Canadian Federal Budget

[Rightflyer]

Well, what do you think?

Lot's of spending, lot's of broken promises. Savers and small business seem to be anathema to the Liberal government.

[The Fake Cheap]

I just read a few of the highlights of it.  Seems meh so far.  I'll report back again once I have a better look.

[okits]

The Canada Child Benefit presents a new wrinkle in my tax optimization efforts (this isn't new news, except that the program is a go; details were available during the election campaign.) The way it seems to be structured, for family income over $65,000 there's a reduction in CCB received equivalent to 5.5% of that additional income (based on two kids under six.)

I'm in the midst of some lower income years and have been de-registering some RSP investments to take advantage of the lower tax bracket.  If I was refunded 31.15% tax on that RSP contribution and now only pay 20.05% when de-registering, great!  Saved 11.1%!*  But if the CCB reduction in benefits really means I've saved only 5.6%, well, that's not nearly as attractive, mathematically**.  I could make a good argument for waiting to de-register, once CCB isn't a factor (though gambling on future tax rates not being dramatically higher.)

Something for me to think about for 2016 tax year.

* And possibly more, depending on Ontario Health Premium.

** Other questions do come into it.  Do I feel right trying to optimize receipt of benefits primarily intended to assist impoverished children?  Are we really wealthy enough to reasonably forego some of this benefit by not optimizing? 

[lostamonkey]

The Canada Child Benefit presents a new wrinkle in my tax optimization efforts (this isn't new news, except that the program is a go; details were available during the election campaign.) The way it seems to be structured, for family income over $65,000 there's a reduction in CCB received equivalent to 5.5% of that additional income (based on two kids under six.)

I'm in the midst of some lower income years and have been de-registering some RSP investments to take advantage of the lower tax bracket.  If I was refunded 31.15% tax on that RSP contribution and now only pay 20.05% when de-registering, great!  Saved 11.1%!*  But if the CCB reduction in benefits really means I've saved only 5.6%, well, that's not nearly as attractive, mathematically**.  I could make a good argument for waiting to de-register, once CCB isn't a factor (though gambling on future tax rates not being dramatically higher.)

Something for me to think about for 2016 tax year.

* And possibly more, depending on Ontario Health Premium.

** Other questions do come into it.  Do I feel right trying to optimize receipt of benefits primarily intended to assist impoverished children?  Are we really wealthy enough to reasonably forego some of this benefit by not optimizing?

In my opinion there is no moral difference between minimizing taxes and maximizing cash benefits. If you pay $10K in taxes and receive $9K in benefits, your total tax is $1K. I would add the lost tax benefits to your actual taxes when calculating your tax rate on an additional $1 of income.