Earlier in the summer, I got a bike trailer to replace my double stroller so that we could take our kids around using our bikes.
Riding bike was something I did all the time when I was a teenager. We used to ride from one side of town to the other side, which usually took up over 1.5 hour one way.
Ever since I moved to Canada, I rarely got a chance to ride.
Last time I did, I was training for the Ride for Heart & Stroke fundraising event annually. I broke my front tooth during the training and had an open cut on my knees.
I didn’t end up riding for the event and I’d not got a chance to go back.
Until the kids pick up bike riding seriously…
And this bike trailer reignited my love for riding bikes.
I still had the same bike from the accident that I suffered almost 10 years ago. It’s not a great bike to begin with, the accident just made it worse.
I want a new bike.
I saw so many bikes available for sale on Facebook Marketplace and Kijiji. I figured, maybe I could just get a used one there.
It would save me a few bucks and it’s good for the environment by having less garbage.
I nailed down to one brand (it took me a couple of months to decide on a brand) and started searching. Found one bike that fit my price range.
It looked perfect on paper. A couple of year old. Only rode it five times.
It’s just on the east side of Toronto, and I live about 40 minutes away.
No biggie. I save a couple hundred dollars, even with 40 min away, it’s still worth it.
Because I’m a 5’3 Asian woman, it’s a bit dangerous to meet a guy (without a picture of himself, only a monkey) off Facebook, Erwin decided that he would come along.
We showed up, we saw the bike, it started to rust. That wasn’t how it was described on the ad.
Disappointed. We ended up not buying the bike.
That’s the end of searching for a used bike.
I wasted numerous hours looking for the “right bike”. I then spent over an hour of commuting, not just my own time, but Erwin’s time as well, to “look at” this used bike.
I might have saved $300 buying the bike, but I ended up spending way more time on scouting the deals, that didn’t even turn out to be a deal. Not worth it.
Savings that you get may not outweigh the time required to get the savings.
Time is money, that you can never get back.
Fraser Institute, an organization based on BC, recently came out with a study that says Canadians are paying more taxes than necessities.
That sounds crazy, isn’t it?
If you think about it, here’s the list of taxes that we pay…every single day.
- Personal income tax (part of your payroll)
- Employment insurance (that’s paid as part of your payroll too)
- Corporation tax (business tax)
- Property tax (if you own a property or indirectly helping someone pay their property tax if you rent)
- Sales tax (HST 13% in Ontario, 13% GST & PST combined in BC, maybe 5% if you live in Alberta)
These are the obvious ones. Then there are the less obvious ones…
- Tax on gasoline for your vehicles
- Import duties (which are included as part of what you pay for your cars, alcohol, pretty much everything that are imported and subjected to duties)
- Liquor, tobacco, amusement and other excise taxes
According to Fraser Institute, on average, we spend 44% of our income on all of the taxes listed above. We only spend 36% on basic necessities such as food, shelter and clothing combined.
Crazy, isn’t it?
44% of our income goes to the government, while only 36% of income is spent on basic necessities.
It boggles my mind how we can spend more on taxes, than supporting our families.
Let’s flip a switch and look at what made up of the government’s revenue.
Almost 50% of the federal government’s revenue came from personal income tax.
If you include Employment Insurance premiums that you contribute as an employee, more than 50% of the government revenue came from your paycheck alone. ☹
On the other hand, corporation income tax only contributes to 15.2% of the government revenue.
Many people ask me if there’s a tax benefit in setting up corporations. Guess what, corporations only contribute to 15.2% of the government revenue. Much lower than what personal income tax has contributed to the system.
You would understand why corporation can be a beneficial vehicle to lower your taxes.
The politicians from all parties can tell us how much tax cuts they are going to implement, these charts and statistics can show you that we’re paying more taxes than ever.
Building a business and investing, in some sort of corporation environment, can help you build your wealth much more tax efficiently.
This is also the reason why we are hosting Wealth Hacker Conference on Nov 9, to inspire hardworking Canadians to take control of their own wealth and to share all the tips, strategies, motivation and connection to 10X your wealth.
Until next time, happy Canadian Real Estate Investing.
Cherry Chan, CPA, CA
Your Real Estate Accountant