Apr 2013 17

Canada Ranked 8th on the List of the World’s Wealthy

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Even though the global economy has undergone a major slowdown in the past few years, there are countries that do not lack wealthy people. According to a recent list of the top ten countries with the most billionaires made by a New York–based intelligence and wealth due diligence firm Wealth-X, the number of billionaires has grown, as well as the overall wealth generated by them, which has increased $760 billion since last year. Canada has done pretty well. It ranked tenth in the countries with the most billionaires list and has the eighth largest population of ultra-rich individuals, or those whose total assets are estimated at $30 million or more.

The Fountain Of Wealth by adforce1
The Fountain Of Wealth by adforce1

Wealth-X reported that there are 40 billionaires in Canada whose total wealth amounts to $105 billion. However, Canada recorded a decline of 4 per cent in its combined wealth as a result of the U.S. market downturn. As Forbes informed, Canada’s richest person, David Thomson, who together with his family owns Thomson Reuters, experienced the impact of this decrease and suffered a worth slump of $5.5 billion in a year — which is almost 30 per cent of the company’s share price. The list’s number one country, the United States, took an unprecedented lead with 480 billionaires, whose total wealth amounts to $2.05 trillion. Despite the current economic instability, there were 25 new billionaires in 2012 in the United States.

Furthermore, Investor Economics, a research firm that specializes in the fact-based measurement and analysis of Canada’s retail financial services and wealth management industry, recorded approximately 30,000 households in Canada that gathered financial wealth of more than $10 million, excluding equity in real estate or family businesses.

Another report conducted by Wealth-X revealed that there were 5,015 ultra-high-net-worth individuals (UHNWI) in Canada as of last July. The number of UHNWIs in the top five provinces was 4,660, representing 92.9 per cent of the total UHNW population in Canada. Ontario was at the top of the list with 2,210 UHNWIs, which represents 44.1 per cent of the whole UHNWI population. Ontario was followed by Quebec, with 1,025 UHNWIs, and Alberta, with 690. British Columbia took fourth place, with a population of 610 UHNWIs, which represents 12.2 per cent of the richest individuals in the whole country.

Susan Latremoille, director of wealth management and wealth advisor at Richardson GMP’s The Latremoille Group, commented in a National Post newspaper report:

We have way more wealth than we ever had in Canada. There’s this growing affluence and we’re seeing a demand for our services as people become more successful.

She suggests that there are two groups among Canada’s wealthy. One is composed of heirs to previous generations’ wealth, and the other is composed of successful entrepreneurs. Apparently, some show off their wealth, buying expensive cars and luxury items. However, most of Canada’s wealthy prefer to spend their money on experiences rather than possessions.

Canadian Yacht by jsloss
Canadian Yacht by jsloss

Increasing Income Inequality in Canada

According to the latest data by Statistics Canada, top earners who comprise 1 per cent of income tax filers collectively accounted for 10.6 per cent of the country’s total income in 2010. The biggest earners made at least $201,400 in 2010.

Furthermore, long-term data indicate that the gap between the richest and the rest of Canada has grown over the past three decades. In 1982, the average income of Canada’s top earners was $191,600, which was seven times more than the $28,000 average income of the rest of the country. By 2010, Canada’s richest people were earning ten times as much as the remaining 99 per cent. Their average income grew to $283,400, while everyone else’s average incomes went up by only $400 per year, reaching $28,400.

Income inequality was reduced in 2008 and 2009. However, at the height of the recession, in 2010, it increased again, according to Statistics Canada. Stats Can also informed that more than one fifth of the country’s richest people are now women, whereas in 1982, they represented only 11 per cent of the super rich. Moreover, the wealthiest Canadians pay a greater portion of federal, provincial, and territorial taxes now — at 21.2 per cent in comparison with the 12.4 per cent recorded in 1982. Most of the top earners live in big cities such as Montreal, Calgary, Vancouver, and Toronto.

Canada Estimated to be the Seventh Wealthiest Country in 2050

Canada ranked 14th in a list of the richest countries made by Forbes in 2012 on the basis of each nation’s gross domestic product calculated after 2009, with a GDP per capita of $39,171. Another study conducted by Citigroup and property consultancy Knight Frank placed Canada ninth in their list of the world’s wealthiest countries according to their GDP per capita in 2010. However, according to the report, Canada’s GDP per capita ($38,640 in 2010) was expected to grow, reaching 96,375 by 2050, which would represent the seventh highest GDP per capita in the world by that time.

The report predicts that almost half of the world’s economic output, 49 per cent, will be attributed to Asia by 2050, whereas today it is 27 per cent. Europe and North America’s economic output currently comprises 41 per cent of the world’s economy, but is predicted to drop to a mere 18 per cent by 2050. However, according to the report, this shift doesn’t mean that Europe and North America will become poorer; they simply won’t be able to grow rapidly enough to match the economic growth of Asia and will eventually fall behind.

Finance Minister Wants to Stop Substantial Tax Avoidance of the Wealthy

Canada’s Finance Minister Jim Flaherty announced on March 22 that the ministry plans to reduce tax cheats and target hidden offshore money as part of its efforts to boost revenues and lower the country’s deficit by 2015. Flaherty explained:

There’s still substantial tax avoidance and tax evasion and some of it through quite sophisticated methods by relatively wealthy people.

The proposed measures will be administered by the Canada Revenue Agency and include stricter rules for tracking large international transfers, enhancing corporate anti-loss trading rules, and rewards for people who come forward with information about tax cheats.

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