Serious flaw with Strategy #1. If a person needs the $70 after tax take home pay to provide for their family, the take home is not $78k, after contribution, but just $52k. They cannot access the RRSP $26k. The gain is only the $8k savings of tax rebated on the RRSP contribution.
Thats why when it comes to personal finances, you need to not only focus on saving and investing, but also how to increase your income. This is what I talked about in my TEDxTalk: ruclips.net/video/0laavBo25ew/видео.htmlsi=c08dDaFdGrXRBma_
Thank u! The info is so helpful! Could you create a video discussing sole proprietorships and corporations, their benefits, costs, and other key factors to consider? For example, which option might be better suited for small business owners or content creators? Thanks and hope you have a great 2025!
Thanks for the forecast! Could you help me with something unrelated: I have a SafePal wallet with USDT, and I have the seed phrase. (alarm fetch churn bridge exercise tape speak race clerk couch crater letter). How should I go about transferring them to Binance?
See one big error with your first claims for being an employee. 30k for phone, internet, meals and travel etc etc. is just ludicrous! Those are business expenses of the employer, not the employee. Only if you are Required to work from home would those be personally paid out of pocket but then would either be reimbursed by employer, or deducted as legitimate work from home expenses OFF your taxes owing. I am an employee and there is no way anyone should be covering 30k in your emoloyers expenses out of pocket. That makes all your examples and comparisons way off base. My only personal expenses as an employee are parking (900 /yr)and fuel, (maybe $500/yr) wear and tear on the vehicle, and maybe some extra clothing I might not otherwise buy. Couple thousand at most, not 30k.
So the $30K of eligible expenses is an example that I shared was to show the benefits of a corporation. There are a lot of hidden costs of working an employee job that isn’t included in phone, internet, or meals and travel. Working with over 100+ clients, some clients spend more money just to be able to do their job. In the future I can do a financial audit of one of my clients to show as a real life example. But the message that I wanted to share is that in Canada it’s very difficult to build wealth just through employment income.
Well, you are correct for a majority of people. However, this works for me as I'm technically an employee (under a corporation) but in reality I'm the owner with large travel expenses.
@@FYI003 Ok. Would you not claim all that travel through the business as an expense? That's the part I don't get why it would be out of pocket personally. I believed that businesses would want every expense possible to write down and lower their corporate taxes.
@@scsparcrow Your question is probably better answered by a chartered accountant rather than by me. However, before I became self-employed (under my own corporation) I worked for an engineering consulting company and had all kinds of out-of-pocket expenses....it was terrible as I put all on my MC and awaited reimbursement. However, now that I'm self-employed it's far better. I pay myself quite well for mileage (no leasing), etc. as a reimbursement immediately and using my MC is the way to go. In my situation reimbursement is far better than having a taxable benefit.
Great video. But given the current salary levels in Canada vs the cost of living (in Vancouver), there hardly remains any scope of contributing 26K in registered accounts. The cost of living is increasing but salaries not. Real estate is out of range. The smallest apartment is selling for 500K in such slow market. The rental income from the property wont cover the EMI and then I still need to pay more for my own rent, while covering the deficit between rental income and EMI. The value appreciation in apartments is not much. Question is whether the equity buildup will be fast enough in this apartment vs other market investments. Just thinking out loud. Setting up a business is a different game altogether. Don’t have any experience in that domain, hence cant estimate correctly. What would be your recommendation for someone like me, who represents a big chunk of folks in Canada?
Hey Abhishek, coming from Toronto, I feel your struggles when it comes building wealth in such expensive markets. The hard truth is it is very difficult to build wealth in these markets when cost of living and real estate is so high. But there are a few options: 1. Long distance real estate investing. I know a lot of real estate investors that are now investing in Winnipeg and Saskatchewan because you can still get cash flowing properties there. 2. Increasing your income. There are ways to increase your skill and recruit for higher paying jobs. 3. Starting a business with an unlimited earning potential 4. Stock Options Trading: if you have more than $50K to invest this is a really easy way add another source of passive income where you can get a 2-4% return per year. 5. Moving. Unfortunately building wealth in Toronto/Vancouver is very difficult, but if you move to somewhere cheaper, it’ll solve a lot of problems. Hope this gives you some ideas!
