4 Things Millennials in Canada Need to Know About Taxes

What do millennials and taxes have in common? They’re both misunderstood!

Addressing misconceptions and misunderstandings

If there’s one generalization, we’ve all come to know and believe it’s that millennials are terrible with their finances and don’t know how to handle their money. It’s a belief that’s widespread, and held not only by older generations but millennials themselves, leaving them feeling hopeless and disempowered at a crucial time.
This is untrue, but it’s also inaccurate because Millennials are reportedly making more money than their parents. They are smarter about their financial decisions and more cautious even though it’s difficult to dismiss the fact that the global economy and recession, inflation and other factors have dealt them a weak hand.

Among the many issues that many millennials, especially those who are new to the workforce and graduating college, starting their independent lives etc. are plagued with is the issue of taxes.
As a tax advisory and full-service CPA firm in Edmonton, we’re breaking down some key factors millennial readers should know about taxation in Canada:

1.Why are taxes important? Why do we need to pay them?

Taxes are essential to maintaining the economy and affording you all the freedoms that you may be taking for granted. Canada’s welfare and public healthcare systems, schooling etc. are some of the top in the world, and our standard of living is heavily dependent on the taxes we pay.

Taxes are a form of public investment that help sustain many of the services we require and need on a regular basis, including subsidized food, education, and much more. It’s a social contract between the citizens and the state, allowing for a system to come in place. Understanding them helps you sort your finances better, make fewer errors when filing, and continuing to benefit the economy.

2.What are tax audits, and why do they matter?

Tax audits are for companies and organizations to reconcile and track payments, differences and compliance. They help tax authorities and taxpayers stay on the same page and ensure there are no frauds, major inconsistencies and other issues emerging. As a CPA firm, we offer tax auditing services to clients too.

Learn to save, understand taxes, and plan for a more financially secure future with our help.>

3.What is reportable income?

Reportable income is what is considered taxable. We know there are several ways of earning a living, be it from employment, self-employment, pensions and savings, investments, or grants, benefits etc. But not all of them are taxable or taxed in the same way, which is why you need to know what is applicable to you in particular. You can consult our team to know more about this and find out your reportable income.

4.What are the deductible expenses? Do I have them?

A hilarious, yet incredibly vital instance of tax confusions being addressed in pop-culture was on the popular Canadian comedy series, Schitt’s Creek, as the protagonist David Rose struggles with the idea of deductibles. As a young individual, it’s important to know exactly what your deductibles are because they will help you save big time. From factoring in spending on education to the various tax breaks such as those mentioned here, there are many deductibles that you can benefit from in your personal and professional investments.

Taxes are a milestone of adulthood. If you’ve made it this far, congratulations! You deserve a pat on the back. But we realize it can be overwhelming, which is why you can always reach out to us for tax advisory services, corporate financing and much more.