We all have hopes and dreams of striking it rich one day. Or, maybe you want to know just how much the rich are hauling in. Either way, you’re at the right place. In this article, we’ll discuss the top 1% of incomes here in Canada.
From there, you can gauge how far you have to go, or simply marvel in the fact that the top 1% of income earnings in Canada make a ton of money. Lets get started.
What income puts you in the top 1% in Canada?
According to Statistics Canada, if you want to be in the 1% of top earnings, you’ll need to make around $500,000 a year.
What income puts you in the top 5% in Canada?
In order to be inside of the top 5% of earners in Canada, you would need to earn about $236,400 annually. This is a significant decline from the $500,000~ needed to reach the top 1% of earners in Canada, and highlights how truly well off the 1% are.
What income puts you in the top 10% in Canada?
In order to be inside of the top 10% of earners in Canada, you would need to earn about $174,400 annually. This is still a steep decline from the top 5%, but nowhere near the decline we see going from the top 1% to top 5%.
The top 1% of earners by gender
Although this is certainly an argument for another, there are frequent debates on income inequality in both Canada and the United States. When we look to the top 1% of earners here in Canada, it certainly looks to back up that point.
75% of the top 1% in Canada are currently male. Along with this, their salaries are significantly higher than that of females inside of the top 1%.
The average salary of a male in the top 1% sits at $534,000, while a female is $450,400.
What about the top 1% per province?
Looking at data compiled by Stats Canada in 2019, we can see how much the 1% of income earners in each province make:
Newfoundland and Labrador: $406,100Prince Edward Island: $368,500Nova Scotia: $434,900New Brunswick: $457,900Quebec: $482,300Ontario: $534,800Alberta: $495,300British Columbia: $546,100The Territories: $357,100
So as we can see, the highest level of 1% income is currently located in British Columbia. However, Ontario is not far behind. And if we look to province to province discrepancies, we can see that 1% earners in British Columbia earn 53% more than those in the Territories.
Lets look at Canada’s 1% earners salary by city
Although British Columbia has the highest salary among 1% earners, you’ll actually see below that the highest level of 1% earners by city are located outside of British Columbia. These statistics are from 2019, the last year on record for Statistics Canada.
Calgary: $382,400Toronto: $322,300Ottawa: $273,700Vancouver: $285,600Hamilton: $267,100St. Johns: $266,300Edmonton: $264,700Victoria: $261,500Montreal: $252,000
What are these numbers currently based on?
Many have questions as to how the income of one-percenters is calculated in Canada. This is not household income, it is individual income. Meaning that if a one-percent earner has a spouse that is earning an income as well, it does not factor into these numbers.
Statistics Canada is simply taking income tax filings and deriving a threshold income (the minimum required to fit into a bracket) from its tax filings.
Are these numbers pre or post tax?
These numbers are before any federal or provincial income taxes have been paid.
How much income tax do one-percent earners pay?
Canada’s one-percent definitely do pay their fair share of taxes on their income. Statistics Canada data states that the average amount of federal and provincial income taxes paid by the 1% exceeded $190,000 in 2019.
This is a significant jump from 5% income earners in Canada who paid just $72,700 in income tax, 10% earners who paid just $48,100, and top 50% earners who paid just $16,900.
Is the current income distribution in Canada a concern?
For the most part, although many of the one-percenters would say it isn’t, it most certainly is. The wealth gap was widened even further during the COVID-19 pandemic, as the top earners got richer, while the middle and lower class Canadians suffered through job loss, rapid inflation, and business closures.
Stagnant wage growth among the non one-percenters
When we look to other percentiles of earners here in Canada, we can see that there is a drastic difference in the amount of growth on a year-to-year basis in terms of hard dollar numbers.
The common phrase “it takes money to make money” is completely relevant. And generally, the more money you have, the more money you can put to use.
This is reflected in the fact that it took just $338,000 to be considered a one-percenter in the year 2000. Today’s 1% income levels represent a near $200,000 increase. Compare that to the bottom 50% of earners here in Canada, who have only watched their average income go up by about $8200.
What are the net worth’s of 1% income earners?
Generally, as age goes up, so does net worth. The older the 1% earner, the larger the net worth.
However, this is not the case in every instance. There is a possibility that a person did not enter the top 1% bracket until later on in their lives. In this situation, their net worth could be smaller than a younger person who has been earning more for longer.
What percentage of Canadians make over $100,000?
Only around 11% of Canadians make more than $100,000 a year according to statistics Canada.
This seems like a low number, as with the rising costs of living it is becoming increasingly difficult to live off of anything lower than a six figure salary. However, income inequality is more prevalent than ever.
What percentage of Canadians have a net worth over 1 million?
According to Credit Suisse, there were around 1.7 million Canadians who were millionaires in 2020. This represents about 5.6% of the population. However, due the recent surge in the price of real estate and a record low borrowing environment for 2020/2021, these numbers have no doubt gotten higher.
How much does the average Canadian person make a year?
According to Statistics Canada, the average Canadian salary in 2020 was $51,300. This is a far cry from the one-percenters average income of just over half a million dollars, and highlights the significant income gap in Canada.
How do I become one of the one-percent income earners?
Build a business
One of the hardest ways, but the way many one percent earners get to where they are is by starting a business. There is a possibility that their business could be connected to their education, for example a lawyer starting their own law-firm.
Small business owners that have struck it rich due to a unique idea or a strong passion for what they do are few and far between. But there is the potential for someone with little to no education to become one of the 1% earners in Canada as well through the growth of their own business.
Acquire a higher salary
This is easier said than done, but is actually the easiest way to become a one-percent earner here in Canada. The acquisition of a higher salary, depending on the industry you’re in, can be done so through promotion.
However, for the most part, it will require a person to get an education in a niche industry, and then work their way up into one of the top positions in that industry. Think of a lawyer, dentist, doctor, or a CFA for example.
Start a side hustle
This sounds silly to say and relatively cliché, but it does work. Multiple income streams, especially ones that are more passive in nature, can be compounded to grow your wealth.
Although this is likely the hardest route towards becoming a 1% income earner in Canada, even if you don’t get there, starting multiple income streams can certainly help you retire earlier by stockpiling extra cash.
Overall, the 1% here in Canada are an exclusive group.
Bottom line? If you’re aspiring to be inside of the 1% earners here in Canada, you’d better get to work. Earning over $500,000 in a single year is not an easy task. In fact, you’d have to earn $1369 each day of the year. There are some low-income Canadians who struggle to make this every two weeks, highlighting the economic inequality in our society today.
At the end of the day, we’re firm believers that happiness doesn’t necessarily come from the amount of disposable income a person has. Does more money help, especially if you’re struggling to pay for basic needs? Certainly. But in our opinion, total wealth doesn’t necessarily come exclusively from the money a single individual has.
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Original Source: Stocktrades
Categories: Personal Finance