Save our TFSA

[valve37]

The newly elected Liberal federal government has discussed that the limit of Tax Free Savings Accounts (TFSAs) will be reduced from the current $10,000 to the previous ceiling of $5,500. Introduced in 2009, the TFSA permits the 80% of Canadians who do not work in government to save their own money for a decent retirement.

The FACTS:

• Half of Canadians have a TFSA, and of the TFSA holders who have topped up their contributions to the maximum limit, fully 60% earn less than $60,000 per year.

• TFSAs are an excellent tool for seniors who can no longer contribute to a Registered Retirement Savings Plan after the age of 71.

• A recent Angus Reid public opinion poll showed that 67% of Canadians are in favour of the TFSA limit remaining at $10,000.

• TFSAs have already been taxed, and the annual income generated from the account will be tax-free.

• Canadians currently pay about 43% of their income in taxes – more than they spend on food, shelter and clothing combined. And many of those tax dollars go to provide very generous pensions to government workers – pensions that the average Canadian cannot afford for themselves but to which they contribute tens of billions of their tax dollars.

• Contributing the maximum of $10,000 per year to a TFSA would still not compare to the very generous public sector defined-benefit pension plans, which are indexed to inflation, and which include additional post-retirement extended health and dental benefits.

• Although opponents of leaving the TFSA limit at $10,000 often say they do not believe Canadians have that kind of money “lying around” to put into a TFSA, the same group nevertheless believes that Canadians do have additional funds to put into increased mandatory levies for CPP, a possible Ontario Retirement Pension Plan (ORPP), EI, new carbon taxes, etc. It is hypocritical to say that Canadians lack the funds for a TFSA, but do have funds to put into these forced government levies.

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I want the federal Liberal government to leave the Tax Free Savings Account (TFSA) at the current $10,000 per year contribution limit.

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[ypdc_dennis]

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@valve37 wrote:

The FACTS:

• Half of Canadians have a TFSA, and of the TFSA holders who have topped up their contributions to the maximum limit, fully 60% earn less than $60,000 per year.

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For those who held a TFSA in 2013, only 17 per cent had reached the contribution limit.

Among those eligible for TFSAs with annual incomes below $60,000, only 5% had reached the limit.

By comparison, the maximization rate was 31% for those with incomes higher than $250,000.

[disisus]

Half of Canadians have a TFSA, and of the TFSA holders who have topped up their contributions to the maximum limit, fully 60% earn less than $60,000 per year.

And how many making 60,000 or less do max out their contribution limits? 5%.

[pierrelebel]

Valve - Canadians elected a new government to govern all Canadians, not only the high income earners.

The current plan is to simply roll back the TFSA annual limits to the same level they were earlier this year. Nobody will suffer.

And yes, Mary and I will only been able to salt away $11,000 a year into TFSA.  So what?  There is nothing wrong with Canadians with high income paying some taxes. is there?

[pierrelebel]

While on the subject, I also approve of the new government plan to increase income tax for those earning more than $200,000 a year while lowering the tax for Canadians earning less than $100,000 (the so-called "middle class")

How will that affect you, valve?  Will you not save money like 90% of all Canadians or you would rather not discuss a Liberal plan that directly benefits you?

[valve37]

The facts also do not support the argument that TFSAs are causing the government to lose lots of tax revenue. In 2014, the “cost” to the federal government from TFSAs was just over $1 billion. Yet in the same year, the government spent over $21 billion of our tax dollars on government employee pensions. And that was just the federal government. If you include provincial and municipal governments, the cost of public sector pensions is almost twice that amount. So our new federal government is telling us it’s OK to spend tens of billions of our tax dollars on very generous pensions for the 20% of Canadians who work for government, yet it can’t afford $1 billion or so for the rest of us? I don’t buy that for a minute, and neither should you.

Catherine Swift

Leaving it alone will not upset anyone but reducing it will. The TFSA is a great retirement  savings vehicle especially for those just starting to save for retirement. And TFSAs are tax free when removing funds unlike RIFs and all other pension vehicles.

