Author Topic: Tax changes in 2023 for Canadians: Useful YT summary.  (Read 3306 times)

Experimental_FIRE

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Tax changes in 2023 for Canadians: Useful YT summary.
« on: January 07, 2023, 02:17:43 PM »
Here's a useful 14 minute summary of the changes for 2023. It's all good news!

https://www.youtube.com/watch?v=Zjfy_G1l5ok

the.one.who.wonders

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Re: Tax changes in 2023 for Canadians: Useful YT summary.
« Reply #1 on: January 08, 2023, 07:26:19 AM »
informative, thanks!

poxpower

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Re: Tax changes in 2023 for Canadians: Useful YT summary.
« Reply #2 on: January 17, 2023, 10:11:39 PM »
Summary:

- TFSA room: 6000$ ---> 6500$ (+500)

- RRSP limits:
18% of previous year --> NO CHANGE
cap: 29 210$ ---> 30 780$ (+1570)

- Money stolen for CPP =
5.75 --> 5.95% (+0.2%)
 max 3,499.80 --> 3754.45$ ( + 254.65$) ( double all numbers if you're self-employed )

- Slight tax bracket tweaks

- Lifetime Capital Gains Exemption $913,630  ---> $971 190 ( + $57 560 )

- New Tax Exempt Investment Account: FHSA ( first homebuyer savings account ) ( legislation not passed yet )
https://www.td.com/ca/en/personal-banking/personal-investing/learn/tax-free-first-home-savings-account/

OttawaNeal

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Re: Tax changes in 2023 for Canadians: Useful YT summary.
« Reply #3 on: January 18, 2023, 06:27:58 AM »
- Money stolen for CPP =
5.75 --> 5.95% (+0.2%)
 max 3,499.80 --> 3754.45$ ( + 254.65$) ( double all numbers if you're self-employed )

I'm not sure I'd say "stolen" - I mean you are going to receive CPP payments at some point in time in one way or another.

poxpower

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Re: Tax changes in 2023 for Canadians: Useful YT summary.
« Reply #4 on: January 18, 2023, 12:23:39 PM »


I'm not sure I'd say "stolen" - I mean you are going to receive CPP payments at some point in time in one way or another.

What you get back is a fraction of what that money would be worth if invested by yourself.
It also has no estate value, i.e. can't be passed down to your children. Only some of it can go to a spouse.

The CPP is not a retirement fund, it's actually a 20-100% TAX on some of a potential retirement fund.
If you had invested the max from 30 to 65 you'd be sitting on over 1.1 million ( not inflation adjusted ).

At 4% withdrawal that's 44k/year. Forever. That you can pass down to your children.
What you'd likely to get back in CPP is around 200-300k if you live long enough. When you're dead, it's gone. If the government changes their mind, it's also all gone at the drop of a hat.

If that's not stealing I don't know what is.
CPP is just more income tax.

edit: Oh and I forgot but your employer ( or yourself if you're self-employed ) contributes the same amount "for you" so double the amount you'd actually have in your pocket if that money was yours to invest instead of squandered by politicians.
« Last Edit: January 18, 2023, 12:29:46 PM by poxpower »

OttawaNeal

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Re: Tax changes in 2023 for Canadians: Useful YT summary.
« Reply #5 on: January 18, 2023, 07:33:59 PM »
If you had invested the max from 30 to 65 you'd be sitting on over 1.1 million ( not inflation adjusted ).

When I run the numbers it appears you're using a little higher than a 10% return in that calculation?? That's hardly a reasonable rate of return to compare against. Using a more reasonable 7%, and assuming the contributor is putting in this year's maximum contribution of $3,754.45 for each year, I end up with a total of around $519K after the 35 years.

The maximum benefit is currently $15,678.84/year (we assumed they contributed the maximum, so let's assume they receive the maximum - there are a number of ways to toss out lower contributing years after all). That's quite close already to what the 4% withdrawal rate value would be. There's also something to be said for it being guaranteed for life.

... instead of squandered by politicians.

CPP funds aren't used for anything other that the CPP program. The funds don't enter into the government coffers.

In either case, while I personally would rather have that money to invest for myself too, I'd rather live in a society with a CPP so that those with less investing knowledge aren't completely without.

poxpower

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Re: Tax changes in 2023 for Canadians: Useful YT summary.
« Reply #6 on: January 19, 2023, 01:52:14 AM »
The maximum benefit is currently $15,678.84/year (we assumed they contributed the maximum, so let's assume they receive the maximum - there are a number of ways to toss out lower contributing years after all). That's quite close already to what the 4% withdrawal rate value would be. There's also something to be said for it being guaranteed for life.


If you use 7% you assume CPP will also be adjusted to inflation or that the age you can withdraw from it won't change. The fund can also be taken away from you in any amount and for any reason, at any time. It's not guaranteed for life. It's not guaranteed at all, because politicians own it.

The benefits also stop when you die whereas your retirement stash can be passed on.

There's also endless social nets in Canada, why do you need a CPP? That just creates more bureaucrats, which means less people and resources in your society to actually go towards helping anyone. All you've done is tax people more and, once again, punished the most responsible people while also attempting to guilt them into not protesting about it. I'm so sick of this.

OttawaNeal

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Re: Tax changes in 2023 for Canadians: Useful YT summary.
« Reply #7 on: January 19, 2023, 07:19:39 AM »
The fund can also be taken away from you in any amount and for any reason, at any time. It's not guaranteed for life. It's not guaranteed at all, because politicians own it.

Can you provide me with an example of CPP being taken away from a living person in any amount, for any reason, at any time?

This is not how CPP works. OAS is a lot more like how you've described, but CPP is managed at arms-length to the government. The government has no ability to take from those funds for their own spending. A great deal of the investing done by the CPP is actually outsourced to the private sector investment firms (enriching them probably more so than bureaucrats).

You do own your CPP contributions. In proportion to how you contributed through the years you will receive a retirement benefit. Those who started their employment before the CPP started got less. Those contributing now, as the contribution rates have risen, will get proportionally more (that's the whole point of raising the contributions...not enough Canadians are saving enough). On death benefits continue for a spouse, and your children can receive a benefit as well under some circumstances.

Your funds are about as guaranteed for life as anything could be. "The most recent triennial report by the Chief Actuary of Canada indicated that the CPP is sustainable over a 75-year projection period." Source: https://www.cppinvestments.com/the-fund/our-performance/sustainability-of-the-cpp

There's also endless social nets in Canada, why do you need a CPP? That just creates more bureaucrats, which means less people and resources in your society to actually go towards helping anyone. All you've done is tax people more and, once again, punished the most responsible people while also attempting to guilt them into not protesting about it. I'm so sick of this.

