When it comes to providing financial advice to most Canadians, the financial industry is wrong!!!
This is because there are two types of marginal tax rates. Posted marginal tax rates is the amount of taxes that will be paid on your next dollar of income. It is solely based on provincial and federal rates as the wealthy do not qualify for benefits and they don't have to worry about benefit claw backs.
For the low income and average Canadian, posted marginal rates should never be used. Such rates give the impression that a family making $40,000 for example, would have a marginal tax rate of 25% when that marginal tax rate could reach as high as 90%.
This has a very big impact on financial decision. If that family spends that extra dollar of earnings, they can only spend 10%. If they save this dollar and listen to the industry by putting it in a TFSA, they will still lose 90% of that dollar. The only solution is a RRSP.
In Real Life (IRL) Tax application, using your current income and new income, will calculate and show all the government benefits impacted by an increase in income. It will calculate the real marginal tax rate and will show you the difference between a TFSA and RRSP investment by capitalizing all tax losses.
You want to know the impact of the UCCB or Family Tax Cut, IRL TAX does it all...
Never again will the government be able to lie about a change to the Income tax Act!
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