Ask the Hammer                                                                                              

Sure we already get to deduct contributions to RRSPs, and those who pay spousal support, that deduction as well, but what else is there really for those of us who are SiFaNKs (single family, no kids)?

We can’t deduct dependants, education or child care costs so we see our annual incomes diminished by income taxes.

Given the current high Canadian ratio of debt to income (hovering around $1.80 of debt for every dollar earned) it would make sense for Governments, both Federal and Provincial, to further incentivise savings and debt reduction by rewarding us for decreasing debt year to year. Such incentives, if coupled with rebates for combating climate change, such as buying electric cars and upgrading our living spaces with energy-wise accessories and the like, would go a long way to helping consumers afford these products.

And to ensure that the purchase of the above type of items does not increase the debt load I have the following suggesting for the lawmakers.

Firstly, adopt a similar system, as the Banking industry has, that increases an income tax deduction for –

a) Not increasing your annual debt load in a calendar year compared to the previous calendar year.


b) Further increase the tax deduction for also lowering your annual debt load every year compared to the previous year’s.


c) Implementing a system of tax breaks to Corporations selling the energy wise rated products if “cash rebate” enticements to consumers had to be used by the consumers towards the purchases instead of adding the amount to a credit card or applied directly to RRSP and TSFA contributions for the purchaser, thereby minimizing the need to further encumber the household debt.

What those additional deductions are would be based on your gross annual income and the percentage of your debt reduction each year.

Of course I know that all the mathematical calculations normally needed for these suggestions would be intricate and complicated so that all parties get something out of them.

The Corporations, now giving away cash rebates, should receive a tax percentage break, if all the requirements of the consumer-purchaser are adhered to; the consumers see an increase in savings with a further reduction in personal taxes; the Governments see taxpayers reduce debt and increase savings so that they, once arrived at age 60/65 require less Government pension income, and therefore the Government will have those extra funds for other programs (like health and financial; the education of our youth).

Many decades ago, when I ridiculously aspired to be the Prime Minister of Canada (OK, so I was 10 years old) and still today, I believe that all school children should start to receive financial education at the earliest (Grade 1), and through high school, so that they are taught to understand the true benefits of saving from the get go, and be made to understand why it is so important to return to an era where one only bought what one could afford – without debt.

Debt is the new opium and once started it has an appetite to become larger and larger over time until only few options remain.  File for bankruptcy or kill oneself, neither of which being good choices.  If, through financial education and more tax incentives, one lowers and/or avoids debt altogether, the less need Governments will have to expand on bankruptcy bureaucracy.

And, again, when the Governments save in one area they liberate funds to enhance other more necessary and useful programs.  A win-win-win for all.

Me. Hammerschmid has practiced Family Law since 1982; Senior Partner at Hammerschmid & Associates; founding & current member of Family Law Association of Quebec (past Secretary for 28 years). Inquiries treated confidentially: 514-846-1013 or [email protected] © 2019 Linda Hammerschmid 

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