I would argue that the CPP does help a large number of Canadians. Maybe you and I don't need it for balancing our retirement finances, but a lot of Canadians do (and particularly OAS/GIS).  There are benefits to living in a country with socialized programs that go beyond just the money you receive from your OAS/CPP cheque. I wouldn't assume the only benefit you'll receive from the CPP program will be the sum of the funds you eventually receive from it.

poxpower

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Re: Tax changes in 2023 for Canadians: Useful YT summary.
« Reply #8 on: January 19, 2023, 10:52:42 AM »
Can you provide me with an example of CPP being taken away from a living person in any amount, for any reason, at any time?

The point is public pensions funds can and have gone bankrupt and national level retirement programs change all the time, from raising retirement age to lowering benefits to not adjusting for inflation etc.

That money isn't yours until it's back in your bank account.

The CPP is not meant to fund people's retirement, it's meant as a supplement but it will cost you in your lifetime as much money as you'd have used to actually fund a full retirement.
https://www.youtube.com/watch?v=bPyyV9TdH3Y

I don't really understand why anyone can be glad this exists if they do the actual math.

daverobev

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Re: Tax changes in 2023 for Canadians: Useful YT summary.
« Reply #9 on: January 19, 2023, 11:13:28 AM »
CPP is insurance for people living a long time. It's one of the things that proves you live in a civilised nation - if you work, you get a pension.

The government won't raid CPP precisely because it's arms length; it's basically held in trust for you. You can't gamble it away, you don't lose it in bankruptcy, etc, etc. It's there for you when you retire.

Some people are too anti government and will argue anything the government does is bad.

Is there waste? For sure. Could the CPP be better? Yes - invest in a global index fund and save most of the management fee.

I just don't know... how you argue with people about this stuff. Seem to believe the world owes them something, that they're special... no, it's precisely because most people are not special that programs like the CPP exist. Not like a Sears pension, say.

Can you individually do better than the CPP? Sure. Can the average person? Ehhhh... no probably not.

There are lots of things to be concerned about in Canada I think, but the CPP is absolutely not one of them.

BNgarden

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Re: Tax changes in 2023 for Canadians: Useful YT summary.
« Reply #10 on: January 19, 2023, 11:16:21 AM »
...

I don't really understand why anyone can be glad this exists if they do the actual math.

Because most people can't 'math' and don't miss funds taken off the top, and DO rely upon CPP for the majority of their retirement income.  I'd rather live in a place where a goodly number of folks unable to plan for the distant future are okay-ish, even if I personally lose a bit of personally controlled investment growth. 

The alternative is pretty nightmarish (many more seniors living in destitution with its attendant social costs in health, housing and more).

(And +1 to daverobev who posted while I composed...)

GuitarStv

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Re: Tax changes in 2023 for Canadians: Useful YT summary.
« Reply #11 on: January 19, 2023, 11:20:50 AM »
Can you provide me with an example of CPP being taken away from a living person in any amount, for any reason, at any time?

The point is public pensions funds can and have gone bankrupt and national level retirement programs change all the time, from raising retirement age to lowering benefits to not adjusting for inflation etc.

Has a raising of retirement age, lowering of benefits, bankruptcy, or failure to adjust for inflation ever been a bigger concern than individuals failing to save enough for retirement?  I feel like you're misplacing concern here.


That money isn't yours until it's back in your bank account.

Since it seems that we're going to be stupid and pedantic here . . . money isn't yours until it's physically in your hands.  Just because it's in a bank account doesn't mean you can access it or use it.  If you have a bank account, then you obviously have a lot of trust in financial and legal systems both of which are ultimately controlled by the legislation the government passes.

poxpower

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Re: Tax changes in 2023 for Canadians: Useful YT summary.
« Reply #12 on: January 19, 2023, 02:50:38 PM »

Has a raising of retirement age, lowering of benefits, bankruptcy, or failure to adjust for inflation ever been a bigger concern than individuals failing to save enough for retirement?  I feel like you're misplacing concern here.

I'm not stopping you from helping those people, why are you violently stopping me from managing my own money?
Despicable.

BNgarden

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Re: Tax changes in 2023 for Canadians: Useful YT summary.
« Reply #13 on: January 19, 2023, 03:24:38 PM »

I'm not stopping you from helping those people, why are you violently stopping me from managing my own money?
Despicable.

Are you referring to the power of government to use violence?  Cause...[shrug emoji]

Seems a little overwrought...

poxpower

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Re: Tax changes in 2023 for Canadians: Useful YT summary.
« Reply #14 on: January 21, 2023, 01:46:05 PM »
Oh man I forgot about this.

I think the best part is the blurb where some guy wrote "you aren't owed anything in life" at the same time as "if you worked you're owed a pension".

People also compartmentalize money in such a funny way, where on this forum they will point and laugh at the idiot getting into debt for a 70k truck but then support paying high taxes to give that guy a retirement.

HEY, GUYS, GUESS WHAT. YOUR CPP DOLLARS WENT TO FUND THAT STUPID PICKUP TRUCK EXCEPT YOU DIDN'T EVEN GET TO DRIVE IN IT, YOU JUST WORKED AND GOT JACK SHIT. HOW DO YOU LIKE THEM APPLES?

jambongris

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Re: Tax changes in 2023 for Canadians: Useful YT summary.
« Reply #15 on: January 21, 2023, 06:48:20 PM »
At a societal level CPP seems like the cheaper option.

It’s probably not the most efficient option for the types of individuals that frequent these boards but it seems like a cheaper and morally superior option than letting a significant number of our elders ending up destitute.

poxpower

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Re: Tax changes in 2023 for Canadians: Useful YT summary.
« Reply #16 on: January 21, 2023, 09:38:00 PM »
At a societal level CPP seems like the cheaper option.

How did you arrive at this calculation?

chasingsnow

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Re: Tax changes in 2023 for Canadians: Useful YT summary.
« Reply #17 on: January 21, 2023, 10:58:16 PM »
CPP is insurance for people living a long time. It's one of the things that proves you live in a civilised nation - if you work, you get a pension.

The government won't raid CPP precisely because it's arms length; it's basically held in trust for you. You can't gamble it away, you don't lose it in bankruptcy, etc, etc. It's there for you when you retire.

Some people are too anti government and will argue anything the government does is bad.

Is there waste? For sure. Could the CPP be better? Yes - invest in a global index fund and save most of the management fee.

I just don't know... how you argue with people about this stuff. Seem to believe the world owes them something, that they're special... no, it's precisely because most people are not special that programs like the CPP exist. Not like a Sears pension, say.

Can you individually do better than the CPP? Sure. Can the average person? Ehhhh... no probably not.

There are lots of things to be concerned about in Canada I think, but the CPP is absolutely not one of them.

