My graduate association has brought to my attention that postdoctoral fellowships will be taxed beginning this year if the Budget passes in its current form. I read the relevant section and happen to agree with Flaherty's assessment.
The tax exemptions for grad stipends (like mine) are excellent because we study to get a qualification and the stipends would be, realistically speaking, quite small if the tax was applied.
A postdoctoral fellowship is a larger paycheck, and the Government is creating 75,000 dollar whoppers to boot. Moreover, one is training for a faculty position which will earn not only a higher salary, but eventual tenure and lots of access to NSERC funding.
So there's nothing wrong with bringing postdoctoral money into the tax system. But is such an abrupt change the best way to address the issue?
If from one day to another you were whammed with a 20% tax you wouldn't be happy, never mind having to scrap plenty of plans. With a mortgage to pay or a child coming up, the situation becomes serious.
I would much rather the tax was introduced gradually over three years. Postdocs would pay 11% of the full rate in the 2010 fiscal year, 33% in 2011 and 100% in 2012. This way contingency plans can be made or an alternative, more lucrative career sought. Otherwise we are disgruntling a potential pool of non-liberal professors, which is a bit of a waste methinks.
2 comments:
Oh whine ... years ago, we paid full tax on grad T.A. stipends. Post-docs paid tax until someone introduced an exemption. Why?
Whatever you earn as a TA is still qualified as income, it just never reaches taxable levels.
The stipend goes into "other income" and is exempt.
I don't know why these exemptions were granted. I know that taking 20% of 20k is quite a hammering, doing so for 30k is even more of a whammy.
If you want to push these exemptions out because of the belt-tightening, do it gradually and give a word of warning.
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