Is The Government Finally Recognizing Flaws In The Canada Tax System?

Is The Government Finally Recognizing Flaws In The Canada Tax System?
Almost every tax payer complains about the Canada tax system, but mostly because we simply don’t like seeing a good chunk of our hard earned money going out to the Government.   Yet, it is also very necessary if we want all of the programs and services that Canada has to offer which is paid for by the tax dollars.   There definitely is a lot wrong with our tax system, and it may be that the Canadian government is paying more attention to these flaws, or at least talking about them.


In a recent article posted in MacClean’s it talks about Jim Flaherty’s post budget comments regarding income splitting….
“Jim Flaherty wants more analysis of income splitting….


Finance Minister Jim Flaherty’s post-budget comments on income splitting have created a large stir. (See John Geddes here.)   The Minister has questioned the distribution of benefits of his own party’s income splitting proposal, noting that “…it benefits some parts of the Canadian population a lot.   And other parts of the Canadian population virtually not at all.”   According to reports, the Minister also called for more research on income splitting, saying “I think income splitting needs a long, hard analytical look.”   In a blog post, I’m not able to offer a deep analysis.   Instead, here’s a backgrounder to catch up on some of the key points in the debate…. Continue reading


You will see that once you have read through that entire article that our Finance Minister is really questioning the benefits of income splitting.  For many tax payers they don’t or cannot utilize this potential tax method.   Basically what it does is allows a family to combine their income so it can put them in a position where each tax payer is in a lower income bracket.


It really is a sore spot with many tax payers who know that others that are basically in the same tax situation as them end up paying less tax. Without understanding the complexity of our tax system they simply don’t understand this.


According to the Finance Minister he believes that income splitting should be analyzed much more as there is a lot of talk about the unfairness of this.


One of the other problems that many households face when they are looking at the income tax brackets is they often lose their incentive to get ahead.   Many have adopted the attitude that by increasing their income so they can better their life is fruitless because the increased income will only put them in a higher tax bracket.   This type of attitude can affect the economy of a country.   People who may want to start a business may be reluctant to do so, simply because of the tax implications.
Perhaps there will be some changes for the good coming in the future.


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Sam Seidman, CPA, CA, LPA
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