+1 to this. If you can't wrap your head around and understand that CPP is a social safety net for folks who dont save for retirement, arent good with money, or have had a series of unfortunate life circumstances that they end up at 65 and live off of $15k a year, I am not really sure what to say. Ive met many folks who are seniors and their entire income for the year is CPP & OAS and <$15k a year. These people need that money and if it was given to them theres a good to fair chance they would have squandered it. Could it be invested more efficiently, or could some people take that money and do much better things with it, probably. But thats exactly the point, that MOST people cant and wont.

At the end of the day, I am more than happy to pay $3k a year (even if I receive nothing) if it means that more folks who are aging and dont have money have a better quality of life as a result because there's a fair share of people that if just left to their own devices would have nothing by the time they need to retire.

Dude, you retired at 35. If you are telling me that the $3k a year that goes to CPP is ridiculous, then I think you are being just a bit miserly. If you think of it as "theft" I would encourage you to reframe it as a charitable contribution you make that's held in trust by the government that goes to less fortunate senior citizens who didn't plan accordingly.
« Last Edit: January 21, 2023, 11:02:39 PM by chasingsnow »

poxpower

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Re: Tax changes in 2023 for Canadians: Useful YT summary.
« Reply #18 on: January 21, 2023, 11:43:36 PM »
If you think of it as "theft" I would encourage you to reframe it as a charitable contribution you make that's held in trust by the government that goes to less fortunate senior citizens who didn't plan accordingly.

A contribution is voluntary. This is not.
People are not accountable for other people's mistakes, that's a ludicrous moral standard to have.

Your feelings towards the less fortunate are not a license to take things from other people.

I'm not stopping you from using any or all of your time and money to solve any problem you choose, why are you taking that right away from others?

The 3k you take for CPP to do YOUR charity work is 3k that taxpayer cannot spend on charity work of their choosing. That's a little selfish don't you think? If you're all about saving people, look into effective altruism and you will find that for the money you are spending on one Canadian for CPP you could support entire families in India.

Anyway all this to say that I have hired hackers to drain your bank accounts in the coming week to "charitably contribute" to infrastructure projects in Pakistan. I'd rather live in a world where kids have a nice school building to go to then where you retire early. If you disagree I will just call you names like "greedy" or "entitled", thus winning the argument.

GuitarStv

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Re: Tax changes in 2023 for Canadians: Useful YT summary.
« Reply #19 on: January 22, 2023, 09:26:14 AM »
If you think of it as "theft" I would encourage you to reframe it as a charitable contribution you make that's held in trust by the government that goes to less fortunate senior citizens who didn't plan accordingly.

A contribution is voluntary. This is not.
People are not accountable for other people's mistakes, that's a ludicrous moral standard to have.

This is ridiculous.  Paying CPP is entirely voluntarily.

If you voluntarily choose to take a job in Canada you are accepting all the benefits that our society has provided which allow that job to exist and you to work it, and you're also accepting the rules that go along with that job (some of your income will be given to CPP).  There's no requirement whatsoever that you make this choice - it's done of your own free will.  You're also free to change the rules (if you can convince enough other people that they should be changed), or leave the country if you find them intolerable.


Your feelings towards the less fortunate are not a license to take things from other people.

My feelings aren't a license to implement taxes - agreed.  But we live in a democratic country.  If enough people feel that providing for less fortunate members in our society is a task worth spending money on, then that absolutely is a license to change taxation and government spending.


I'm not stopping you from using any or all of your time and money to solve any problem you choose, why are you taking that right away from others?

Nobody's taking away your right to use your time and money to solve problems that you choose.  Money that you agreed to pay for CPP when voluntarily accepting a job in the country was never yours to begin with.


Anyway all this to say that I have hired hackers to drain your bank accounts in the coming week to "charitably contribute" to infrastructure projects in Pakistan. I'd rather live in a world where kids have a nice school building to go to then where you retire early. If you disagree I will just call you names like "greedy" or "entitled", thus winning the argument.

Your 'hackers' scenario is just weird, as it's not remotely similar to CPP:
- CPP is purely voluntary, not something done to you.
- CPP doesn't drain your bank account of a random, unspecified amount.  Contributions are very clearly spelled out in law, and you should be aware of them before you ever start a job and run into any.  There is no way that you could be surprised/blindsided by CPP or that it could upset your planning.
- CPP isn't taken away by thieves, it's managed by your democratically elected government.  This means that it's subject to oversight, and ultimately the program itself is fully answerable to the people of Canada (including you).
- We already pay for schools through taxation.  If you disagree with the amounts being spent on them, you can change it!  You will just need to convince enough people to support you.  That's how a democratic country works.



Ultimately it seems like you want to reap the benefits of living in the society that we live in without paying the costs.  This is like chowing down on a meal at a fancy restaurant and then yelling about 'theft' when they send you the bill . . . it's just not an argument that many non-Libertarians will accept.
« Last Edit: January 22, 2023, 10:53:13 AM by GuitarStv »

chasingsnow

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Re: Tax changes in 2023 for Canadians: Useful YT summary.
« Reply #20 on: January 22, 2023, 10:35:05 AM »
If you think of it as "theft" I would encourage you to reframe it as a charitable contribution you make that's held in trust by the government that goes to less fortunate senior citizens who didn't plan accordingly.

A contribution is voluntary. This is not.
People are not accountable for other people's mistakes, that's a ludicrous moral standard to have.

Your feelings towards the less fortunate are not a license to take things from other people.

I'm not stopping you from using any or all of your time and money to solve any problem you choose, why are you taking that right away from others?

The 3k you take for CPP to do YOUR charity work is 3k that taxpayer cannot spend on charity work of their choosing. That's a little selfish don't you think? If you're all about saving people, look into effective altruism and you will find that for the money you are spending on one Canadian for CPP you could support entire families in India.

Anyway all this to say that I have hired hackers to drain your bank accounts in the coming week to "charitably contribute" to infrastructure projects in Pakistan. I'd rather live in a world where kids have a nice school building to go to then where you retire early. If you disagree I will just call you names like "greedy" or "entitled", thus winning the argument.

I mean, now you are just being silly. I think multiple people now have spent far too much time trying to convince you of the benefits of a democratic society and you don't seem very interested in changing your mind or acknowledging others points of view. Wishing you all the best, I've got better things to do with my time.

poxpower

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Re: Tax changes in 2023 for Canadians: Useful YT summary.
« Reply #21 on: January 22, 2023, 10:34:59 PM »
This is ridiculous.  Paying CPP is entirely voluntarily.

You clearly don't understand what that word means.

MoseyingAlong

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Re: Tax changes in 2023 for Canadians: Useful YT summary.
« Reply #22 on: January 22, 2023, 11:10:47 PM »
This is ridiculous.  Paying CPP is entirely voluntarily.

You clearly don't understand what that word means.

We have this same problem in the US.

Years ago when I was studying for the IRS enrolled agent exam, I was baffled when they kept talking about our "voluntary" income tax system. At the time, a family friend was actually in prison for not paying income taxes. At the annual IRS tax forums, the IRS bigwigs would get up and talk about the "voluntary" system. It just boggled my mind.