Hi I'm a business owner. Yeah as you said we pay 9-12% , but then I pay myself as dividend which at the end of the year I'm at 25ish % tax bracket. Do you have any suggestions on how to get it lowe thank you and suscribed!
The best tax strategy is to amass enough savings that @ a 4 -5% Canadian eligible dividend matches your earned income then you can retire. Example 100k salary vs 100k eligible dividends: 100k salary after cpp ei and personal tax deductions you Net $73,367 100k in dividends would Net you $95,609
Yes dividends are a great way to reduce the amount of taxes you need to pay. And if you can generate enough passive income to cover your day-to-day expenses you can essentially retire!
another way for extra income is rental property refinance, every few years you refinance rental property and pay out your personal debt. or even pay off part of your primary residence and keep the rental property going, it is a tough business in Ontario with current laws and LTB but still can make it
Great point! Thanks for sharing. Yes unfortunately to get a residential positive cash flowing property in the GTA is near impossible these days with the real estate prices and interest rates.
If the corporation makes $200k and you pay yourself $100k, what happens to the rest? Where does it go? Will it get taxed when I withdraw everything the corporation makes eventually?
Hey Ine, so the $100K that stays within the corp gets taxed at the corporate rate at about 12%. You have a few options: 1. you can use this money to withdraw at a later time when you’re in a lower tax bracket 2. you can use this for future biz investments to make more money 3. You can also set up some insurance structures to withdraw the money at a lower tax rate.
@@TheoG4403 Yes, in Canada, if you own a company and pay yourself a salary, you will have to pay personal income tax on the salary you receive. Here’s how it works: Your company pays corporate taxes on its profits at the applicable corporate tax rate. Paying Yourself a Salary: If you decide to pay yourself a salary from the company’s profits, this is treated as an expense for the company. As a result: The salary is deducted from the company’s taxable income, potentially reducing the amount of corporate tax the company has to pay. You will then need to declare the salary as personal income on your personal tax return. An alternative to a salary is paying yourself dividends, which can have different tax implications. Would you like me to explain the difference between paying yourself a salary versus dividends?
Your house or primary residence is not an asset, as per Robert Kyosaki. He calls a home a liability because money is going out of your pocket to keep it. I tend to agree…… when u can sell it and live for free afterwards, then I would call it an asset.
Hey Isaiah, that’s right the FHSA is both tax deferred and tax free. I made a video about it here: ruclips.net/video/5ceZ-eEsF8c/видео.htmlsi=3h5GqxLTwM9MBShD
Most cities where someone is making 100K(single status) is NOT contributing 22K to of their after tax income to an RRSP lol. this is like some silly joke. Maybe $5-10K. Unless they are still living at home.
When you sell your house, okay you become millionaire but you still need to live somewhere so you still would have to buy another house that would cost as much as the one you sold. So you’re not millionaire anymore, not in liquid. Unless you move to a more affordable place or you buy a smaller cheapest house.
I totally agree! People put too much emphasis in their primary residence. In a previous video, I called a principal residence a "dead" asset because although it might be increasing in value, you can't sell it cuz you need to live in it.
Your channel is very informative, thx for the info!
Hey Nick! Thanks for the nice comment! Glad you find my channel informative!
Thanks for the share-out, this is really useful!
Thanks Will for the nice comment! Glad you enjoyed it
Serious flaw with Strategy #1. If a person needs the $70 after tax take home pay to provide for their family, the take home is not $78k, after contribution, but just $52k. They cannot access the RRSP $26k. The gain is only the $8k savings of tax rebated on the RRSP contribution.
Thats why when it comes to personal finances, you need to not only focus on saving and investing, but also how to increase your income. This is what I talked about in my TEDxTalk: ruclips.net/video/0laavBo25ew/видео.htmlsi=c08dDaFdGrXRBma_
Thank u! The info is so helpful! Could you create a video discussing sole proprietorships and corporations, their benefits, costs, and other key factors to consider? For example, which option might be better suited for small business owners or content creators? Thanks and hope you have a great 2025!
Hey Yuning!
Thank you! That’s a great video idea!
