Personal Finance

This won't look good for Trudeau: New stats show TFSAs not just for the rich...

  • Last Updated:
  • Jul 2nd, 2015 3:16 pm
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Deal Expert
Feb 29, 2008
30106 posts
5547 upvotes
Montreal
xgbsSS wrote: Liberals barely raised taxes with exception for the GST which only replaced a hidden Manufacturer's Sale Tax that was about 13%.
GST was created by Mulroney and the cons. However, I have learned on this thread that Mulroney is a Liberal.
Deal Guru
User avatar
Mar 1, 2004
12861 posts
1485 upvotes
Pickering
I don't see what the problem is. Increase the TFSA limit and the budget will balance itself.
Deal Fanatic
Nov 24, 2013
6479 posts
3344 upvotes
Kingston, ON
AudiDude wrote: I don't see what the problem is. Increase the TFSA limit and the budget will balance itself.
And if it doesn't, the Prime Minister's granddaughter can figure it out in 70 years.
Sr. Member
Oct 21, 2005
615 posts
95 upvotes
London
The wonder of TFSA is compounding. Increasing $4500 a year in contribution is likely going to have a minimal impact in tax revenue for 2015 at best. It will be a huge burden say 30-40 years from now. Of course any opposition party would oppose the ideas or nick picking on the government. Once they are in power though, it is a different story.

As a side note, TFSA will likely be used for cash flow / rainy day funds for the lower income tax payers. It will be used as a "sheltered" for the rich to house capital gain. Even though a lot of Canadians including lower income families contributed to TFSA, the tax savings, I would argue, benefits the rich's more than poor's. Then again, this is RFD, everyone is rich.
Deal Addict
Jan 15, 2009
1081 posts
456 upvotes
Just north.
Everyone just wants to be poor, homeless, pay no tax and suck on the public teats. You want something that won't benefit the rich? Tax cap gain on primary residence.
Sr. Member
Sep 9, 2012
623 posts
156 upvotes
Edmonton
guyver0 wrote: Everyone just wants to be poor, homeless, pay no tax and suck on the public teats. You want something that won't benefit the rich? Tax cap gain on primary residence.
Yep. Or cap it at 250k (per sale, some restrictions for amount of time lived in house, etc) like they do in the States.
Member
May 21, 2014
418 posts
59 upvotes
Toronto, ON
Alot of poor people just have bad spending habits and dont have saving/investing knowledge. So giving them a few extra bucks in their pocket would just go to waste.

These are the same people you see constantly eating out, buying big screen tv/furniture on credit, trying to get the latest phone on subsidy because according to them its free etc...

I am not saying all low income people are like this though. But I see this happening often enough.
Deal Fanatic
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Apr 20, 2011
5310 posts
484 upvotes
Vancouver
guyver0 wrote: Everyone just wants to be poor, homeless, pay no tax and suck on the public teats. You want something that won't benefit the rich? Tax cap gain on primary residence.
Taxing cap gain on primary residence will benefit the rich by driving people to invest in the stock market
Deal Fanatic
User avatar
Apr 20, 2011
5310 posts
484 upvotes
Vancouver
wserib wrote: Alot of poor people just have bad spending habits and dont have saving/investing knowledge. So giving them a few extra bucks in their pocket would just go to waste.

These are the same people you see constantly eating out, buying big screen tv/furniture on credit, trying to get the latest phone on subsidy because according to them its free etc...

I am not saying all low income people are like this though. But I see this happening often enough.

yes, phones and toys are considered bad debt and real estate is good debt
Deal Addict
Apr 13, 2015
1108 posts
214 upvotes
RRSP contribution room is 18%.

TFSA old contribution room - $5500
TFSA new contribution room -$10,000

Do the math and comparison:

$5500/.18 = $30,555
$10,000/.18 = $55,555

Individuals with an income between $30,555 an $55,555, who are most likely to SPEND their tax refund provided by an RRSP contribution, can fully replace their RRSP contribution with a TFSA contribution and avoid the income tax in retirement AND enjoy tax sheltered compounding growth. And if their income is higher in retirement which is quite probable, they won't pay the tax penalty.