Why do we have armed IRS agents to enforce a voluntary system?
Just admit it's not voluntary and some (most?) people pay to avoid jail or wage garnishment. Or just quit bragging about it being voluntary when it's only voluntary in the sense that we volunteer to pay them to avoid jail. I know some people say they support the current income tax system but I really wonder how many would continue filing and paying if there were no consequences.

daverobev

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Re: Tax changes in 2023 for Canadians: Useful YT summary.
« Reply #23 on: January 23, 2023, 02:07:00 AM »
This is ridiculous.  Paying CPP is entirely voluntarily.

You clearly don't understand what that word means.

We have this same problem in the US.

Years ago when I was studying for the IRS enrolled agent exam, I was baffled when they kept talking about our "voluntary" income tax system. At the time, a family friend was actually in prison for not paying income taxes. At the annual IRS tax forums, the IRS bigwigs would get up and talk about the "voluntary" system. It just boggled my mind.

Why do we have armed IRS agents to enforce a voluntary system?
Just admit it's not voluntary and some (most?) people pay to avoid jail or wage garnishment. Or just quit bragging about it being voluntary when it's only voluntary in the sense that we volunteer to pay them to avoid jail. I know some people say they support the current income tax system but I really wonder how many would continue filing and paying if there were no consequences.

I'll tell you what would happen: nobody would pay them. Then everyone would complain that there were old people on every street corner begging. Then everyone would vote to put in some kind of system of taking money while you're working, and giving it back when you're old.

GuitarStv

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Re: Tax changes in 2023 for Canadians: Useful YT summary.
« Reply #24 on: January 23, 2023, 07:29:37 AM »
This is ridiculous.  Paying CPP is entirely voluntarily.

You clearly don't understand what that word means.

Voluntary - done, given, or acting of one's own free will

You voluntarily accept to pay CPP when you freely accept a job in Canada.  Just as you voluntarily accept to pay the bill at a restaurant when you sit down at a table and order food from the menu.

Could you point out the involuntary part?

JAYSLOL

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Re: Tax changes in 2023 for Canadians: Useful YT summary.
« Reply #25 on: January 23, 2023, 10:14:38 AM »
This is ridiculous.  Paying CPP is entirely voluntarily.

You clearly don't understand what that word means.

We have this same problem in the US.

Years ago when I was studying for the IRS enrolled agent exam, I was baffled when they kept talking about our "voluntary" income tax system. At the time, a family friend was actually in prison for not paying income taxes. At the annual IRS tax forums, the IRS bigwigs would get up and talk about the "voluntary" system. It just boggled my mind.

Why do we have armed IRS agents to enforce a voluntary system?
Just admit it's not voluntary and some (most?) people pay to avoid jail or wage garnishment. Or just quit bragging about it being voluntary when it's only voluntary in the sense that we volunteer to pay them to avoid jail. I know some people say they support the current income tax system but I really wonder how many would continue filing and paying if there were no consequences.

I'll tell you what would happen: nobody would pay them. Then everyone would complain that there were old people on every street corner begging. Then everyone would vote to put in some kind of system of taking money while you're working, and giving it back when you're old.

This.  And who cares if it’s technically voluntary or not voluntary, I don’t.  The cost for an individual of funding CPP is peanuts compared to the benefit of living in a society where basic things are taken care of for people, even the stupid ones.  I’d much rather pay a bit of involuntary tax to live a still-luxurious life in a happy and wealthy society, rather than keep every penny I earn so I can spend it on surviving the unhappy and impoverished dystopian hell that’s the reality of a Libertarian society that gives everyone unlimited freedom with no responsibilities. 



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Re: Tax changes in 2023 for Canadians: Useful YT summary.
« Reply #26 on: January 23, 2023, 02:41:39 PM »
This is ridiculous.  Paying CPP is entirely voluntarily.

You clearly don't understand what that word means.

You're free to move to the free market country of Somalia or whereever so you don't have pay into shared retirement pools and can instead live in a country with no rules, regulations or pesky governments, a true paradise where those who believe in individual effort and picking yourself up by the bootstraps can thrive without the tyranny of rules decided by a democracy.
« Last Edit: January 23, 2023, 02:44:03 PM by sixwings »

MoseyingAlong

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Re: Tax changes in 2023 for Canadians: Useful YT summary.
« Reply #27 on: January 23, 2023, 03:02:27 PM »
This is ridiculous.  Paying CPP is entirely voluntarily.

You clearly don't understand what that word means.

We have this same problem in the US.

Years ago when I was studying for the IRS enrolled agent exam, I was baffled when they kept talking about our "voluntary" income tax system. At the time, a family friend was actually in prison for not paying income taxes. At the annual IRS tax forums, the IRS bigwigs would get up and talk about the "voluntary" system. It just boggled my mind.

Why do we have armed IRS agents to enforce a voluntary system?
Just admit it's not voluntary and some (most?) people pay to avoid jail or wage garnishment. Or just quit bragging about it being voluntary when it's only voluntary in the sense that we volunteer to pay them to avoid jail. I know some people say they support the current income tax system but I really wonder how many would continue filing and paying if there were no consequences.

I'll tell you what would happen: nobody would pay them. Then everyone would complain that there were old people on every street corner begging. Then everyone would vote to put in some kind of system of taking money while you're working, and giving it back when you're old.

This.  And who cares if it’s technically voluntary or not voluntary, I don’t.  The cost for an individual of funding CPP is peanuts compared to the benefit of living in a society where basic things are taken care of for people, even the stupid ones.  I’d much rather pay a bit of involuntary tax to live a still-luxurious life in a happy and wealthy society, rather than keep every penny I earn so I can spend it on surviving the unhappy and impoverished dystopian hell that’s the reality of a Libertarian society that gives everyone unlimited freedom with no responsibilities.

My bemusement was the way they kept emphasizing "voluntary" when it clearly is not. It was unnecessary and false. Call a spade a spade.

ETA And maybe they have stopped. I recently finished the VITA training and not once was that claim made.

And I'll bow out of the Canadian thread. Just wanted to share another example.
« Last Edit: January 23, 2023, 03:04:54 PM by MoseyingAlong »

GuitarStv

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Re: Tax changes in 2023 for Canadians: Useful YT summary.
« Reply #28 on: January 23, 2023, 03:42:50 PM »
This is ridiculous.  Paying CPP is entirely voluntarily.

You clearly don't understand what that word means.

We have this same problem in the US.

Years ago when I was studying for the IRS enrolled agent exam, I was baffled when they kept talking about our "voluntary" income tax system. At the time, a family friend was actually in prison for not paying income taxes. At the annual IRS tax forums, the IRS bigwigs would get up and talk about the "voluntary" system. It just boggled my mind.

