💰 Which Tax Bucket is Eating Your Wealth? 🤔
- mcau11120
- Feb 7
- 1 min read
Did you know that the Canada Revenue Agency (CRA) classifies your money into three tax buckets? 🪣💰
Understanding how your income and investments are taxed can make a huge difference in how much money stays in your pocket. Let’s break it down:
🔹 Tax Now (Taxable) – This includes income that gets taxed right away, such as your salary, business income, and investment earnings from non-registered accounts. Every dollar earned here is subject to tax in the year you receive it.
🔹 Tax Later (Tax-Deferred) – This is money that grows tax-free for now but will be taxed when withdrawn. Think of RRSPs and pensions. You get a tax deduction when you contribute, but when you take money out (like in retirement), it’s taxed as income.
🔹 Tax Never (Tax-Free) – The golden bucket! Investments in a TFSA, for example, grow tax-free, and withdrawals are not taxed. Life insurance payouts and certain benefits also fall into this category.
The key to maximizing your wealth? A strategic mix of these buckets! Too much in the "Tax Later" bucket can mean a big tax bill in retirement. Too much in "Tax Now" may limit your ability to grow wealth efficiently. Finding the right balance is crucial.
💡 Have you thought about how your money is spread across these buckets? Let’s chat about ways to optimize your tax strategy! Drop a comment or DM me.
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