The middle income earner benefits enormously!
Sr. Member
Sep 9, 2012
623 posts
156 upvotes
Edmonton
popbottle wrote: yes, phones and toys are considered bad debt and real estate is good debt
"Good debt" is a line from realtors/house rich boomers. There is no such thing.
Deal Guru
User avatar
Mar 1, 2004
12861 posts
1485 upvotes
Pickering
Mike15 wrote: And if it doesn't, the Prime Minister's granddaughter can figure it out in 70 years.
Exactly. I've got no business making stock pics and world predictions for 2085 with what I know today.
Banned
User avatar
Nov 1, 2014
4317 posts
562 upvotes
Toronto, ON
bruceh2015 wrote: RRSP contribution room is 18%.

TFSA old contribution room - $5500
TFSA new contribution room -$10,000

Do the math and comparison:

$5500/.18 = $30,555
$10,000/.18 = $55,555

Individuals with an income between $30,555 an $55,555, who are most likely to SPEND their tax refund provided by an RRSP contribution, can fully replace their RRSP contribution with a TFSA contribution and avoid the income tax in retirement AND enjoy tax sheltered compounding growth. And if their income is higher in retirement which is quite probable, they won't pay the tax penalty.

The middle income earner benefits enormously!
wth? you saying people between 30k-55k can actually afford to put 18% into RRSP? as in max their RRSP contribution? lol wut?
Sr. Member
Mar 27, 2009
543 posts
67 upvotes
This makes me wonder why the 1/4 million$ per year earners don't see TFSA as a viable vehicle for investments.

Any ideas?
Deal Fanatic
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Feb 19, 2010
6237 posts
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guyver0 wrote: Tax cap gain on primary residence.
With 70% of the populace as homeowners this is an absolute non-starter not to mention a ridiculous idea touted only by those that can't afford a house. It would be political suicide to go down that road.
Deal Addict
Apr 13, 2015
1108 posts
214 upvotes
LandKing wrote: wth? you saying people between 30k-55k can actually afford to put 18% into RRSP? as in max their RRSP contribution? lol wut?
I am saying individuals who CAN afford to save benefit more from increased TFSA room than they do from contributing to their RRSP. Previously, the $5500 lmit provided that benefit to those earning less than $30k. Now it provides that same benefit to those earning less than 55k.

Whether or not a person CAN save is irrelevant. If you're going to use that argument then we should be eliminating both RRSPs and TFSAs.

By the way, I am in that income range, and I CAN save more than $5500/yr. Furthermore, given my limited income, I am much more inclined to use the TFSA because if I need it in the future, I won't pay an income tax penalty.
Deal Addict
Jan 15, 2009
1081 posts
456 upvotes
Just north.
Conquistador wrote: With 70% of the populace as homeowners this is an absolute non-starter not to mention a ridiculous idea touted only by those that can't afford a house. It would be political suicide to go down that road.
Right, people want fairness from government, yet they don't want them to take away their candies. So basically you're confirming that the whole rolling back TFSA idea is purely a political motive to win votes, and not to implement measures that doesn't benefit rich people more than poor.

My point still stands, TFSA is a minor issue. If people want fairness, then remove tax-exemption status on primary residence.
Deal Fanatic
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Apr 20, 2011
5310 posts
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Vancouver
Conquistador wrote: With 70% of the populace as homeowners this is an absolute non-starter not to mention a ridiculous idea touted only by those that can't afford a house. It would be political suicide to go down that road.
You can't get more right than that. Tax free accounts are the largest things to appear in the Canadian savings scene for decades. No complexity required - Simply put in your annual contribution up to the limit. Take it out without messing up your income tax at any time. TFSA's democratize saving money for Canadians. Anyone can utilize a TFSA and is completely equal, since it is paid for with after tax money.
Deal Addict
Dec 7, 2011
3586 posts
1993 upvotes
Whitehorse
If most Canadians haven't maxed out in the past, even fewer will max out the higher limit. So it can't be such a drag on tax revenue.

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