Why do we have armed IRS agents to enforce a voluntary system?
Just admit it's not voluntary and some (most?) people pay to avoid jail or wage garnishment. Or just quit bragging about it being voluntary when it's only voluntary in the sense that we volunteer to pay them to avoid jail. I know some people say they support the current income tax system but I really wonder how many would continue filing and paying if there were no consequences.

I'll tell you what would happen: nobody would pay them. Then everyone would complain that there were old people on every street corner begging. Then everyone would vote to put in some kind of system of taking money while you're working, and giving it back when you're old.

This.  And who cares if it’s technically voluntary or not voluntary, I don’t.  The cost for an individual of funding CPP is peanuts compared to the benefit of living in a society where basic things are taken care of for people, even the stupid ones.  I’d much rather pay a bit of involuntary tax to live a still-luxurious life in a happy and wealthy society, rather than keep every penny I earn so I can spend it on surviving the unhappy and impoverished dystopian hell that’s the reality of a Libertarian society that gives everyone unlimited freedom with no responsibilities.

My bemusement was the way they kept emphasizing "voluntary" when it clearly is not. It was unnecessary and false. Call a spade a spade.

ETA And maybe they have stopped. I recently finished the VITA training and not once was that claim made.

And I'll bow out of the Canadian thread. Just wanted to share another example.

I'm honestly confused by this line of reasoning.

I think I've mentioned this a couple times, but it seems identical to eating at a restaurant.  If you voluntarily choose to work in Canada, then you sign up to pay CPP.  Just like if you go to a restaurant and voluntarily order/eat some food.  After you get the job or eat the food, you have to pay the bill that you agreed to.

Could you point out the involuntary part?

MoseyingAlong

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Re: Tax changes in 2023 for Canadians: Useful YT summary.
« Reply #29 on: January 23, 2023, 04:45:07 PM »

I'm honestly confused by this line of reasoning.

I think I've mentioned this a couple times, but it seems identical to eating at a restaurant.  If you voluntarily choose to work in Canada, then you sign up to pay CPP.  Just like if you go to a restaurant and voluntarily order/eat some food.  After you get the job or eat the food, you have to pay the bill that you agreed to.

Could you point out the involuntary part?

Since you asked...here's the way I see your analogy.
If the restaurant is the only way to get food in your country and the price always included paying for a ticket to Disneyland, I can see the parallel. In that case, would you consider buying the ticket to Disneyland as voluntary or involuntary in order to get the food you need to survive?

I don't consider that voluntary. It's required to buy a necessity (food), not an actual voluntary choice. And yes, theoretically, everyone could skip the restaurant and feed themselves by subsistence farming and hunting and thus avoid buying Disneyland tickets. That doesn't make it actually voluntary in my opinion. Even if Disneyland is providing a societal good by employing everyone who wants to work there.

So working in Canada (eating at the only restaurant) comes with the added cost of paying into CPP (buying a ticket to Disneyland). For most, working is a necessity in order to buy the essentials of life (food, housing, etc) and so they pay the added cost. But they pay that added cost because the alternative is worse, not because they actually want to. If it was voluntary, people would pay that cost even if it wasn't a legal requirement.

To try another analogy, if I'm mugged on a street and choose to surrender my wallet under threat of physical harm, did I voluntarily give the mugger my wallet?
I think you would say yes, that I voluntarily chose the hopefully safer route and that was my choice.
I would say no, it was not voluntary, that it was coerced under threat of physical harm. The coercion makes it involuntary even if I chose the lesser harm.

And, just in case anyone is interested, I am actually in support of the Social Security system in the US. But I don't consider it voluntary.
30 years ago, I was not in support of SS. But exposure to a wide range of people and their poor financial decisions for many, many different reasons, have convinced me that the safety net is worth the cost and loss of a slight amount of self-determination. I am not a Libertarian.

GuitarStv

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Re: Tax changes in 2023 for Canadians: Useful YT summary.
« Reply #30 on: January 23, 2023, 05:07:12 PM »

I'm honestly confused by this line of reasoning.

I think I've mentioned this a couple times, but it seems identical to eating at a restaurant.  If you voluntarily choose to work in Canada, then you sign up to pay CPP.  Just like if you go to a restaurant and voluntarily order/eat some food.  After you get the job or eat the food, you have to pay the bill that you agreed to.

Could you point out the involuntary part?

Since you asked...here's the way I see your analogy.
If the restaurant is the only way to get food in your country and the price always included paying for a ticket to Disneyland, I can see the parallel. In that case, would you consider buying the ticket to Disneyland as voluntary or involuntary in order to get the food you need to survive?

I don't consider that voluntary. It's required to buy a necessity (food), not an actual voluntary choice. And yes, theoretically, everyone could skip the restaurant and feed themselves by subsistence farming and hunting and thus avoid buying Disneyland tickets. That doesn't make it actually voluntary in my opinion. Even if Disneyland is providing a societal good by employing everyone who wants to work there.

So working in Canada (eating at the only restaurant) comes with the added cost of paying into CPP (buying a ticket to Disneyland). For most, working is a necessity in order to buy the essentials of life (food, housing, etc) and so they pay the added cost. But they pay that added cost because the alternative is worse, not because they actually want to. If it was voluntary, people would pay that cost even if it wasn't a legal requirement.

To try another analogy, if I'm mugged on a street and choose to surrender my wallet under threat of physical harm, did I voluntarily give the mugger my wallet?
I think you would say yes, that I voluntarily chose the hopefully safer route and that was my choice.
I would say no, it was not voluntary, that it was coerced under threat of physical harm. The coercion makes it involuntary even if I chose the lesser harm.

And, just in case anyone is interested, I am actually in support of the Social Security system in the US. But I don't consider it voluntary.
30 years ago, I was not in support of SS. But exposure to a wide range of people and their poor financial decisions for many, many different reasons, have convinced me that the safety net is worth the cost and loss of a slight amount of self-determination. I am not a Libertarian.

But the restaurant isn't the only way to get food.  You can always go to a different restaurant if you don't like the prices.  Or you can make your own food.

If you don't like the rules of the country, nobody's forcing you to work here (you can work elsewhere and come back for retirement even).  You don't pay CPP if you go to another country to work - even if you come back to Canada to retire.  You also don't pay CPP on investment income.  You don't pay CPP on real estate income.  There are plenty of options.

If someone wants to do something (whether because it makes them ecstatic, or simply because the other alternatives are worse) and they choose to do it . . . that's voluntary.  Your definition doesn't seem to match this dictionary definition, which is maybe where the confusion is coming from.

MoseyingAlong

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Re: Tax changes in 2023 for Canadians: Useful YT summary.
« Reply #31 on: January 23, 2023, 06:08:27 PM »

I'm honestly confused by this line of reasoning.

