Personal Finance

This is my first year not getting a tax refund...

  • Last Updated:
  • Feb 25th, 2017 1:28 am
[OP]
Member
Dec 26, 2015
484 posts
282 upvotes
Manitoba

This is my first year not getting a tax refund...

No reason for this post other than to share my sadness as I've burnt the last of my tax credits from being a student and due to my pension debts I needed to pay off I didn't put much away into RRSP.

This is the sad day I realize I have entered adulthood and no longer get nice big tax refunds from being a student all those years.
27 replies
Deal Addict
Oct 4, 2009
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Montreal
Congratulations!
Deal Addict
May 15, 2013
1771 posts
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Montreal
But you don't mention how bigger is your income ...
Deal Addict
Dec 22, 2008
2170 posts
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Victoria
Veeshmack wrote: No reason for this post other than to share my sadness as I've burnt the last of my tax credits from being a student and due to my pension debts I needed to pay off I didn't put much away into RRSP.

This is the sad day I realize I have entered adulthood and no longer get nice big tax refunds from being a student all those years.
Nothing makes me sad about having to pay tax. I don't take for granted for one day that I have a good paying job.
Sr. Member
Feb 11, 2009
985 posts
239 upvotes
I get some benefits at work and we have the option of having tax withheld but I choose not to.

Come tax time I owe but it's like getting a free loan!
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Jul 17, 2008
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If you don't get a refund that means you are ahead. It means the government didn't borrowed the money you are entitled to, for free and 0 interest.

I would rather have 2000$ in my bank account, accumulating interest, then have to pay 2000$ come tax time, than receiving 2000$ refund, meaning for the best part of the year, government kept money I was entitled to tax free.

If I could, I would want 0 taxes taken from source at my employer. Then pay 10000$ or whatever I owe come tax time. Ofc 80% of the population would have no clue how to save these money to pay it at tax time, hence the government is looking to take as much as possible, and then give whatever was overpaid. (and ofc waste 50% of our money on useless crap and bad deals)
4seasonscentre wrote: I get some benefits at work and we have the option of having tax withheld but I choose not to.

Come tax time I owe but it's like getting a free loan!
When I hear people wanting to request tax withheld at source and I CRINGE.... SO... MUCH! Ugh!

As we speak I'm trying to figure how to submit the T1213 to reduce tax at source with some credits I know I will be eligible for this year.
Last edited by Messerschmitt on Feb 23rd, 2017 12:23 am, edited 2 times in total.
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Dec 14, 2007
3102 posts
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100% agreed with Messerschmitt. Things like the withholding tax when withdrawing an RRSP really piss me off. Gimme my money and let me pay tax come tax time. Don't arbitrarily decide to take 30%

I'm fine with paying taxes but hate tax refunds. It means I did something wrong.
I'd love to write history... in advance.
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Member
Apr 18, 2011
333 posts
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Toronto
BTW, how much you used to get in refunds in the past?
Deal Guru
Dec 11, 2008
10106 posts
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I've been paying taxes at the end of the year for YEARS. I don't remember the last time I got a refund lol.
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Nov 10, 2005
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I still manage to get refunds - but that is due to the fact that I pay into a pension plan, RRSP, medical, bus pass, etc....
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Dec 27, 2009
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4seasonscentre wrote: I get some benefits at work and we have the option of having tax withheld but I choose not to.

Come tax time I owe but it's like getting a free loan!
How much do you owe at tax time? Don't they (CRA) come after you for installment payments in this scenario?
Banned
Aug 19, 2016
1903 posts
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Our taxes is way too high. And I consider the EI premium, and CPP as taxes too because I will never see them again.
And even if I do see my CPP money, that will be like 30+ years down the road.
I wish they have ways to opt out of EI and CPP.
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Dec 27, 2009
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CollegeGraduate wrote: Our taxes is way too high. And I consider the EI premium, and CPP as taxes too because I will never see them again.
And even if I do see my CPP money, that will be like 30+ years down the road.
I wish they have ways to opt out of EI and CPP.
Silly comment about not seeing CPP. CPP is well-funded and will be around by the time you are ready to retire (unless you plan to die before you see any of it). As for EI, you may find yourself using it one day, don't assume you might never collect.

What low tax country would you rather live in? Most of the happiest countries on Earth are taxed more heavily than we are.
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Aug 19, 2016
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Chickinvic wrote: Silly comment about not seeing CPP. CPP is well-funded and will be around by the time you are ready to retire (unless you plan to die before you see any of it). As for EI, you may find yourself using it one day, don't assume you might never collect.

What low tax country would you rather live in? Most of the happiest countries on Earth are taxed more heavily than we are.
Why is the CPP premium increasing if it is well funded?
Link
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Jan 4, 2009
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NOT on the links!!
Chickinvic wrote: Don't they (CRA) come after you for installment payments in this scenario?
Yes, if you owe > $3K* for current and any of the 2 previous years.

