Inflation, inflation, inflation!! Have you ever sat back and contemplated the ridiculousness of what things cost now compared to 20 years ago? Or even 10 or 5 years ago? And ironically things are produced cheaper and aren’t made near the same quality, thus don’t last as long.
Business overhead costs increase due to such things as fuel prices and minimum wage increases, which in turn causes them to increase their selling prices. With this, the value of money actually becomes less as you aren’t able to buy as much as you used to. Yet the standard of living goes up, therefore there is this continuous feeling of requirement to increase your income. Quite the weird wheel of life, isn’t it?
Before you consider asking for a pay raise, boosting your business income, or looking forward to that pension, consider the tax implications. It has been said that you can never make enough money, however making the best of your money and sending as little as possible to the Government is something that takes regular monitoring.
The first thing to consider is educating yourself on the Income Tax bracket thresholds. Is that $1.00 per hour raise (or approx $2000/year income increase) going to put that income into a higher tax bracket, thus you giving a higher percentage of it to the government? Perhaps you could avoid the next tax bracket with an RRSP contribution? What portion of your income can you spilt with your spouse? What are the other things you could consider that affect your ‘taxable income’?
Everyone’s situation is different, therefore some options work better for some than others. Be prepared with assistance from your Income Tax professional and financial advisor. Refer here for the most recent 2016 Indexation adjustment for personal income tax and benefit amounts.
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Best wishes for you in 2016!