The Income Tax Act (ITA) is a lot like those word problems we all remember from grade school math. The word problem is a story told in numbers. Tax is a story told in numbers but the characters in the story are real life politicians and voters.
Let us take a humorous approach and give a real life example. Imagine you are a politician looking to get re-elected. You have the power to change the ITA because you currently hold office. You decide to change the ITA to encourage voters to vote for you. Let’s say you want to get young families to vote for you. You introduce a new tax credit that only young families can use. The tax credit gives a tax refund to families with children in registered sports activities. The formula in your head is:
Young families who vote plus tax refund = votes for you in the next election
Although I have left out the details, the concept is clear. You trade a reduction of tax revenue for an increase in votes for your political party. The formula does not stop there. For the voter in the young family there is a similar but different formula:
Value of tax refund currently promised by the party up for re-election versus value of tax refund promised by the opposition party.
When the election is actually held there is a political equation presented to the voter. Which party will provide more value in the next government
If you want to discuss the real world “formula” of tax advantages available to you please get in touch below, where we are working to ensure every client gets a chance to learn and act on the formula that is best for them.
Have a question? Contact Grant Gilmour.
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