TFSA Contribution Limit to Possibly Double

[icky2unk]

Thoughts?

http://www.ctvnews.ca/politics/ottawa-hints-at-doubling-tfsa-contribution-limit-1.2315291

[ercchry]

nice, finally getting to a number that almost makes it usable

[ExtraSlow]

All these "boutique" tax deferred and tax sheltered investment options are bad public policy.
I will probably benefit from this, but I don't approve of it.

[HiTempguy1]

Originally posted by ExtraSlow

I will probably benefit from this, but I don't approve of it.

You don't HAVE to use the policies the gov puts in place.

Maybe put your money where your mouth(fingers?) is ;)

There is nothing stopping individuals from giving more to the gov both federally and provincially if they want. :angel:

[ercchry]

the ctv comments are hilarious... "omg! rich get richer!"

...yeah they do... but they dont use a fucking TFSA to shelter their earnings :rofl:

this one is great:


I am retired and live on my pension check, which is a lot smaller than

I would like, I do not have $5000 in my TFSA and I certainly cannot afford

to salt away $10 grand this year or any other, so it looks like the rich that can,

will have 10 more thousand tax free dollars, and people like me will put in what

ever amount of money we can spare. Maybe 11 million Canadians have TFSA's but that

does not mean that they all have an extra $10 thousand to chuck into their account

this year! Just saying!

yeah, those rich employed fuckers! :rofl:

but seriously... how the hell do you not even save $10k over the course of your career, and with $0 savings why do you think its okay to stop working? :nut:

[whiteout]

Originally posted by ercchry
but seriously... how the hell do you not even save $10k over the course of your career, and with $0 savings why do you think its okay to stop working? :nut:

Fiscal illiteracy and a sense of entitlement?

Both are rampant in Alberta

[dezmarez]

Originally posted by ercchry
nice, finally getting to a number that almost makes it usable


How come you wouldn't consider it usable at the current contribution limit?

[ercchry]

Originally posted by dezmarez



How come you wouldn't consider it usable at the current contribution limit?

guess it depends on your goals, but more so referring to a trading account than say a passive vehicle for etfs or other managed funds.

[eblend]

About time. Mine is maxed out on Jan 1st of every year.

[dirtsniffer]

^but at what time?

[killramos]

Originally posted by ercchry
the ctv comments are hilarious... "omg! rich get richer!"

...yeah they do... but they dont use a fucking TFSA to shelter their earnings :rofl:

this one is great:



yeah, those rich employed fuckers! :rofl:

but seriously... how the hell do you not even save $10k over the course of your career, and with $0 savings why do you think its okay to stop working? :nut:

I love how little people know about the accounts based on that quote. Its not 10,000 tax free dollars a year. Not unless you have a reliable way of doubling your money in the account every year :nut:

[icky2unk]

Originally posted by killramos


I love how little people know about the accounts based on that quote. Its not 10,000 tax free dollars a year. Not unless you have a reliable way of doubling your money in the account every year :nut:

I mean the great thing about tsfa at 5.5 or 10k is that most of us are young so over 20-30 years when most are looking to retire from today that is 100-150k (If it's only 5.5) that you can have paying out interest free dividends. Hopefully you aren't relying on that but I mean it's not a bad income in itself.

[ercchry]

yeah and at 5% annually over the next 30 years thats $500k-$1mm ($5500 vs $11000)

[killramos]

Originally posted by icky2unk


I mean the great thing about tsfa at 5.5 or 10k is that most of us are young so over 20-30 years when most are looking to retire from today that is 100-150k (If it's only 5.5) that you can have paying out interest free dividends. Hopefully you aren't relying on that but I mean it's not a bad income in itself.

I agree, and if you are effectively investing between now and then its well over 150k in assets to be collecting dividends off of.

Say you have 40 years of contributing before retirement ( not unrealistic for young people 20- 60 or 25-65 etc. ). At current contribution amounts of 5500 at 4 6 and 8% annual returns the nest egg is 550k, 910k, 1,545k respectively.

Double those amounts for 11,000 annual contribution. So 1-3 million dollars of accumulated assets in the TFSA. Not a bad amount to retire on and collect dividends regardless of your return between then and now.

