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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- SCORE+10
- mr_raider
- Deal Expert
- Feb 29, 2008
- 30106 posts
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- Montreal
- AudiDude
- Deal Guru
- 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.
- Mike15
- Deal Fanatic
- Nov 24, 2013
- 6479 posts
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- Kingston, ON
- bfoot
- 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.
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.
- guyver0
- 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.
- imkinger
- Sr. Member
- Sep 9, 2012
- 623 posts
- 156 upvotes
- Edmonton
Yep. Or cap it at 250k (per sale, some restrictions for amount of time lived in house, etc) like they do in the States.
- wserib
- 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.
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.
- popbottle
- Deal Fanatic
- Apr 20, 2011
- 5310 posts
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- Vancouver
- popbottle
- Deal Fanatic
- 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
- bruceh2015
- 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!
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!
- imkinger
- Sr. Member
- Sep 9, 2012
- 623 posts
- 156 upvotes
- Edmonton
- popbottle
- Deal Fanatic
- Apr 20, 2011
- 5310 posts
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- Vancouver
- AudiDude
- Deal Guru
- Mar 1, 2004
- 12861 posts
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- Pickering
- LandKing
- Banned
- Nov 1, 2014
- 4317 posts
- 562 upvotes
- Toronto, ON
wth? you saying people between 30k-55k can actually afford to put 18% into RRSP? as in max their RRSP contribution? lol wut?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 $55,555, who are most likely to SPEND their tax refund provided by an RRSP contribution, can fully replace their RRSP contribution with a TFSA contribution and avoid the income tax in retirement AND enjoy tax sheltered compounding growth. And if their income is higher in retirement which is quite probable, they won't pay the tax penalty.
The middle income earner benefits enormously!
- zibzer
- Sr. Member
- Mar 27, 2009
- 543 posts
- 67 upvotes
This makes me wonder why the 1/4 million$ per year earners don't see TFSA as a viable vehicle for investments.
Any ideas?
Any ideas?
- Conquistador
- Deal Fanatic
- Feb 19, 2010
- 6237 posts
- 2992 upvotes
- bruceh2015
- Deal Addict
- Apr 13, 2015
- 1108 posts
- 214 upvotes
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.
- guyver0
- Deal Addict
- Jan 15, 2009
- 1081 posts
- 456 upvotes
- Just north.
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.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.
My point still stands, TFSA is a minor issue. If people want fairness, then remove tax-exemption status on primary residence.
- popbottle
- Deal Fanatic
- Apr 20, 2011
- 5310 posts
- 484 upvotes
- Vancouver
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.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.
- sokolov
- 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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