I think I've mentioned this a couple times, but it seems identical to eating at a restaurant.  If you voluntarily choose to work in Canada, then you sign up to pay CPP.  Just like if you go to a restaurant and voluntarily order/eat some food.  After you get the job or eat the food, you have to pay the bill that you agreed to.

Could you point out the involuntary part?

Since you asked...here's the way I see your analogy.
If the restaurant is the only way to get food in your country and the price always included paying for a ticket to Disneyland, I can see the parallel. In that case, would you consider buying the ticket to Disneyland as voluntary or involuntary in order to get the food you need to survive?

I don't consider that voluntary. It's required to buy a necessity (food), not an actual voluntary choice. And yes, theoretically, everyone could skip the restaurant and feed themselves by subsistence farming and hunting and thus avoid buying Disneyland tickets. That doesn't make it actually voluntary in my opinion. Even if Disneyland is providing a societal good by employing everyone who wants to work there.

So working in Canada (eating at the only restaurant) comes with the added cost of paying into CPP (buying a ticket to Disneyland). For most, working is a necessity in order to buy the essentials of life (food, housing, etc) and so they pay the added cost. But they pay that added cost because the alternative is worse, not because they actually want to. If it was voluntary, people would pay that cost even if it wasn't a legal requirement.

To try another analogy, if I'm mugged on a street and choose to surrender my wallet under threat of physical harm, did I voluntarily give the mugger my wallet?
I think you would say yes, that I voluntarily chose the hopefully safer route and that was my choice.
I would say no, it was not voluntary, that it was coerced under threat of physical harm. The coercion makes it involuntary even if I chose the lesser harm.

And, just in case anyone is interested, I am actually in support of the Social Security system in the US. But I don't consider it voluntary.
30 years ago, I was not in support of SS. But exposure to a wide range of people and their poor financial decisions for many, many different reasons, have convinced me that the safety net is worth the cost and loss of a slight amount of self-determination. I am not a Libertarian.

But the restaurant isn't the only way to get food.  You can always go to a different restaurant if you don't like the prices.  Or you can make your own food.

If you don't like the rules of the country, nobody's forcing you to work here (you can work elsewhere and come back for retirement even).  You don't pay CPP if you go to another country to work - even if you come back to Canada to retire.  You also don't pay CPP on investment income.  You don't pay CPP on real estate income.  There are plenty of options.

If someone wants to do something (whether because it makes them ecstatic, or simply because the other alternatives are worse) and they choose to do it . . . that's voluntary.  Your definition doesn't seem to match this dictionary definition, which is maybe where the confusion is coming from.

Yeah, it seems we have different definitions of voluntary.
Based on this, I think you'd say the mugging victim is voluntarily giving their wallet to the mugger. Even though, they are making that decision against their will but consider it the best of bad options. But it is their decision.

Whereas, I don't consider it voluntary. I'd say it's involuntary due to coercion, threat of physical harm. In order for it to be voluntary, the person would have to choose to give their wallet to the person while not being threatened.

How that relates to working in Canada...
Person X is choosing to pay CPP (give up their wallet) instead of not because it is the preferred option as opposed to moving out of the country, away from their friends and family, living off the grid, mainly by barter, doing real estate when they hate being a landlord and just want to be a receptionist (other possible reactions to mugging, running, fighting back, arguing).
That's not voluntary to me. Voluntary would be affirmatively choosing to support the program without coercion (such as having employment options severely limited).

Anyway, it feels like we just have different applicable definitions and are circling the drain. So now, I'm really bowing out.

GuitarStv

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Re: Tax changes in 2023 for Canadians: Useful YT summary.
« Reply #32 on: January 23, 2023, 06:39:46 PM »

I'm honestly confused by this line of reasoning.

I think I've mentioned this a couple times, but it seems identical to eating at a restaurant.  If you voluntarily choose to work in Canada, then you sign up to pay CPP.  Just like if you go to a restaurant and voluntarily order/eat some food.  After you get the job or eat the food, you have to pay the bill that you agreed to.

Could you point out the involuntary part?

Since you asked...here's the way I see your analogy.
If the restaurant is the only way to get food in your country and the price always included paying for a ticket to Disneyland, I can see the parallel. In that case, would you consider buying the ticket to Disneyland as voluntary or involuntary in order to get the food you need to survive?

I don't consider that voluntary. It's required to buy a necessity (food), not an actual voluntary choice. And yes, theoretically, everyone could skip the restaurant and feed themselves by subsistence farming and hunting and thus avoid buying Disneyland tickets. That doesn't make it actually voluntary in my opinion. Even if Disneyland is providing a societal good by employing everyone who wants to work there.

So working in Canada (eating at the only restaurant) comes with the added cost of paying into CPP (buying a ticket to Disneyland). For most, working is a necessity in order to buy the essentials of life (food, housing, etc) and so they pay the added cost. But they pay that added cost because the alternative is worse, not because they actually want to. If it was voluntary, people would pay that cost even if it wasn't a legal requirement.

To try another analogy, if I'm mugged on a street and choose to surrender my wallet under threat of physical harm, did I voluntarily give the mugger my wallet?
I think you would say yes, that I voluntarily chose the hopefully safer route and that was my choice.
I would say no, it was not voluntary, that it was coerced under threat of physical harm. The coercion makes it involuntary even if I chose the lesser harm.

And, just in case anyone is interested, I am actually in support of the Social Security system in the US. But I don't consider it voluntary.
30 years ago, I was not in support of SS. But exposure to a wide range of people and their poor financial decisions for many, many different reasons, have convinced me that the safety net is worth the cost and loss of a slight amount of self-determination. I am not a Libertarian.

But the restaurant isn't the only way to get food.  You can always go to a different restaurant if you don't like the prices.  Or you can make your own food.

If you don't like the rules of the country, nobody's forcing you to work here (you can work elsewhere and come back for retirement even).  You don't pay CPP if you go to another country to work - even if you come back to Canada to retire.  You also don't pay CPP on investment income.  You don't pay CPP on real estate income.  There are plenty of options.

If someone wants to do something (whether because it makes them ecstatic, or simply because the other alternatives are worse) and they choose to do it . . . that's voluntary.  Your definition doesn't seem to match this dictionary definition, which is maybe where the confusion is coming from.

Yeah, it seems we have different definitions of voluntary.
Based on this, I think you'd say the mugging victim is voluntarily giving their wallet to the mugger. Even though, they are making that decision against their will but consider it the best of bad options. But it is their decision.

Whereas, I don't consider it voluntary. I'd say it's involuntary due to coercion, threat of physical harm. In order for it to be voluntary, the person would have to choose to give their wallet to the person while not being threatened.

No, I wouldn't say that mugging is voluntary.  There's no choice being made, you're being violently threatened.

You're not being violently threatened to go into the restaurant and order food.  You're not being violently threatened to work a job.  Those are both voluntary acts and choices that you're making because they make your life more convenient.  The choices aren't reactionary, you're able to plan them out well in advance.