[disisus]

So our new federal government is telling us it’s OK to spend tens of billions of our tax dollars on very generous pensions for the 20% of Canadians who work for government, yet it can’t afford $1 billion or so for the rest of us? I don’t buy that for a minute, and neither should you.

Why would you be against generous pensions? Aren't you one of the privileged one's that get a generous Defined Benefit Pension?

[pierrelebel]

Valve - Catherine Swift has no credibility. She is strictly pro-business.

http://www.cbc.ca/news/politics/boosting-tax-free-savings-account-may-cost-billions-budget-watchdog-...

""By 2080, the TFSA fiscal costs project to increase tenfold, reaching 0.57 per cent of GDP," the report concludes."

Now please take the time to review the report from the non-partisan Parliamentary Budget Officer

http://s3.documentcloud.org/documents/1675141/tfsa-2015-en.pdf

[valve37]

JT will create a bigger 2080 fiscal problem than TFSAs when he lowers the CPP eligibility from 67 to 65. Was it not deemed to be unaffordableÉ

[pierrelebel]

"Was it not deemed to be unaffordable"?

That is what Harper claimed.  Did you really believe it?

"Canada can afford its Old Age Security system without making younger Canadians wait an extra two years to receive benefits, Parliamentary Budget Officer Kevin Page said "

I would rather believe Page than Harper.  Would you not?

http://www.cbc.ca/news/politics/old-age-security-affordable-without-changes-watchdog-says-1.1244845

By the way valve, how about a reply to my earlier question regarding the lowering of your income tax rate under the new Liberal government?  Don't you think it is a good thing for you?

[valve37]

Unfortunately RRIF payment percentages increase every year and soon it will put be over the 90 plateau. A tax free TFSA would have been a saviour however they were not available 40+ years ago.

[pierrelebel]

"Unfortunately RRIF payment percentages increase every year "

???

Your pension (RRIF) income increases every year - and will soon exceed $90,000 after income splitting - and you call that unfortunate! 

Still, the net result of the proposed tax changes will SAVE you money.  Do you have a problem with that?

[valve37]

"Unfortunately RRIF payment percentages increase every year "

???

Here is the table:

https://www.woodgundy.cibc.com/wg/reference-library/topics/retirement-planning/rrsp-maturity-options...

Just to clarify your statement. My total income will soon exceed 90 because of the increasing RRIFF forced withdrawal percentages.

Do I not fall out of the save you money after 90É

[pierrelebel]

I fully understand how RRIF works.

The point is that YOU will SAVE taxes under the new Liberal tax plan, whether your taxable income reaches $90,000 or not.

The savings - year after year - are substantially more than what would have been saved on the extra $4,500 TFSA contribution.

Do the calculations.  It is not that difficult.

The income on $4,500 TFSA works out to $225 (based on 5% yield), Extra annual tax cost: $100-$125

The 1.5% reduction in your income tax bracket works out to:  oooops!  Lots of money after all! (about $600 as your income approaches $90,000)

You are way ahead with the Liberal plan.

Maybe you should say Thank You by sending your monthly contribution to the Liberal Party instead of the Conservatives!   

You may even get a Christmas card from Trudeau and family.

[prior-of-verity*shake-hands-with-your-devil]

Lets be honest here.......go back a year, two, three, ten! and he does not like liberals and certainly not anyone in the Trudeau family. No matter what is said nothing will change, hasn't in the past, why start now? When asked specific questions they are just avoided and only the replies for the parlor game are discussed. I know this person. I know where he lives and who he is and how much he makes including pensions and investments and frankly......he should be as happy and content as a mouse in a cheese factory, so this is not about money, this is about resentment and having lost and having a person's 'hero' (Harper) seen for what he really is and all it took was a real adversary for the people of Canada to finally have someone else to chose from. 

Will Trudeau be the savior that some people hope for? I don't know. However I will say this, it's been a longgggggg time since I have noticed so much vibrancy and hope and smiles in Canada since the beginning of the Dark Ages of the Harper reign. It's like taking a shower after being locked in a pig barn for 9 years. You feel clean again. Canada feels clean again. 

[rose-dee]

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@pierrelebel wrote:

The current plan is to simply roll back the TFSA annual limits to the same level they were earlier this year. Nobody will suffer. 

