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What is Tax Freedom Day in Canada?
Get ready Canada – the day is coming when you can start actually keeping your money.
That’s because Tax Freedom Day is almost here!
According to the Fraser Institute, a Canadian public policy think-tank based in Vancouver, Tax Freedom Day marks the day when Canadians officially start keeping the money they make, instead of turning it over to federal, provincial, and municipal tax collectors.
Because provincial tax rates vary between provinces, Tax Freedom Day’s actual date is different across the country. For example, in 2017 Alberta marked it on May 21, earlier than any other province due to Alberta not collecting provincial sales tax. In contrast, the highly taxed citizens of Newfoundland and Labrador enjoyed tax freedom on June 25, well over a month after their westerly counterparts.
In other words, the total amount a person in Newfoundland and Labrador earned between January 1 and June 25 represented their total tax bill for that year. If that amount were due up front, every penny they made until June 25 would be paid to the government. That’s nearly half the entire year!
How Tax Freedom Day is Calculated
The date is calculated based on models created from data available from Statistics Canada and the Canada Revenue Agency. The model takes into account an individual’s marital and family status, location, as age, as well as a whole host of the different taxes they pay, including income, property, sales, health, carbon, and more.
Let’s look at an actual example. According to the Fraser Institute, the average Canadian family (two or more people) earned $108,674 in 2017. Using the model, a family of four in Ontario that includes two dependent children and a head of household who is 45 years old will celebrate Tax Freedom Day on June 5. That means that they spent 155 days working for the government and 210 days working for themselves, and have a total tax bill of $46,066.
Wherever you are in Canada, enjoy Tax Freedom Day. You’ve more than earned it!
Interested in tax-saving strategies that will help you keep more of your money for your family? Talk to your financial advisor today – we’re here to help!
When is Tax Freedom Day 2018 for your family?
Use this handy calculator to find out: https://www.fraserinstitute.org/tax-freedom-day-calculator