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Hey Reader!

I saw a post on Linkedin today and it is the inspiration for this week's article. It highlighted the disparity between Canada and the U.S' tax systems, especially with the recent changes from the One Big Beautiful Bill Act. See this excerpt from CPA Ontario:

Canada’s tax system is falling behind, and it’s costing us more than dollars.

While Americans are getting permanent relief through the OBBBA and extended Tax Cuts and Jobs Act benefits, Canadians remain married to high personal tax rates and fewer deductions. The average top marginal tax rate in Canada is 53.5%, compared to 43.7% in the U.S, which kicks in A LOT earlier at just $253,414 CAD instead of $626,351 USD. For creators and families in cities like Toronto, Montreal or Vancouver, the result is simple: a higher cost of living, less disposable income, and no tax break in sight. It’s time to talk about real tax reform if we want Canadians to keep more of what they earn and reduce cost of living.

Incentives matter. The U.S. is clearly signaling that it wants investment, innovation, and domestic spending. Everything from tip exemptions, to overtime exemptions, to auto interest deductions shows it. Imagine the extra relief of Canadians if they were able to deduct their car interest in a market where car prices are inflated (Accords cost as much as C300s). For some, that could be the difference between a tight budget and slightly more freedom. Canada is offering fewer reasons to park capital here, while Bonus Depreciation is boosting capital investment across all U.S assets; vehicles, boring businesses, and even private jets.

It starts with creating an ecosystem where businesses thrive.
American creators enjoy full expensing provisions and slightly lower corporate tax rates. This gives U.S. businesses a leg up on capital reinvestment, employee growth, and R&D. Canadian creators face a higher average tax rate and don’t benefit from the same expensing incentives. If we want Canada to be a place where small businesses scale, we must foster an environment that will not crush them before they can take off. Here are actionable steps we can take to relieve Canadians in the coming year:

Auto Interest Loan Deduction (Reduces taxable income for all individuals, not just business owners)
Tip and Overtime Deduction (Reduces taxable income by cash tips and overtime pay)
Reducing restrictions on Immediate Expensing (to promote our economy and encourage spending on Canadian businesses and capital)

Tax planning isn't a science. It's common sense, and my goal is to simplify it one piece of content at a time.

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