The Tax Blog for Smart Canadians

Tips and tricks for Canadian tax filers at every stage of life from UFile's tax expert Gerry Vittoratos



Where Do My Tax Dollars Even Go?

by UFile Team Équipe ImpôtExpert | Jan 03, 2018   Comments:

UFile blog

We all have a part to play in contributing to the growth and advancement of our country, and that’s why taxes are so important. But the truth is, most Canadians are in the dark about where exactly their tax dollars go. That’s why we’ve prepped a handy breakdown of all the important things your tax money helps to fund. In this season of giving, let’s find what you’ve been giving to all year.

It Takes An Army

The government department that costs the most to the government of Canada is... the military! National Defence, which includes the armed forces, accounts for 8 cents of every tax dollar spent by the government in 2013-2014. This may be surprising, considering the size of our military compared to other countries, but maintaining tanks and planes can be expensive!

Keeping Canada in Good Health

A tax spend you can, quite literally, feel good about? Health Care! While it’s technically the provinces’ jurisdiction, a good chunk of provincial annual budgets come from federal tax dollars. In 2013-2014, 11 cents of every tax dollar received by the federal government went to the Canada Health Transfer, which is the program setup by the federal government to transfer tax dollars to the provincial governments for health care. So this year, as you’re firing up your 2017 tax software, think about the active and important role we play in Canadian healthcare and the healthcare services you yourself enjoy thanks to your hard-earned tax dollars.

Creating Canadian Content (And More!)

Crown corporations, such as the CBC, Via Rail and Canada Post cost the government 3 cents for every tax dollar spent. On first inspection, that might sound high, but consider this: Crown corporations make money for the government, too! They return 1.4 cents to the federal coffers. So feel great, knowing your money is creating jobs and supporting local content.

Keeping Canada Governed

How much of each tax dollar goes to our federal elected officials? Surprisingly little! Salaries and benefits for members of parliament, ministers and parliamentary staff, and spending on facilities and services, totaled about $534 million in 2013-2014. That means when you use your tax return software to calculate your taxes, about ¼ of a cent of each tax dollar will go towards government salaries. Not so bad!

Paying It Forward

Some of your tax dollars go directly to people, too! We’ll explain. Pension plans such as Old Age Security, supplements, and allowance for the survivor, and more, take up 16 cents of every tax dollar spent. As a group, these pension plans represent the biggest portion of transfers the federal government makes to people directly. Other transfers the government makes directly to taxpayers are Employment Insurance (6 cents) and Canada Child Benefit (5 cents).

Investing In Business

The CRA not only collects, but gives back tax dollars to taxpayers through subsidies for certain activities. For example, say a company wants to develop a new product. They can have some of their scientific research and development costs reimbursed (up to 35% in some instances!). These types of subsidies represent almost 3 cents per tax dollar spent. Rest assured, the CRA doesn’t make it easy to get these types of subsidies; only deserving companies need apply! These subsidies can be an important job driver in certain fields such as engineering, which produce high paying jobs for which the  government easily recoups this investment through future tax dollars (tax on salaries, tax on income earned from the new product). These subsidies also incentivize companies to set up shop in Canada, creating even more jobs. So when you see the final federal tax figure on your personal tax return in your preparation software, look at it like an investment in the future of Canada….if you can!  

The Mounties!

There are, of course, lots of smaller spends that account for your tax dollars. Public safety is one of them, which includes prisons, border safety and of course, the RCMP. Other things you’re paying for include management of our country’s natural resources and protecting Canada’s wilderness through Parks Canada.

Got more questions about where your tax dollars go, finding CRA certified software, or how to use income tax return filing software? Connect with us on Facebook and Twitter for news and updates on the 2017 tax return, UFile 2017 tax software, and UFile community tax clinics coming to a community near you! Nothing nearby? Visit Tax & U to get accurate answers to all your questions about your 2017 tax return.

Leave a comment