“Canadians know very little about taxes. And they don’t know that they don’t know,” says Daniel Collison, who teaches personal finance in the MBA program at the Schulich School of Business at York University, in the Toronto Star Jan. 28.
“Some people have basic concepts, but they don’t know the true tax system,” he says. “It’s not taught anywhere, not formally.”
What Canadians need to understand, first and foremost, is that we have a graduated tax system, so that as incomes rise so do tax levels, says Collison, regional director of Investors Group in Markham.
Learn about the graduated tax rates, Collison says, by looking through the Web site at Revenue Canada or any sizable accountancy firm. You will discover at what level different types of income are taxed, starting with your employment income, then investment income such as interest, dividends and capital.
“The tax return is probably one of the best tools I use for tax planning since it has all the opportunities to look at deductions and tax credits,” he says. “There isn’t a better single tool to work with than tax return.”
While the tax system is complex, Collison believes that it’s not beyond the understanding of the average person to pay attention to deductions and credits when filing income tax.
Republished courtesy of The Toronto Star.