Who needs an RRSP :dunno:

[ercchry]

$11k+20% annual return please :D

can live a pretty nice lifestyle on some pretty low risk yields at retirement with that... but who am i kidding, if i pull that off im not working the next 30 years :rofl:

[killramos]

Originally posted by ercchry
$11k+20% annual return please :D



lol we can all dream. even my 8% case is not unrealistic with a well managed portfolio. And that's some real money in the end. Plus any other assets you have. Its pretty silly that people manage to screw up their retirements as much as they do...

Then again im one to talk. My TFSA is down an overall 75% right now :banghead:

[M.alex]

http://www.gamer.ru/system/attached_images/images/000/400/180/original/good-good.jpg


Originally posted by killramos


Then again im one to talk. My TFSA is down an overall 75% right now :banghead:

lol, how'd you manage that fvck up :rofl:

[icky2unk]

Originally posted by M.alex
http://www.gamer.ru/system/attached_images/images/000/400/180/original/good-good.jpg



lol, how'd you manage that fvck up :rofl:

hahaha I thought I was the only one lol.. -33% hah

[holden]

Do you think the gov't would ever implement a program where we could transfer our RRSP --> TFSA without paying any tax? Would be nice to max both until retirement, then upon retirement withdraw all my TFSA and move over my RRSP so I can live off tax free dividends.

Obviously the money withdrawn from the TFSA would be used for hookers and blow.

[killramos]

Originally posted by M.alex

lol, how'd you manage that fvck up :rofl:

Restricted sale stocks on a company savings plan.

Can't sell even if i want to. Have to hold the units for 12 months.

Fortunately all i paid for them are income tax so its pretty much a wash right now. Hoping for a big payday in the end if this turns around.:dunno:

[killramos]

Originally posted by holden
Do you think the gov't would ever implement a program where we could transfer our RRSP --> TFSA without paying any tax? Would be nice to max both until retirement, then upon retirement withdraw all my TFSA and move over my RRSP so I can live off tax free dividends.

Obviously the money withdrawn from the TFSA would be used for hookers and blow.

Yea the program would be called paying tax. All of it, at your full marginal rate. Then you can put it in your TFSA all you want.

:rofl:

[ercchry]

Originally posted by icky2unk


hahaha I thought I was the only one lol.. -33% hah

i may be joining the negative club soon when these april contracts expire... but so far this week has been good... so if the markets can keep it up i'll be okay :D

[blownz]

The only people that should be upset about the increase in TFSA's should be people retired or close to retired. And the only reason they should be upset is that they didn't have a chance to use something like this when they are younger. It really is an excellent vehicle for saving money.

I personally think the increase is great (if it happens...) and just wish it was around sooner as it might have made me a better saver when I was younger.

[bspot]

The median individual income in Canada is like $27K.

I agree with the poster who said this benefits me, but I oppose it.

This punishes low income families.

A household seeing $40K after tax can't afford to put away $10K + $10K per year, plus RRSP.

All you are doing is giving a tax break to people who are well off enough to save, and disciplined enough to save.

Encouraging saving is good, but the tax I'm not paying will be made up by low income families, and those without financial discipline. I'm fine with the latter, not the former.

[icky2unk]

Originally posted by bspot
The median individual income in Canada is like $27K.

I agree with the poster who said this benefits me, but I oppose it.

This punishes low income families.

A household seeing $40K after tax can't afford to put away $10K + $10K per year, plus RRSP.

All you are doing is giving a tax break to people who are well off enough to save, and disciplined enough to save.

Encouraging saving is good, but the tax I'm not paying will be made up by low income families, and those without financial discipline. I'm fine with the latter, not the former.

The difference is this makes a great tool for people going forward.

The amount of uneducated people I know now that have actually started saving up in tsfa/rrsp is pretty impressive. If you look 20-30 years down the road I think you'll find a generation that has been tuned to saving a lot better than their peers which is what I think the TSFA has a hand in doing.

For people today who are low income earners who can't save I would argue you can't help them at all no matter what you do. It does however entice and encoure future generations to save and be smarter spenders and gives them tools to do that.

I see both sides of the argument but I think over time the tool itself will be beneficial to everyone.

The biggest thing is if you can't be fiscally responspible then no amount of free money from the government will be enough for those people. Generally speaking that makes up a good portion of low income earners. Which is why many people who win the lottery go bankrupt within 5 years. Or Rig Pigs...Or many professional Athletes.