I received a letter asking for installment payments but with a bit of planning (income splitting, minimal capital gains, etc.) I was able to avoid it this year.


*Quebec amount is smaller
Sr. Member
Feb 11, 2009
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Chickinvic wrote: How much do you owe at tax time? Don't they (CRA) come after you for installment payments in this scenario?
A little over a grand in tax year 2015. It's not worth it to chase me for instalments. Also depends on how well my investments perform so it is really impossible to come up with a $ amount per instalment.
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Dec 27, 2009
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CollegeGraduate wrote: Why is the CPP premium increasing if it is well funded?
Link
Are you really a college graduate?

The CPP is very well funded for its current level of payouts for at least the next several decades.

This increase has nothing to do with the current funding. It is increasing in order to increase the payout amounts in the future (to replace a larger percentage of people's incomes than it currently does). The CPP is very healthy and well-funded. This has been very well explained elsewhere (and you can google and find lots of information). The current system is designed to replace about 25% of an average salary (apparently the average salary is currently about $55K which is why that is where CPP contributions currently max out). In the future, they are going to increase the percentage of the salary that they want to replace (about 33% as opposed to the current 25%). They are also increasing the maximum salary that will be covered (from about $55K where it currently cuts off to about 80K).

By the time these changes come in, I won't have that many working years left to contribute at higher rates, so I won't benefit as much as people who are young today will (I'm 46 and will probably be retired in 10 years or so).

So, the current max CPP payout is about 25% of $55K (roughly) or say $13,750/year. Once the new system (increases) is fully realized in the future this will go up to a maximum of 33% of $80K (assuming a person consistently earned that much) or about $26,400. Of course this will all be in future dollars (so higher), but if it were today's dollar amounts that is what it would be.

This is why contributions will be increasing over time.
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Aug 19, 2016
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Chickinvic wrote: This has nothing to do with the current funding. It is increasing in order to increase the payout amounts in the future (to replace a larger percentage of people's incomes than it currently does). The CPP is very healthy and well-funded. This has been very well explained elsewhere. The current system is designed to replace about 25% of an average salary (apparently the average salary is currently about $55K which is why that is where CPP contributions currently max out). In the future, they are going to increase the percentage of the salary that they want to replace (about 33% as opposed to the current 25%). They are also increasing the maximum salary that will be covered (from about $55K where it currently cuts off to about 80K).

By the time these changes come in, I won't have that many working years left to contribute at higher rates, so I won't benefit as much as people who are young today will (I'm 46 and will probably be retired in 10 years or so).

So, the current max CPP payout is about 25% of $55K (roughly) or say $13,750/year. Once the new system (increases) is fully realized in the future this will go up to a maximum of 33% of $80K (assuming a person consistently earned that much) or about $26,400.

This is why contributions will be increasing over time.
They didn't increase it by the amount, they increase it by the percentage.

For instance, if I am making 20k 10 years ago, 5% of that is $1,000 plus $1,000 from employer.
Suppose the 5% stays, but now I am making $25k (due to inflation). That alone would have increased the amount being contributed.
However, if they increased the rate to 7.5% then we would get creamed,
You are suggesting that CPP should increase over time due to high payout requirements. Well, how would you like it if they increase it to 50% 100 years down the road? Your great grandchild would be paying that.

I know how the investment field works and I can identify a mismanaged fund when I see one.

The reasons for this mismanagement:
1) Hired way too many "Internal" and "External" experts as they call it. These people need to eat and enjoy life too.
2) Their results felt behind the market average return of 9% (they have like 6%) over the 50-year period. Let's put some numbers into perspective. If you manage 1 billion with compounded return of 9% over 50 years, you would have ended up with $74 billions. Now, if your return was reduced down to 6%, then you will end up with only 18 billions. See the $55 billions difference?
3) There is a good chance that they have over estimated their ability to generate their intended rate of return when computing the payout amount. They increased the contribution rate (not amount) once before.

To be fair, they did managed to pull 10% (advertised heavily) compounded annually over the 50-year period; however, they ended up with only 6% (buried deep in their annual report under a small section in small print) due to high fees (payments made to external experts) and expenses (salary for internal experts).

That is why I treat the CPP contribution as lost money because I don't expect the government to feed me when I retire.
I have maxed out my RRSP and TFSA for myself and my spouse. The rate of return I have enjoyed was around 20% for the past 6-7 years. If anyone is capable of generating 10% for me annually, I would gladly hand my money over; however, I have found none.

To generate that rate of return, I had to work almost 24/7 studying and reading annual reports while holding a full time job (not investment related). I have noticed one thing though, it is much harder to find undervalued stocks these days (much much much harder). I can see my rate of return slipping to the low teens in the next 6-7 years.

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