Lessons Learned From Another Tax Season

Another tax season is in the books (at least for me).

I consider the filing of tax returns for family, friends and some clients to be a side-hustle to my side-hustle (real estate investing). Trying to decipher the CRA’s new tax rules, credits, and deductions each year is something I truly enjoy.

Over the years, I have seen a lot of tax returns, which by default means a lot of interesting financial situations.

The key observation I wanted to share from this years’ batch of filed returns (which holds true every year) is this: Individuals who own assets are generally the wealthiest tax filers I see. These are business owners, real estate investors, etc. Many of them rely on multiple revenue streams.

As I completed phone calls with some of these individuals this past month, specifically real estate investor friends/clients, it is interesting to see the amazing growth in most portfolios. Each year, many of these returns show increasing incomes, decreasing expenses, additional properties, and therefore, growing net worth.

Given the world-wide pandemic that we are in the midst of, I think this is a great time for all of us to reassess the stability of each of our income sources and whether we own enough good assets.

This is because the strength of these incomes and assets will be tested in the months (and years) that are to come. Some questions to consider: Do I need to create additional or new streams of income for myself? Am I relying too much on the income from my full-time job? Will my business (good or service) be in demand when we return to regular life?

I am not a financial advisor, but based on hundreds of tax returns that I have seen over the last 13 years, which are essentially snapshots of individuals’ wealth, the individuals who own assets are onto something.

So get out there and do what you can to create OR acquire assets that put money in your pocket each month.

Stay safe, stay positive.