A Lifetime of Tax: How much tax will the average Canadian pay over their lifetime? [2023 Edition]

The Canadian government collects hundreds of billions in taxes each year, but how much will the average Canadian pay in taxes in their lifetime?

Using data from Statistics Canada, as well as recent studies on life expectancy, number of years worked and the cost of living, we’re able to estimate your lifetime tax burden. Each province collects tax in a different way and because of drastically different home prices and average salaries, the amount of tax paid by the average Canadian in each province is significantly different.

The average Canadian will pay $873,345 in taxes throughout their lifetime.

That’s 40.79% of all estimated lifetime earnings ($2,141,328) spent on taxes.

Those in Ontario will pay the most in lifetime taxes ($1,020,852) and people in Alberta will pay the least ($713,027).

Income tax is where most tax will come from, with the average Canadian paying $373,915 in a lifetime.

Sales tax on purchases will cost the average Canadian $256,929 in tax payments alone, almost 30% of their lifetime tax burden.

Tax on property will cost the average homeowner an additional $242,500 over their lifetime.

Taxpayers in Alberta will pay only $1,908 in sales tax per year, on average. While those in Ontario will pay $4,465, more than 134% extra.

74% of Canadians think that the average family is paying too much in tax.

Tax payers in Ontario are estimated to pay 45.83% of their lifetime earnings towards tax, far more than the 29.60% that those in Alberta will pay. Those in Ontario are paying more than $250,000 (a quarter of a million dollars!) in extra tax over their lifetimes.

Factors that contribute to this are the relatively high income and sales tax in Ontario, but also the exceedingly high property values which lead to property taxes that are more than triple other provinces.

On the flipside, Albertans pay extremely low taxes because of their 5% sales tax, low home prices, very low property taxes and average income tax rates. Alberta also has the highest median lifetime earnings by far, drastically reducing their percentage of earnings that go towards tax.

In the table above you’ll find a breakdown by province of the median lifetime earnings, the estimated lifetime taxes paid and the percentage of earnings that will go towards taxes.

These calculations used data from Statistics Canada, which produces reports and surveys on factors like income, spending and housing. We used the median pre-tax income of Canadians from 2020, as this is the most recent high-quality data available. We then inflated the earnings by $1,800, a little over a 6% increase over the 3-year period to estimate earnings as of 2023. This is behind CPI, but reflects historical income increases since 2012 and is inline with public estimates.

Then, we used the tax code of each province to calculate the yearly income tax that you would pay in each province, inclusive of factors like EI and CPP. Studies show that Canadians expect to work for 36-years, and so we multiply the yearly income tax by 36 to get your lifetime income tax burden.

Using 2019 Statistics Canada household spending, we divide by 2.4 (the average number of people in a household) and use CPI to inflate the cost of living to 2023 levels. Then, we multiply by the provincial sales tax to get the yearly sales tax bill. Life expectancy in Canada is currently 81.75, and we assume that you start paying a meaningful sales tax at 18-years old. Knowing this, we can calculate the lifetime sales tax payment.

We used the most recent Canadian Real Estate Association (CREA) average house price by province, and assume that the average Canadian purchases their first home at 36, the average age according to recent surveys. Using the lifetime expectancy and provincial property taxes we are able to calculate the lifetime tax burden from property tax.

We did not include factors like taxes on sale of assets or inheritance tax. Neither did we consider the effect of marriage on certain taxes.

How much tax does the average Canadian pay in their lifetime?

The average taxpayer in Canada will spend 40.79% ($873,345) of their lifetime earnings ($2,141,328) on taxes. However, the variance in lifetime tax burden can be significant because of differences in home values, yearly income and spending habits.

According to recent polls from the Fraser Institute, 74% of Canadians think that the average family is paying too much in tax. Yet the latest 2023 government budget is larger than the previous year, continuing a dangerous trend.

Sources:

Household spending by household income quintile: https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=1110022301

Household final consumption expenditure: https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=3610010701

Population estimates: https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=1710000901

Distributions of household economic accounts, income, consumption and saving: https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=3610058801&pickMembers%5B0%5D=1.2&pickMembers%5B1%5D=2.1&cubeTimeFrame.startYear=2018&cubeTimeFrame.endYear=2022&referencePeriods=20180101%2C20220101

Census Profile, 2021 Census of Population: https://www12.statcan.gc.ca/census-recensement/2021/dp-pd/prof/index.cfm?Lang=E

Household spending: https://www150.statcan.gc.ca/t1/tbl1/en/cv.action?pid=1110022201

Market income, government transfers, total income, income tax and after-tax income by economic family type: https://www150.statcan.gc.ca/t1/tbl1/en/cv.action?pid=1110019001