Taxes

Aging is not for sissies. Not only will your body start reminding you of all of those merry days and nights when you ignored it, hoping faintly you could do so for ever and with impunity. Your income will change dramatically, too.

Now what? Well, you have a simple choice: accept it, sit down in your rocking chair and wait till death do us part. Or, on the other hand, you will NOT accept it and live life to the fullest. You will find that – theoretically, at least – you ought to have much more time to live life to the fullest now that you don't have to be in the office from nine to five. Guess what? You're barely coping.

That's called the Parkinson's Law effect: work (or any other activity, for that matter) fills the time that is available. (You should obtain a copy of the law in any good bookstore. You won't regret it. It will add more laugh wrinkles to your face, and these are the best wrinkles one can have.)

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The Mitt Romneys of the world not only pay less tax than the rest of us, (he paid about 17% on his millions according to reports this week), but their savvy extends to tax havens where they can save even more. Tax-free zones from the Caymans to lesser known spots like the Cook Islands, attract wealthy individuals like bees to honey.

Click on the photo below to find out where the 'one percenters' salt it all away.

I like to explain it this way: think of your RRSP as a garage. It's essentially an empty structure. You still need to put cars into your garage. These cars could be GIC's at your bank, stocks, bonds, mutual funds or just about any combination and more. But without carefully choosing which cars go into your RRSP and periodically changing those cars up, many Canadians aren't optimizing their RRSPs.

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As I write this Canada's debt-to-income ratio is at an all time high of 153 per cent. And it has been steadily increasing since 1984. According to The Vanier Institute of the Family this means for every $1,000 before-tax that the typical Canadian family earns, it owes $1,500.

Does that send shivers down your spine? Good. It should. It's time for you to get a DRAP (debt repayment action plan).

Quite a few Canadians entertain idle thoughts about how to break the ancient saying about taxes and death being the only certainty we've got in life. In fact, they want to avoid paying taxes and – at the same time – to survive to tell the tale.

And there have been a number of myths trying to prove you can do it and get away with it.

Here's the second part of a very sad myth-breaking compilation.

We've covered three such myths in the previous installment.

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Did you know that interest rates the Canada Revenue Agency charges to overdue accounts change every three months?

No? Well, now you do.

So, here, in their own words, are the rates as they will be as of New Year's Day (Jan. 1, 2012) all the way to March 31, 2012.

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Thanks to a premium hike in employment insurance and pension that starts on January 1, Canadians will be taking home less money per paycheque.

According to the Canadian Taxpayers Federation, the increase in payment towards employment insurance and the Canadian Pension Plan (CPP), comes to a combined $306 for employees and employers.

Employees will see an increase to 1.83 per cent from 1.78 in the EI rate, an increase in the maximum insurable earnings from $44,200 to $45,900 as well as an increase in the CPP maximum pensionable earnings from $48,300 to $50,100.

Life is short, and so is the time for us to file tax returns.

But all joking aside, small businesses will no doubt appreciate that electronic filing of Goods and Services Tax (GST) and/or Harmonized Sales Tax (HST) returns has become easier. Canada Revenue Agency (CRA) is keeping up with the most modern technology.

The system a.k.a. NETFILE has been around for a few years now. It's been splendid, as many of those who've been using it will attest, but some of the features have been awkward. For example, you had to go through a number of rather complicated hoops to get an access code so you could deal with the tax office without any side issues (such as Canada Post) delaying you.

No longer.

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There are only two things in life that we can't avoid: death and taxes.

That's the saying and, alas, it's true. Even though there are some people out there who would try to convince you that, while the medical fraternity (and sorority) hasn't yet come up with a faultless recipe for eternal life, taxes are another matter. You can avoid paying them, and the government can do nothing about it.

Sounds good, no? Except it's a perfect lie.

We live in a democracy and everybody is perfectly free to say that this or that tax is ludicrous, or taxation stinks, and besides, was it not a temporary thing to tide the country over expenses incurred in the World War I? Come to think of it, has the definition for temporary changed to for ever?

Opinions can carry a lot of weight. But they have no weight whatsoever when it comes to taxes. The bulky book a.k.a. Income Tax Act should be your only source when considering whether the government deserves a cent of your money.

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It seems the number of Canadians who think taxes should be taken out of the equation is growing. Most of us know that there are only two unconditional things in life, death and taxes.

There are some who beg to differ. They call themselves Tax Protesters. Judging by the fact the Canada Revenue Agency has been issuing numerous warnings to taxpayers, asking them to ignore the protesters, something fishy must be going on.