While income from work, retirement benefits, interest… is fully taxable, only half of the income from capital gains is taxable.
Who benefits most from this attractive tax treatment? Wealthy taxpayers.
• Also read: You’ve been paying less taxes since July 1.
According to the latest tax data, 199,310 wealthy Canadian taxpayers alone, including 35,480 Quebecers, made capital gains of about $35 billion in 2020, completely protected from taxes. This represents a non-taxable income of about $175,600 per wealthy taxpayer.
Here’s a breakdown of the $35 billion in profits for which no taxes were withheld:
$27.3 billion in capital gains from resale of stocks and other investments.
– $2.8 billion in gains with stock options;
– $4.8 billion in capital gains in “small companies”.
A fact that should be highlighted in a big red line: In 2020, there were about 1,410 wealthy taxpayers (including 370 Quebecers) who “succeeded” in the feat of not paying a penny Tax on their income of $250,000 or more.
We agree that this raises doubts about our tax system!
By “wealthy taxpayer chief,” we mean those who have declared income of $250,000 or more. Canadian revenue totaled 373,110 Canadian taxpayers in this income bracket in 2020, including 65,380 Quebecers.
These “rich people” represent only a tiny percentage of all taxpayers, barely 1.26%.
The other income category where the “wealthy” are very active…is distributed income from taxable Canadian corporations. They collected 41% of said dividends paid to all Canadian taxpayers.
It should be noted that dividends benefit from the privileged tax treatment, as they are taxed at lower rates than income from interest, employment, pension benefits, etc.
It must be admitted that “our” wealthy taxpayers of $250,000 or more still run a hefty tax bill.
Although they represent only a tiny percentage (1.26%) of the 29.6 million Canadian taxpayers, they account for nearly 25% of the total federal tax bill. In 2020, they paid $42.4 billion in federal taxes out of a total of $170 billion.
In terms of total income, our “wealthy” reported a regulated amount of $202 billion (12.6% of total income), or an average income of $541,395 per capita. Which cost them $114,200 in federal taxes, on average.
To this, obviously, we must add the provincial tax bill, at a minimum of $26 billion, or even about $70,000 per taxpayer.
In short, on a median income of $541,395, “wealthy” Canadian taxpayers paid taxes an average of $184,200, for an effective tax rate of 34%.
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