Every person no matter where they are living in Canada has a certain amount of expenses. The basic necessities are food, clothing, and shelter. It has been determined that the average household cost for this ranges around $28,887.
A recent study also shows that a normal Canadian family is in the earning bracket of around $79,010. Naturally there has to be tax paid on this amount of money that is being earned. When everything has been calculated out, a recent consumer Index has shown that from this income 42.1% went towards taxes while 36.6% looked after all of the basic necessities.
This comes as a shock to many people because they really don’t recognize how much tax they are paying on a monthly basis as it comes directly off of their paycheque. It is usually around tax time that most people will begin to grumble because they see the lump sum amount that they paid over the period of the year as it’s recorded on their T4 slip.
Often when families are running into financial difficulties and money is tight they will make every effort to set up a budget and to cut spending as much as possible. Even though they may cut out all the items that are not considered as a necessity it can be pretty tough to try and cut down on the basic necessities.
They certainly can be frugal with their grocery shopping and perhaps not eat as elaborately as what they would like to but they still have to purchase food. Clothing is often a place where they can cut a great deal of spending by only buying when necessary and buying clothing items when they’re on sale or even buying second-hand clothing.
When it comes to shelter it is almost impossible to cut back the costs. Either the family has a mortgage and has attempted to get the best mortgage rate they can or else they are renting. Rent is extremely expensive and no matter how much a family may want to downsize there is still going to be a base amount needed to provide decent accommodation for the family.
What many don’t realize is that they have got to be more proactive with their taxes and although they can’t budget for these what they can do is study the tax system and learn what all of the potential tax breaks are. Using a accountant is wise, to not only help them file their taxes but to help them with tax planning. There are some steps that individuals and families can take to put themselves in a position where they can take more advantages of the potential tax breaks.
