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Steinbach CU, higher rates for odd months
August 24, 2014
9:42 pm
Loonie
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Yes, I can imagine that there will be some tough times ahead tax-wise in Ontario, now that they have a majority for the next few years. Increasing income taxes is very unpopular so it might come in the form of dickering with benefits or adding other kinds of taxes such as toll roads and so on.

I know exactly what you mean about the books and pamphlets etc which seem to almost always assume that people are in the 50% tax bracket, and thus will get dinged big-time by any increase in income. In fact, very few people are in that kind of tax bracket, so why direct all your material towards such a small minority? The answer must be, in order to dramatize the situation and create fear so that people will act irrationally and make investments that they would probably do best to avoid.

Yes, death can create a huge tax bite for the surviving partner who inherits RRSP/RIF money. It's worth thinking about annuities at that point, even though returns are not very high right now. But they're not very high no matter what you invest in. The annuity enables the survivor to avoid the ever-increasing mandatory withdrawal rate and stabilizes it instead.

August 24, 2014
10:39 pm
Jack Manning
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Loonie, I don't know if you have read some information about the last 2 or 3 Ontario budgets but they added new tax income brackets for higher income earners for now. They also cut medical deduction limits for higher income earners for now.

I agree that income tax increases are unpopular but I can see possibly new or higher Ontario health premiums of $100 to $200 annually easily. It is a tax really.

I can also see a possibility of higher taxes for infrastructure through income taxes, sales taxes, gasoline taxes, road tolls, photo radar of some form coming back, car registration fees, land transfer taxes, provincial education portion of property taxes etc.

You name it they will put it. If interest rates on Ontario debt increase by just 0.25% that will mean on maturing debt 300 million dollars more annually. This will make for higher taxes as well.

Loonie, I recall many mutual fund companies back in the day were really emphasizing dividend income and dividend based investments with their fancy charts and graphs.

Annuities can be used well for set it and forget income plus for income tax purposes especially not just for RRSP's.

August 24, 2014
11:44 pm
Loonie
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The high income tax bracket that they introduced not too long ago is really for very high earners. I forget where it kicks in but I think it's over 100,000.
A lot of people don't realize that the medical tax credit is connected to income. The more you earn, the less valuable the credit is.

The health care tax is an obvious place to hit, I suppose. It is correlated with income, however, as I think it should be. If they change the latter provision, it could be really hard on people with lower fixed incomes.

Some kind of increased vehicle tax is likely too, I think, maybe more than one. Could include gas, some kind of penalty/incentive re: alternative fuel vehicles, toll roads, etc. They can't build all the subways that Rob Ford wants without a huge cost to the province, never mind the debt. Sadly, seniors will have to pay for the subways that they will never use because they take a long time to build.
The High Occupancy lanes (HOV) which they put on highway 404 seem to be a failure, as very few cars qualify to use them. So now they are talking about toll roads, which will be a nightmare to install at this stage.

August 24, 2014
11:54 pm
Jack Manning
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Loonie, I also heard that the Ontario government could give all municipalities in Ontario like they did Toronto their own taxing powers that they currently do not have like sales taxes, tobacco taxes, liquor taxes, gasoline taxes, car registration fees, land transfer taxes to name a few.

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