[riander5]

In light of this new news im throwing all my tfsa money into DWTI if oil drops tomorrow.

Mwahahaha

[ercchry]

the amount of people (like killramos and icky2unk) that use their TFSA as a high risk investment vehicle and lose probably comes close to offsetting the ones who are actually saving on tax, since the losers cant claim their loses anyways. i call that side of the argument a wash. but then again im a capitalist at heart, so if you cant help yourself then too bad. the less tax the better. gov already keeps enough of my pay

[sabad66]

Originally posted by bspot
The median individual income in Canada is like $27K.

I agree with the poster who said this benefits me, but I oppose it.

This punishes low income families.

A household seeing $40K after tax can't afford to put away $10K + $10K per year, plus RRSP.

All you are doing is giving a tax break to people who are well off enough to save, and disciplined enough to save.

Encouraging saving is good, but the tax I'm not paying will be made up by low income families, and those without financial discipline. I'm fine with the latter, not the former.
:werd:

Also thinking about it from a gov't revenue perspective, is this really the best time to give these higher earning people (using above assumption) a tax break?

also i'm just a little bitter that i can't use a TFSA being a dual US citizen :poosie: :D

[ercchry]

Originally posted by sabad66

:werd:

Also thinking about it from a gov't revenue perspective, is this really the best time to give these higher earning people (using above assumption) a tax break?

also i'm just a little bitter that i can't use a TFSA being a dual US citizen :poosie: :D

you mean the middle class? thats always a good idea. like i mentioned at the beginning of this thread rich people dont bother with this shit, they own companies and harbour massive amounts of wealth and pay very little in taxes (the small business break alone is just insane) when they retire? well they sell their businesses, and just purchase a shelf company in a tax haven. not only is the gov not seeing another dime, but that shit is now being spent overseas

[icky2unk]

Originally posted by ercchry
the amount of people (like killramos and icky2unk) that use their TFSA as a high risk investment vehicle and lose probably comes close to offsetting the ones who are actually saving on tax, since the losers cant claim their loses anyways. i call that side of the argument a wash. but then again im a capitalist at heart, so if you cant help yourself then too bad. the less tax the better. gov already keeps enough of my pay

From what I read it was a tax loss of ~15billion by 2080 lol.

Some forecast but that's what it is lol.

[R154]

What does icky2unk mean?

[ercchry]

Originally posted by icky2unk


From what I read it was a tax loss of ~15billion by 2080 lol.

Some forecast but that's what it is lol.

yeah, 2060... considering how shitty even 6 month forecasts are... :rofl:

[killramos]

Originally posted by ercchry
the amount of people (like killramos and icky2unk) that use their TFSA as a high risk investment vehicle and lose

It really didn't seem that high risk when I started I swear :rofl:

[blownz]

Originally posted by bspot
The median individual income in Canada is like $27K.

I agree with the poster who said this benefits me, but I oppose it.

This punishes low income families.

A household seeing $40K after tax can't afford to put away $10K + $10K per year, plus RRSP.

All you are doing is giving a tax break to people who are well off enough to save, and disciplined enough to save.

Encouraging saving is good, but the tax I'm not paying will be made up by low income families, and those without financial discipline. I'm fine with the latter, not the former.

It doesn't punish anyone, it just rewards savers.

And a family making $40K a year after tax should be only saving in a TSFA and not an RRSP unless there is money left. This group should actually be happy it is increasing because it allows them to save more without reducing things like OAS they will likely depend on in the future.

The problem with most people is they live beyond their means. And it has been encouraged with the record low interest rates we have had for so long. It is nice to see that savers have an ability to be rewarded as well.

[riander5]

Im still waiting to find out what an icky2junk is

[Xtrema]

Originally posted by blownz


It doesn't punish anyone, it just rewards savers.

And a family making $40K a year after tax should be only saving in a TSFA and not an RRSP unless there is money left. This group should actually be happy it is increasing because it allows them to save more without reducing things like OAS they will likely depend on in the future.

The problem with most people is they live beyond their means. And it has been encouraged with the record low interest rates we have had for so long. It is nice to see that savers have an ability to be rewarded as well.

It does not punish the poor in a $ sense as they don't pay much taxes anyway.