Contrast with being mugged.  Your choices are severely constrained by the violent threat that you're facing.  You cannot plan the mugging out in advance, because it's sprung on you unexpectedly and completely against your will.  I certainly wouldn't consider handing over your wallet to a mugger voluntary.


How that relates to working in Canada...
Person X is choosing to pay CPP (give up their wallet) instead of not because it is the preferred option as opposed to moving out of the country, away from their friends and family, living off the grid, mainly by barter, doing real estate when they hate being a landlord and just want to be a receptionist

Is this argument that inconvenience somehow deprives you of freedom?

I don't choose to go to work because it's my preferred option.  I do it because it's more convenient than the alternatives (living off the grid, growing my own food, bartering rather than using money).  The line of reasoning then seems to define my whole working career as involuntary in your eyes.  Is that correct?

RetiredAt63

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Re: Tax changes in 2023 for Canadians: Useful YT summary.
« Reply #33 on: January 23, 2023, 06:56:47 PM »
And, just in case anyone is interested, I am actually in support of the Social Security system in the US. But I don't consider it voluntary.
30 years ago, I was not in support of SS. But exposure to a wide range of people and their poor financial decisions for many, many different reasons, have convinced me that the safety net is worth the cost and loss of a slight amount of self-determination. I am not a Libertarian.

Isn't Social Security similar to the CPP?  Except I see people who don't have SS because of the way their job pensions work.  If you work a documented job in Canada you contribute to CPP*, no matter the job or the employer, and you collect it.  I was a para-public servant and I collect CPP (if I had stayed in Quebec it would have been QPP).  So it is the same pension safety net as SS but all-inclusive - which to me is better.

*Quebec runs its own pension plan just like it runs its own provincial tax collection, but it is pretty much the same as CPP and someone who worked in Quebec but no longer lives in Quebec gets CPP.

CPP is the basic rock bottom pension.  On top of it you can have a workplace pension, you can have your own pension (RRSP) or you can have non-pension type savings/investments (TFSA, investment accounts).   Having only the CPP as a pension is pretty well not great.  But it does provide something to people who, for whatever reason, were not able to do the other pension savings.  I'd rather have people who had jobs get some CPP and when they are old enough the OAS, as opposed to people also needing the GIS because they have no pensions at all.

Plus my understanding is that not only is the CPP at arm's length from the government, it is set up to be self-financing.  Which is why premiums go up every so often.

My Dad was old enough that he saw the CPP brought in  He thought it was a vast improvement over what was in place before.

OttawaNeal

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Re: Tax changes in 2023 for Canadians: Useful YT summary.
« Reply #34 on: January 25, 2023, 01:51:03 PM »
Plus my understanding is that not only is the CPP at arm's length from the government, it is set up to be self-financing.  Which is why premiums go up every so often.
Premiums didn't go up because the CPP was in any need of being bailed out - the CPP investment fund is rock solid for generations to come (short of losing a major war that is). The premiums have gone up because Canadians (on average) are not saving enough.

The recently raised premiums will result in additional payouts in retirement too that those who retired earlier and never paid into will never receive (can already see that the additional money is being tracked separately in the My Service Canada portal). You basically get your own money back in proportion to what you paid in, minus a lot of fees no doubt (assuming an average lifespan).

RetiredAt63

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Re: Tax changes in 2023 for Canadians: Useful YT summary.
« Reply #35 on: January 25, 2023, 07:55:28 PM »
Plus my understanding is that not only is the CPP at arm's length from the government, it is set up to be self-financing.  Which is why premiums go up every so often.
Premiums didn't go up because the CPP was in any need of being bailed out - the CPP investment fund is rock solid for generations to come (short of losing a major war that is). The premiums have gone up because Canadians (on average) are not saving enough.

The recently raised premiums will result in additional payouts in retirement too that those who retired earlier and never paid into will never receive (can already see that the additional money is being tracked separately in the My Service Canada portal). You basically get your own money back in proportion to what you paid in, minus a lot of fees no doubt (assuming an average lifespan).

I read (?) that it was because people were starting it earlier and that put more stress on it (fewer years of money in, more years of money out).  Plus at one point investment returns were low across the board and that hit the CPP as well.

I won't ever see those increases, darn it.  But then I didn't put the money in either.

My pension has three different intervals (based on what we negotiated in various contracts) which are each indexed separately.  None have full indexation.  Good thing I have a RRIF and taxable investments.

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Re: Tax changes in 2023 for Canadians: Useful YT summary.
« Reply #36 on: January 26, 2023, 06:29:47 AM »
I read (?) that it was because people were starting it earlier and that put more stress on it (fewer years of money in, more years of money out).  Plus at one point investment returns were low across the board and that hit the CPP as well.

They get a lot less though when they take it before 65 though.

For every month before age 65 that a person elects to take CPP their CPP benefit is reduced by 0.6% for life, with age 60 being the earliest (36% less CPP benefit). Conversely for every month delayed past age 65 the benefit is increased by 0.7% (up to age 70) for a possible 42% extra benefit.

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Re: Tax changes in 2023 for Canadians: Useful YT summary.
« Reply #37 on: January 26, 2023, 08:24:59 AM »
Plus my understanding is that not only is the CPP at arm's length from the government, it is set up to be self-financing.  Which is why premiums go up every so often.
Premiums didn't go up because the CPP was in any need of being bailed out - the CPP investment fund is rock solid for generations to come (short of losing a major war that is). The premiums have gone up because Canadians (on average) are not saving enough.

The recently raised premiums will result in additional payouts in retirement too that those who retired earlier and never paid into will never receive (can already see that the additional money is being tracked separately in the My Service Canada portal). You basically get your own money back in proportion to what you paid in, minus a lot of fees no doubt (assuming an average lifespan).

I had to read this twice - my understanding is that the increased premiums only result in higher payouts for people who paid them. Although Canadians are not generally saving enough (or, alternately, Defined Benefit Pension Plans basically don't exist anymore), the increased premiums don't do anything to help people who are currently drawing on CPP. In my view, that's actually a good thing - any increase in payouts is required to be fully funded by additional contributions, which means that it's very difficult for a government to take that long term money and spend it on short term things.

The Canadian Investment Board publishes reports on how they manage the capital, and it's a pretty interesting read. They do not just buy the index, but that's probably appropriate given their size and different mandate. Lots more private investment, lots more long term infrastructure. I have a lot of faith that CPP's money is actually pretty well managed, and that the regulatory framework around it keeps it pretty safe from fickle governments.

Things like OAS and GIS (not that anyone here will end up collecting GIS) are ultimately less certain, because they're funded out of tax revenue - if those payments got too high, then it's not hard to imagine that those payments could be curtailed or clawed back.

I will say that it's a definite negative that CPP contributions interact badly for self-employed folks, since they need to pay both the employee and the employer contributions.

