# Double income worthwhile in Canada



## Wexford_Ireland (Mar 6, 2012)

Have been playing with the tax calculators and my jaw hit the floor when I realised that child care in Canada is fully tax deductable!

So I used the following sites and came up the lot listed below.

Long story short, both partners can work in Canada without being penalised by taxes and child care


Calculators taken from TaxTips.ca - 2012 and 2013 Canadian Income Tax Calculator and Deloitte Budget Calculator 2013

All of the following worked out for a married guy with 3 kids under 16 and costs factored in and 8% of salary put away for pension earning 65K.

*Canada, SK*
Married guy earning 65K CAD can look at approx. 15% tax and look at a take home of 56K CAD less his pension contribution so roughly 50K CAD

*Ireland*
Single income at 50K (65K CAD) is paying 28% tax and take home is 38K (49K CAD) so 34K (44K CAD) after pension paid

*Canada, SK*
If his wife takes a part-time job while kids are at school so no childcare at say 20K salary but no pension contribution
Total income 85K CAD, taxed at 13% on average, household income 70K CAD less pension is 66K CAD, so up 16K CAD by his wife working. Pretty good. Wife earns 20K CAD part-time and contributes 16K CAD to the household income. She is taxed at roughly 20%

*Ireland*
Wife takes up part-time job at 15.5K (20K CAD)
Total income 65.5K (85K CAD), taxed at 25% on average, household income 49K (64K CAD) less pension is 45K (59K CAD), so up 11K (13K CAD) by his wife working. Wife has been taxed at 30%


In a nutshell
Single income Ireland – 44K CAD
Single income Canada – 50K CAD 6K less tax in Canada​
Double Income Ireland – 59K CAD
Double income Canada – 66K 7K less tax in Canada​Not a huge difference but wait it gets better.

In Canada you can claim you child care costs back as tax relief!

Let’s say the lady of the house decides to go work full time for 35K CAD or 27K Euro and also pays 8% pension and child care costs for the 3 school going age kids is 1200 euro per month 14.5K pa

Let’s say in Saskatchewan child care for the same 3 kids after school is 
Saskatchewan Child Care Cost Information. Daycare Rates in Saskatchewan 1500 CAD per month 18K CAD pa

Now our double income in Ireland is 77K before tax, 55K after tax (29% tax) and we have 49K after pension less childcare costs of 14.5K actual household income is 34.5K.

So remember our Single income bloke?

Earned 50K Euro, household income was 34K after tax and pension?

His wife went to work fulltime for 27K and after taxes, pension and childcare they are 500 euro better off!

Let’s pay his wife some more, let’s say she gets a 40K a year job all at 8% pension.
Now the household income is 60K less pensions and childcare is 38K, congratulations your wife is working 40 hours a week for 50 cents an hour.

Lets see how this works in Canada

Single income guy was getting 50K after tax and pensions
If his wife goes full time at 35k CAD, , but claims tax relief on childcare of 18K

100K CAD total income, 86K CAD after tax (13%) so 79K CAD after pension and 61K CAD after childcare. Household income is up by 11K CAD

If the wife goes to work for 52K CAD (40K Euro) household income jumps to 117K CAD before tax, 98K Cad after tax, 72K CAD after pensions and childcare. A bump of 22K CAD for the household and your wife worked for 12 CAD an hour after taxes, pensions and childcare.

To summarize


65K Single income Ireland – 44K CAD
65K Single income Canada – 50K CAD 6K less tax in Canada

85K Double Income Ireland – 59K CAD
85K Double income Canada – 66K CAD 7K less tax in Canada

100K Double Income Ireland – 45K CAD after taxes, pension and child care
100K Double income Canada – 61K CAD after taxes, pension and childcare *16K Cad better off than Ireland*

117K Double Income Ireland – 50K CAD
117K Double income Canada – 72K CAD after taxes, pension and childcare*22K Cad better off than Ireland*


Basically in Ireland once you have more than 1 child both partners working makes less sense and more than 2 children and unless both partners are on good money it does not make financial sense.

In Canada a second income makes a difference and although at a lower rate their made be some trade off of money versus nurturing at higher income levels both partners can contribute significantly to the household income

John


----------

