this way?. The income spilting doesn't help much and as the tax preparer said, with some people it makes their taxes worse.

[Bonam]

You're doing something wrong.

[TimG]

My spouse is making less than half of what he did full time and paying more income taxes.

You have done your calculations wrong or you are not including all sources of income (such as GIS or OAS) or you are forgetting about deductions like RRSP and CPP which no longer apply. Edited March 8, 2013 by TimG

[Wilber]

I don't know how many of you are retired, not many I think, but when it comes to retirement and income tax, IT SUCKS, to put it nicely!! I admit I don't know the ins and out of taxes but when people retire and they are paying MORE taxes than they did when they worked full time, something is wrong with the system. My spouse is making less than half of what he did full time and paying more income taxes. It seems to me , that someone's income is between 15- 75,000, you pay more taxes than the higher income. Am I wrong in thinking this way?. The income spilting doesn't help much and as the tax preparer said, with some people it makes their taxes worse.

Not enough information. The only way that should happen is if he had a ton of write offs that he could claim as work or business related and can no longer use.

[Pliny]

Humphhh...sheesh...no one should have to pay income tax, that's the truth of the matter.

[Peanutbutter]

Humphhh...sheesh...no one should have to pay income tax, that's the truth of the matter.

Riiiight...then we would descend into a banana republic without any social services at all.

[Argus]

People forget that RRSPs are merely a loan. You put money in to delay the taxes, not to avoid them. You didn't pay tax on that money when it went in, but you are going to pay it when it gets out. The theory behind this is that, first, the money was able to grow without taxation during that time, and second, you're not working any more when you pull it out, so theoretically, your total income will be lower and you'll pay less taxes on it. That is generally the case but not always, depending on how high your income is. You have to remove money from the RRSP and put it into a RIF, and then take money out of that RIF every year as income, which is then taxable.

Right now my income is very high. I'm in the highest tax bracket. So I'm maximizing my RRSP contributions. Whether that winds up foisting a huge tax bill on me at retirement depends on whether my income remains high. I certainly hope it does and that I face that problem some day.

Not that I'll be happy about it at the time, of course...

[eyeball]

Humphhh...sheesh...no one should have to pay income tax, that's the truth of the matter.

A lot less anyway. More consumption taxes are the way to go.

[Jerry J. Fortin]

i am going through the motions of retirement now.and the tax issue has bothered me all my life. There is no way in hell I cost the feds or the provinces and cities anywhere near what they cost me. I invite each person to make their own calculations and reach your own conclusions as I have done. For me the answer is clear, Canada has proven to be an expensive place for me to live and in my view too expensive to stay in. This is a matter of personal choice but after having worked outside in this country all year long for decades I have no desire to see another snowflake as long as I live. When I couple that desire with the notion of a personal tax load projected to be more than $ 18,000.00 a year the nation of my birth is forcing me out the door. The thought of paying 18k a year for the privilege of Canada's social largesse while paying to fight the environment and keep myself alive on a fixed income is now very problematic and personal.

As a retired person, my only personal requirement is of funding heath care for myself and my wife. I have no bills outside of utilities, so converting to a fixed income is relatively simple for me. The goal being to stretch available income the biggest bang for the buck is a tax load reorganization. I have discovered that becoming a non-resident of Canada changes my tax status in as much as withholding taxes can be circumvented. International tax treaties allow that citizens pay taxes in the nation of residence. There are many nations that provide a tax free status to residents and I have chosen Belize as one of them to be my desired place of residence.

Sadly this nation of my birth has become too expensive for me to spend my retirement in. While I could retire here and continue to subsidize the efforts of others, I would rather retire where I pay less tax to the government and spend more on myself. Yes this is selfish and I am okay with it. Written on the paperwork from the Canada Revenue Agency is a little statement about how each citizen is entitled to arrange their affairs to pay the minimum tax required by law. That is exactly what I am planning to do, act within the law and reduce my tax load.

In my retirement I fully expect to pay mega bucks for healthcare, that is a known thing for me and In fact all of my expenses are known things to me. I can buy private healthcare and I am not requiring other services from governments so I do not desire to pay for them. I can lower my carbon footprint by not using natural resources to avoid freezing to death, andnot require those resources to provide delivery of food to my table. Not working, not paying tax, turning to permaculture, there is simply no downside to moving to Belize for me.