One of the most common things I hear during tax season is this:
“But I didn’t even see that money.”
And yet, there’s a tax bill attached to it.
As a CPA and financial advisor, this is one of the biggest disconnects I see every year — people assume that if money didn’t land in their bank account, it can’t possibly be taxable.
Unfortunately, that’s not how the tax system works.
Tax season is often stressful not because people did something wrong, but because they don’t realize how many types of income are taxed behind the scenes.
Loving your numbers means understanding not just what you earn — but what is considered income in the eyes of the CRA.
Why Tax Season Feels Like a Surprise
Most people associate taxes with paycheques or business income.
But taxes don’t just apply when you “get paid.”
They apply when:
- Income is earned
- Gains are realized
- Value is transferred
- Money is redistributed on your behalf
When you don’t know where taxable events are happening, tax season feels like it comes out of nowhere.
Investment Income: Taxed Even When You Don’t Touch It
This is one of the biggest sources of confusion.
Many investments generate taxable income even if you never withdraw the money.
Examples include:
- Interest earned inside non-registered accounts
- Dividends that are automatically reinvested
- Capital gains triggered by fund activity, not withdrawals
You may not see cash hit your account, but you’re still responsible for the tax.
That’s often why investors are shocked at tax time — the growth felt invisible, but the tax bill is very real.
Reinvested Does Not Mean Tax-Free
A common misconception is that reinvesting income avoids tax.
Reinvesting simply means the money stays invested. It does not change the tax treatment.
If an investment generates taxable income, it must still be reported, whether you spent it, saved it, or never touched it.
This is especially important for people investing outside registered accounts, where taxes are not deferred.
Capital Gains Without Selling Everything
Another surprise comes from capital gains.
People assume capital gains only occur when they sell an investment and cash out.
In reality, capital gains can be triggered by:
- Portfolio rebalancing
- Fund restructures
- Selling one investment to buy another
You may still be fully invested, but a taxable event has already occurred.
This is one of the reasons tax planning and investment planning should never be done in isolation.
Entrepreneurs, Side Hustles, and “Invisible” Income
For business owners and side-hustlers, this issue shows up in different ways.
Common examples include:
- Business income earned but not withdrawn
- Income reinvested back into the business
- Investment income earned personally while cash flow is tight
Tax season becomes overwhelming when people realize they owe tax on money that was already allocated elsewhere.
This is where understanding your numbers — not just your tax return — becomes critical.
Registered Accounts vs Non-Registered Accounts
Not all investment income is treated the same way.
Registered accounts like RRSPs and TFSAs have different tax rules than non-registered accounts.
Confusion often arises when:
- People assume all investments are tax-sheltered
- Growth is mistaken for tax-free growth
- Withdrawals are misunderstood
Knowing where your money is invested is just as important as knowing how much it earns.
Why This Matters During Tax Season
Tax season is when all of these moving pieces come together.
Investment income, business income, employment income — they’re all reported in one place.
If you haven’t been tracking what’s taxable and what’s deferred, tax season feels punitive instead of predictable.
The goal isn’t to avoid tax at all costs.
The goal is to avoid surprises.
Loving Your Numbers Means Understanding Taxable Reality
Loving your numbers doesn’t mean memorizing tax rules.
It means understanding:
- Which income is taxable
- When tax is triggered
- Why cash flow and tax don’t always line up
This is where working with someone who understands both taxes and investments makes a difference.
It’s also why I created Money Moves.
Money Moves helps you understand how your money behaves — across income, investing, and taxes — so you’re not caught off guard when tax season arrives.
A Better Question to Ask This Tax Season
Instead of asking:
“Why do I owe tax on money I didn’t see?”
Try asking:
“Where did taxable income happen that I didn’t account for?”
That shift alone can change how empowered you feel about your finances.