It punishes the government for having less revenue which may turn around with reduced services where everyone, especially the poor needed most.

While I will benefit from this, it will come back to haunt us in some way or other down the road.


Originally posted by holden
Do you think the gov't would ever implement a program where we could transfer our RRSP --> TFSA without paying any tax? Would be nice to max both until retirement, then upon retirement withdraw all my TFSA and move over my RRSP so I can live off tax free dividends.

Obviously the money withdrawn from the TFSA would be used for hookers and blow.

I don't see why you need to switch portfolio unless you are very close to RRIF age. Just stop contributing in RRSP and start contributing to TFSA. Only use RRSP when you have income in the top bracket.

I can see a scenario where you quit/retire at 55 and start drawing RRSP to live on and convert to TFSA at the lowest bracket until you are 71. Then when RRIF kicks in, you won't be taxed at the highest bracket.

The key here is TFSA at $11K now have enough room to be flexible on how you save and retire.

[Sugarphreak]

...

[ercchry]

Originally posted by Sugarphreak
I still haven't put a penny into this system yet

I just don't see the point unless it is a retirement fund. If I put money in, then take it out... I lose that space. For anything short term, it is just way easier throwing it in a high interest savings account.

My plan is once some larger investments pay off, I will just stuff my TFSA to the brim in one shot, and use it to eventually supplement my retirement income.

so much ignorance for someone who is always such a know it all.... :rofl:

if you take it out all you have to do is wait till jan 1st of the next year and you can put it back in. but yeah, its really a toss up if you have a margin account for short term investing since you can only get a cash account with the TFSA

[Xtrema]

Originally posted by ercchry


so much ignorance for someone who is always such a know it all.... :rofl:

if you take it out all you have to do is wait till jan 1st of the next year and you can put it back in. but yeah, its really a toss up if you have a margin account for short term investing since you can only get a cash account with the TFSA

He isn't wrong.

If you put in $5K, make 300% pulls out $15K, you can only put back in $5K. The $10K profit will lose shelter status forever.

At least that's how I interpret it.

End of the day, everyone has a different take and different needs. I treat my TFSA/RRSP as rainy day funds. Being over conservative nature, I don't see how I would tap into that unless Calgary turns into Detroit.

[killramos]

Originally posted by Xtrema


He isn't wrong.

If you put in $5K, make 300% pulls out $15K, you can only put back in $5K. The $10K profit will lose shelter status forever.

At least that's how I interpret it.

I don't think that's how it works. If you pull out 15k come January you can put 15 back in if you want.

2 ways the account space can grow. 1 annual contribution room increases. 2 growing the value of the account by investing.

At least that's my interpretation.

And it goes both ways. For example if I pulled everything out with my 75% loss I don't get the full 35k that the account would theoretically be worth come next january.

[leftwing]

.

[Xtrema]

Originally posted by leftwing
You can only put in up to your maximum contribution room. So if you have been maxing out since 2009 you would have $32,500 assuming 0% gains. If you take that all out, you can replace it all at the beginning of 2016, plus your your additional contribution for 2016. If you have lots of gains and your TFSA is at say $75,000. You can remove it all, but at the beginning of 2016 you can only replace 32,500 + 2016's contribution.

I don't know why I have this in my head too but most of the google fu I did confirms killramos's method is correct.

You withdraw $100K, you can put back in $100K and next year's limit.

You just have to wait a year.

So if you have some mad profit to be had outside of TFSA, you can do so as long as you don't put it back in til next year.

[JRSC00LUDE]

My rsp carry over amount is fairly high (did not utilize to the max during my tenure in government and its pension). I've been thinking of using up all unused room this year and then switching strategies to TFSA and more focus on property. If it makes sense after a proper review, an increase is good news!

[ercchry]

Yeah the only time you lose the space is if you have losses in the account. If you hit a home run and withdraw you have that room forever... this is pretty alarming that you guys dont know this since i usually hold pretty much everyone's opinions in this thread to a higher standard than most beyonders :rofl:

[BrknFngrs]

Whoa, definitely a widespread lack of understanding of the calculations for a TFSA. I think this might be why the program gets a bad reputation. Ercchry is correct.

