I’m not dead yet

This story in today’s Globe and Mail kills me. I guess it’s true what they say about death and taxes.

If you were looking at the financial data from Toronto-based funeral company, Arbor, you might think that people were dropping dead left and right in Canada recently. Is swine flu claiming lives? Are Leaf fans finally jumping off the Bloor Viaduct realizing their team has no chance of making the playoffs let alone win a Stanley Cup (ever)?

It seems the company reported a 242% increase in preneed funeral contacts. (Preneed is a funny term by the way sort of like “previously enjoyed” for used cars.) Why?

The primary driver of this increase: the new harmonized sales tax in Ontario and BC. It seems people wanted to get in and pre-pay before their provinces started charging 8% and 7% tax respectively on their services – previously, only a federal tax was charged on funerals. Is an additional 8% worth dying over?

Additionally, the Guaranteed Funeral Deposits of Canada, an organization that manages prepayment money from funeral homes, and receives about $3m to invest in a normal month, received a whopping $58m in June, or twenty times the usual amount. That just kills me.

On a $10,000 funeral, the new tax only ads $800 in Ontario to the cost. According to my math, if you plan on dying in the next eight years, this is a bad deal. You’d be overpaying. Investing your ten grand at 1% compounded for 8 years would earn you $828.57. After-tax it’s probably a wash.

Frankly, I’m shocked that so many people would rather part with their money today, so that their estates didn’t have to pay an additional 8% to the tax man.

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