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Re: Tax changes in 2023 for Canadians: Useful YT summary.
« Reply #38 on: January 26, 2023, 10:19:11 AM »
Premiums didn't go up because the CPP was in any need of being bailed out - the CPP investment fund is rock solid for generations to come (short of losing a major war that is). The premiums have gone up because Canadians (on average) are not saving enough.

The recently raised premiums will result in additional payouts in retirement too that those who retired earlier and never paid into will never receive (can already see that the additional money is being tracked separately in the My Service Canada portal). You basically get your own money back in proportion to what you paid in, minus a lot of fees no doubt (assuming an average lifespan).

I had to read this twice - my understanding is that the increased premiums only result in higher payouts for people who paid them. Although Canadians are not generally saving enough (or, alternately, Defined Benefit Pension Plans basically don't exist anymore), the increased premiums don't do anything to help people who are currently drawing on CPP. In my view, that's actually a good thing - any increase in payouts is required to be fully funded by additional contributions, which means that it's very difficult for a government to take that long term money and spend it on short term things.

The Canadian Investment Board publishes reports on how they manage the capital, and it's a pretty interesting read. They do not just buy the index, but that's probably appropriate given their size and different mandate. Lots more private investment, lots more long term infrastructure. I have a lot of faith that CPP's money is actually pretty well managed, and that the regulatory framework around it keeps it pretty safe from fickle governments.

Exactly. Sometimes my writing would benefit from a re-reading to reduce the amount of convolution it contains.

Only those who pay the higher premiums will get the benefit of the higher benefits (once they start drawing CPP). We're not bailing out the Boomers with the increased premiums (although for the CPP, having extra cash on hand probably helps a lot so that they don't have to sell off investments to cover the current benefit needs).

The government can not spend the money on anything other than CPP payouts - it's held at arms length from the government. I mean could they change the laws - sure they could - but look at how popular changing the OAS retirement age to 67 proved to be. Any attempt to change the laws around CPP for the purposes of raiding the funds for something other than CPP would be met with lawsuits and quite a great deal of voter anger.

I had the opportunity to speak with a guy from a private investment firm that had been tasked with managing a few billion dollars of CPP investments. He told me it required a whole new way of thinking about managing investments. Typically they would manage investments with an eye towards reducing capital gains tax, but in the case of the CPP they are apparently exempt from capital gains taxation. That created an opportunity whereby they were doing a lot of really short-term trades for small gains. I'm pretty sure it's well managed too for how large it is.

Things like OAS and GIS (not that anyone here will end up collecting GIS) are ultimately less certain, because they're funded out of tax revenue - if those payments got too high, then it's not hard to imagine that those payments could be curtailed or clawed back.

I will say that it's a definite negative that CPP contributions interact badly for self-employed folks, since they need to pay both the employee and the employer contributions.
Exactly again - OAS/GIS are less certain. That said, if the government leaves people to starve they'll have a revolution on their hands.

If I can swing getting the GIS I will, but I haven't really given it too much thought as of yet: https://edrempel.com/make-your-retirement-comfortable-with-the-8-year-gis-strategy/
My wife's DB pension might throw off the strategy though (oh well).

FLBiker

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Re: Tax changes in 2023 for Canadians: Useful YT summary.
« Reply #39 on: January 27, 2023, 09:22:32 AM »
If I can swing getting the GIS I will, but I haven't really given it too much thought as of yet: https://edrempel.com/make-your-retirement-comfortable-with-the-8-year-gis-strategy/
My wife's DB pension might throw off the strategy though (oh well).

I'm a US citizen and new Canadian permanent resident (should be a citizen in ~2 years).  We have a decent amount in non-registered and in Roth IRAs.  It never occurred to me to try to get GIS, but now you've got me thinking.

Missy B

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Re: Tax changes in 2023 for Canadians: Useful YT summary.
« Reply #40 on: February 20, 2023, 07:58:29 PM »


I'm not sure I'd say "stolen" - I mean you are going to receive CPP payments at some point in time in one way or another.

What you get back is a fraction of what that money would be worth if invested by yourself.
It also has no estate value, i.e. can't be passed down to your children. Only some of it can go to a spouse.

The CPP is not a retirement fund, it's actually a 20-100% TAX on some of a potential retirement fund.
If you had invested the max from 30 to 65 you'd be sitting on over 1.1 million ( not inflation adjusted ).

At 4% withdrawal that's 44k/year. Forever. That you can pass down to your children.
What you'd likely to get back in CPP is around 200-300k if you live long enough. When you're dead, it's gone. If the government changes their mind, it's also all gone at the drop of a hat.

If that's not stealing I don't know what is.
CPP is just more income tax.

edit: Oh and I forgot but your employer ( or yourself if you're self-employed ) contributes the same amount "for you" so double the amount you'd actually have in your pocket if that money was yours to invest instead of squandered by politicians.

This.
The only reason I pay myself salary and CPP now is that the tax I would pay just on corp dividends in my bracket is only 2% less.  So from that perspective I may as well since I'm going to pay tax either way.

Any Canadian with enough discipline to save money without needing to have it removed before it even gets to them would have been *way* better off under the original Harper plan to leave CPP alone and increase the TFSA to 10,000K a year.
It was the fairest, kindest thing the conservatives ever did, IMHO, because it benefited everyone equally, not just people with employment income.

But the Liberals always want more government and the people's money in their hands. So they lied and said only the rich would benefit from the extra 5K.

If they were being truthful, they would have said 'only frugal, disciplined people benefit from this, and those people doen't make up our voter base.'

Mighty Eyebrows

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Re: Tax changes in 2023 for Canadians: Useful YT summary.
« Reply #41 on: March 13, 2023, 09:27:23 PM »
There is a lot of misinformation about CPP in this thread (sorry to posters trying hard to educate).

1) CPP is not under control of the federal liberals or subject to their overspending. It is invested entirely separately from the federal tax base by an independent management board and has been audited by actuaries. Don't confuse it with the underfunded US Social Security system.

2) It is an inflation-indexed annuity. Go out and find a comparable one offered in the private insurance market and come back and tell us how bad a deal it is. Don't compare it with equity investments since it is longevity insurance and lets you take more risk on your investments. Knowing what the role of CPP is in your retirement plan is part of understanding investments.

Avoid the political talking points and go do some actuarial math. CPP is a good deal. Could it be better? Sure, if they didn't overpay early contributors, but it is still way better than anything else comparable. If I could, I would contribute more to the CPP plan.

A primer on annuities:
https://www.advisorperspectives.com/articles/2015/08/04/why-bond-funds-don-t-belong-in-retirement-portfolios

As a mustachian you are likely to live longer than the average Canadian. Mortality credits are a thing that you can't get anywhere else:
https://moshemilevsky.com/longevity-credits-beat-insurance/