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You are absolutely right about this.  Moreover, it's clear that the promises that were made by Harper prior to the election were intended as "pre-election candy" to dangle in front of his perceived supporters -- those with 6-figure plus incomes.  This also applies to his announcements about income splitting for couples with children.  

None of this was ever actually implemented, so how could it now be considered by the OP as being taken away by Trudeau?  In fact, there was never any certainty any of it could have been implemented at all unless Harper had won a clear majority.  

Trudeau's approach is like a breath of fresh air after 10 years of being in a sealed room.  I hope Canadians will give him the benefit of the doubt and let him prove his mettle.  He may actually do us proud.  

[pierrelebel]

"None of this was ever actually implemented,"

Actually the TFSA limit was increased to $10,000 for 2015.

From CRA: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/tfsa-celi/cntrbtn-eng.html

[valve37]

ÉThis also applies to his announcements about income splitting for couples with children.  

None of this was ever actually implemented, so how could it now be considered by the OP as being taken away by Trudeau?É

The above applied to the 2014 tax year Rose and unless Justin acts fast it will also apply to 2015 tax year.

You are against stay at home mothers where that has a huge affect on tax owed the majority of which would be middle class the very segment Justin wants to help.

[rose-dee]

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@valve37 wrote:

"This also applies to his announcements about income splitting for couples with children.  

None of this was ever actually implemented, so how could it now be considered by the OP as being taken away by Trudeau?"

The above applied to the 2014 tax year Rose and unless Justin acts fast it will also apply to 2015 tax year.

You are against stay at home mothers where that has a huge affect on tax owed the majority of which would be middle class the very segment Justin wants to help.

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Yes, I do realize those changes would not be reflected until Canadians submit their 2015 tax returns, but I don't expect our new Prime Minister to drag his heels on this file.  With a parliamentary majority he should be able to quickly pass the necessary legislation. 

I am certainly not against stay at home mothers (you assume it is always the mother who wants to stay at home, although there are many men who take on that role, especially if they have a wife who is established in a profession, for example).  

Whichever spouse is involved, I believe this particular income splitting scheme was ill-conceived, far too costly for the country (since it would apply to many, many people over many years), and primarily advantageous for those earning larger incomes, i.e. the people who can actually afford to pay taxes.  

I think it would be of questionable benefit to people who need it the most -- those at lower middle class (or lower) income levels.  If you're already in a bottom-rung tax bracket, struggling to make ends meet, transferring a portion of what income you do have to a spouse who isn't earning income won't make an enormous difference to your lifestyle or financial capacity.  

However, if you're earning a six-figure income and subject to a higher tax bracket, and you have the financial capacity to shovel thousands of that income to a non-working spouse, you would net a substantial tax savings.  Depending on your actual level of income, it could be enough to bump you into a lower tax rate, avoiding paying thousands of dollars in tax.  

We already have a fairly generous system in Canada for parental leave through EI, as well as other child tax and cash benefits from the federal government.  Income splitting of this kind only works if you give it to the people who most need the help.  I personally think there are better ways than this for the federal government to help support young families in Canada. 

One other thing I want to say: I wish people would stop referring to our PM only as "Justin", as if he weren't quite an adult.  The man is 45 years old, not much younger than Stephen Harper was when he became PM, nor others for that matter (I think Joe Clark was even younger -- did people refer to him as a kid?).  Pierre Trudeau was in his late 40's when he became Prime Minister, I think Brian Mulroney wasn't much older.  What difference does 4 or 5 years make at that age anyway?  

If Justin Trudeau is a vigorous, youthful middle-aged man, then all the better.  He'll have the wherewithal and the energy to do the job, as I imagine the stamina required takes a toll on even the most sturdy person.  The election attack ads on his character and abilities are over and I think it's time to acknowledge him with some respect as our fairly and democratically elected Prime Minister.  I think he may prove that a lot of people underestimated him.  Even though I'm not a card-carrying Liberal, I wish him well.  

[valve37]

The TFSA is a great supplemental vehicle to save for one's retirement along with the RRSP. If the Liberals were honest about serving the middle class as they define them, they would not have reduced the 10k/yr allowable contribution to 5.5k.