I’ll try my best to do it in the upcoming months!
Thanks for the forecast! Could you help me with something unrelated: I have a SafePal wallet with USDT, and I have the seed phrase. (alarm fetch churn bridge exercise tape speak race clerk couch crater letter). How should I go about transferring them to Binance?
Great video thanks
You’re welcome Nino!
See one big error with your first claims for being an employee. 30k for phone, internet, meals and travel etc etc. is just ludicrous! Those are business expenses of the employer, not the employee. Only if you are Required to work from home would those be personally paid out of pocket but then would either be reimbursed by employer, or deducted as legitimate work from home expenses OFF your taxes owing. I am an employee and there is no way anyone should be covering 30k in your emoloyers expenses out of pocket. That makes all your examples and comparisons way off base. My only personal expenses as an employee are parking (900 /yr)and fuel, (maybe $500/yr) wear and tear on the vehicle, and maybe some extra clothing I might not otherwise buy. Couple thousand at most, not 30k.
So the $30K of eligible expenses is an example that I shared was to show the benefits of a corporation.
There are a lot of hidden costs of working an employee job that isn’t included in phone, internet, or meals and travel.
Working with over 100+ clients, some clients spend more money just to be able to do their job.
In the future I can do a financial audit of one of my clients to show as a real life example.
But the message that I wanted to share is that in Canada it’s very difficult to build wealth just through employment income.
Well, you are correct for a majority of people. However, this works for me as I'm technically an employee (under a corporation) but in reality I'm the owner with large travel expenses.
@@FYI003 Ok. Would you not claim all that travel through the business as an expense? That's the part I don't get why it would be out of pocket personally. I believed that businesses would want every expense possible to write down and lower their corporate taxes.
@@scsparcrow Your question is probably better answered by a chartered accountant rather than by me. However, before I became self-employed (under my own corporation) I worked for an engineering consulting company and had all kinds of out-of-pocket expenses....it was terrible as I put all on my MC and awaited reimbursement. However, now that I'm self-employed it's far better. I pay myself quite well for mileage (no leasing), etc. as a reimbursement immediately and using my MC is the way to go. In my situation reimbursement is far better than having a taxable benefit.
only 66.7% exceeding 250k in capital gains is taxed at the highest tax bracket, the other 33.3% is tax free
Great video. But given the current salary levels in Canada vs the cost of living (in Vancouver), there hardly remains any scope of contributing 26K in registered accounts. The cost of living is increasing but salaries not.
Real estate is out of range. The smallest apartment is selling for 500K in such slow market. The rental income from the property wont cover the EMI and then I still need to pay more for my own rent, while covering the deficit between rental income and EMI. The value appreciation in apartments is not much. Question is whether the equity buildup will be fast enough in this apartment vs other market investments. Just thinking out loud.
Setting up a business is a different game altogether. Don’t have any experience in that domain, hence cant estimate correctly.
What would be your recommendation for someone like me, who represents a big chunk of folks in Canada?
Hey Abhishek, coming from Toronto, I feel your struggles when it comes building wealth in such expensive markets.
The hard truth is it is very difficult to build wealth in these markets when cost of living and real estate is so high.
But there are a few options:
1. Long distance real estate investing. I know a lot of real estate investors that are now investing in Winnipeg and Saskatchewan because you can still get cash flowing properties there.
2. Increasing your income. There are ways to increase your skill and recruit for higher paying jobs.
3. Starting a business with an unlimited earning potential
4. Stock Options Trading: if you have more than $50K to invest this is a really easy way add another source of passive income where you can get a 2-4% return per year.
5. Moving. Unfortunately building wealth in Toronto/Vancouver is very difficult, but if you move to somewhere cheaper, it’ll solve a lot of problems.
Hope this gives you some ideas!
@@michaeleekim Moving will be my first option.
Subscribed!
Thanks Pajamas! Glad to have you here!
What about donating to charity to lower your taxes?
Hey do you do get a tax credit when you donate to charity, but this isn’t a tax optimization strategy and more of an incentive to donate.
Hi I'm a business owner. Yeah as you said we pay 9-12% , but then I pay myself as dividend which at the end of the year I'm at 25ish % tax bracket. Do you have any suggestions on how to get it lowe thank you and suscribed!
