For the past 3 days I have been trying to figure out how a taxation formula works.  One accountant, and one client have mentioned it to me, saying that it is the greatest thing since slice bread.  I have mulled it over, googled the internet, printed tables and formulas, and I could not figure out how it worked in practical terms, for the long term.

There have been articles written in blogs, accounting websites, CRA, but no one has actually written the long term practical calculations, considering ALL aspects.  They only consider one or two elements.  They all just say “this is how it works and it is great”.  And then they refer to a  national newspaper article written in the fall.  They say “so and so said it was great, and it was published in the Globe, so it obviously must be great”.   So I have been trying to replicate the formula in practical terms, and illustrate the short and long term outcomes.

I was not going to give up until I figured it out.

It took 3 days to put all the pieces together, and finally last night, while in that twilight period of just falling asleep, it came to me, and I said “I will have to remember how it works in the morning….”

So today, I was able to put all the pieces together.  And you know what.  It is not that great.  In fact, not great at all long term, taking all aspects into consideration.  No wonder it is not being touted by the big accounting houses.

So that is where I have been, and what I have been up to.  Tomorrow, I will lay it all out in a logical way on paper, for easy reference.