Great video Will you do a 4th strategie on investment income? That covers Eligible Dividend credit, since you did touch on Capital Gains.
Hey Ryan! That’s a great video idea for sure! Is there anything in particular that you want to learn more about when it comes to investment income?
What if your not working due to disability and get $ from insurance payout. How do you pay less taxes or get a refund from the government?
Strategy #4 move out of canada?
Haha I’ll be honest that is a very viable option that I am actually considering at the moment
The best tax strategy is to amass enough savings that @ a 4 -5% Canadian eligible dividend matches your earned income then you can retire.
Example 100k salary vs 100k eligible dividends:
100k salary after cpp ei and personal tax deductions you Net $73,367
100k in dividends would Net you $95,609
Yes dividends are a great way to reduce the amount of taxes you need to pay.
And if you can generate enough passive income to cover your day-to-day expenses you can essentially retire!
another way for extra income is rental property refinance, every few years you refinance rental property and pay out your personal debt. or even pay off part of your primary residence and keep the rental property going, it is a tough business in Ontario with current laws and LTB but still can make it
Great point! Thanks for sharing. Yes unfortunately to get a residential positive cash flowing property in the GTA is near impossible these days with the real estate prices and interest rates.
A lot of real estate investors are now moving outside of GTA and even in other provinces like Manitoba and Saskatchewan for cash flowing properties
Nice video..qq- is there there a thing called long term capital gain tax vs short term in Canada. I see that in our neighbors in the south! Thx
Hey Nataraj, nope long-term and short term capital gains is only in the USA. In Canada we just have capital gains.
If the corporation makes $200k and you pay yourself $100k, what happens to the rest? Where does it go? Will it get taxed when I withdraw everything the corporation makes eventually?
Hey Ine, so the $100K that stays within the corp gets taxed at the corporate rate at about 12%.
You have a few options:
1. you can use this money to withdraw at a later time when you’re in a lower tax bracket
2. you can use this for future biz investments to make more money
3. You can also set up some insurance structures to withdraw the money at a lower tax rate.
You still have to pay taxes on the $100k that the business paid you.
So you still pay taxes anyway? @@dkchef
@@TheoG4403 Yes, in Canada, if you own a company and pay yourself a salary, you will have to pay personal income tax on the salary you receive. Here’s how it works: Your company pays corporate taxes on its profits at the applicable corporate tax rate.
Paying Yourself a Salary: If you decide to pay yourself a salary from the company’s profits, this is treated as an expense for the company. As a result: The salary is deducted from the company’s taxable income, potentially reducing the amount of corporate tax the company has to pay. You will then need to declare the salary as personal income on your personal tax return.
An alternative to a salary is paying yourself dividends, which can have different tax implications. Would you like me to explain the difference between paying yourself a salary versus dividends?
@@dkchef but I thought dividends are subjected to 50% capital gain tax?
고마워요!!
You’re welcome!!!
Your house or primary residence is not an asset, as per Robert Kyosaki. He calls a home a liability because money is going out of your pocket to keep it. I tend to agree…… when u can sell it and live for free afterwards, then I would call it an asset.
Exactly! Rich dad poor dad was the first personal finance book I read, and it really changed my outlook on things
9:55 slightly mispoke i believe
I thought the FHSA was both tax deferred and tax free.
Hey Isaiah, that’s right the FHSA is both tax deferred and tax free. I made a video about it here: ruclips.net/video/5ceZ-eEsF8c/видео.htmlsi=3h5GqxLTwM9MBShD
Most cities where someone is making 100K(single status) is NOT contributing 22K to of their after tax income to an RRSP lol. this is like some silly joke. Maybe $5-10K. Unless they are still living at home.
When you sell your house, okay you become millionaire but you still need to live somewhere so you still would have to buy another house that would cost as much as the one you sold. So you’re not millionaire anymore, not in liquid. Unless you move to a more affordable place or you buy a smaller cheapest house.
I totally agree! People put too much emphasis in their primary residence. In a previous video, I called a principal residence a "dead" asset because although it might be increasing in value, you can't sell it cuz you need to live in it.
👏
Thank you Binoy!