[rizfarmer]

Don't be too alarmed by the misunderstanding of the TFSA account in this thread; I've been in the finance industry since around the inception of the TFSA and I would say most of the people I've worked with don't have a fucking clue what it is or how it works. But that's to be taken with a grain of salt also since most of those people worked at banks and some of the dumbest people I've encountered worked at banks
:rofl:

Ercchry is correct.

[sabad66]

Originally posted by leftwing
Yeah, for a know it all, sure is missing the point here.

You can only put in up to your maximum contribution room. So if you have been maxing out since 2009 you would have $32,500 assuming 0% gains. If you take that all out, you can replace it all at the beginning of 2016, plus your your additional contribution for 2016. If you have lots of gains and your TFSA is at say $75,000. You can remove it all, but at the beginning of 2016 you can only replace 32,500 + 2016's contribution.

I'd say if you're in a low to mid-range tax bracket and expect your income to rise in the future, and your employer does not match RRSP's all your savings should be going to TFSA instead of RRSP.
This is wrong.

You would be able to put in 75k + 5500 in 2016 in your example. You can create room with your gains

I know this 100% as I have done it

[leftwing]

Originally posted by sabad66

This is wrong.

You would be able to put in 75k + 5500 in 2016 in your example. You can create room with your gains

I know this 100% as I have done it

Yeah my bad. I am certain a CFP at RBC told me that gains don't increase contribution room.

[Khyron]

Originally posted by Sugarphreak
I still haven't put a penny into this system yet

I just don't see the point unless it is a retirement fund. If I put money in, then take it out... I lose that space. For anything short term, it is just way easier throwing it in a high interest savings account.

My plan is once some larger investments pay off, I will just stuff my TFSA to the brim in one shot, and use it to eventually supplement my retirement income.

So say you just have 30K in some non-sheltered mutual fund/index and you make 10%. You are taxed on that 3K at whatever bracket, say 35% - that's 1050 dollars you give away. If it was in a TFSA, you don't pay that 1050. Try and match that benefit with any sort of normal savings account?

I agree it's not a big deal if you are using it as some sort of 1%/ING savings account (not taxed on that 40/year interest, oooh). And it's no use to the really poor.

I still think a cap of some sort would even the field a bit - like 400K lifetime or whatever. You have that much saved, you don't need the tax break.

[Mibz]

TIL gains increase your cap :facepalm: I've never withdrawn so I never considered it.

[J-D]

http://www.macleans.ca/economy/economicanalysis/tfsa-doubling-exacerbates-income-inequality/

[ercchry]

Originally posted by Khyron


So say you just have 30K in some non-sheltered mutual fund/index and you make 10%. You are taxed on that 3K at whatever bracket, say 35% - that's 1050 dollars you give away. If it was in a TFSA, you don't pay that 1050. Try and match that benefit with any sort of normal savings account?

I agree it's not a big deal if you are using it as some sort of 1%/ING savings account (not taxed on that 40/year interest, oooh). And it's no use to the really poor.

I still think a cap of some sort would even the field a bit - like 400K lifetime or whatever. You have that much saved, you don't need the tax break.


Would those gains not be taxed as cap gains? (only half of gains are taxed at a max of ~20%)

[Xtrema]

Originally posted by ercchry



Would those gains not be taxed as cap gains? (only half of gains are taxed at a max of ~20%)

Half of the gain is consider income for the year and taxed at your marginal tax rate. That's up to 39% for Alberta residents this year.

[sabad66]

Originally posted by J-D
http://www.macleans.ca/economy/economicanalysis/tfsa-doubling-exacerbates-income-inequality/
great article


Originally posted by ercchry


you mean the middle class? thats always a good idea. like i mentioned at the beginning of this thread rich people dont bother with this shit, they own companies and harbour massive amounts of wealth and pay very little in taxes (the small business break alone is just insane) when they retire? well they sell their businesses, and just purchase a shelf company in a tax haven. not only is the gov not seeing another dime, but that shit is now being spent overseas

you're making a lot of assumptions there on how you think all rich people operate. When i say 'rich' I mean 170k+ household income. Yes I know my definition is arguable but whatever. The folks doing the tax haven stuff are like the 0.5%. from the above article, here are some real stats for you:



While households including unattached persons with total incomes below $60,000 constituted 52 percent of all families, they held only 31 percent of all TFSA balances in late 2012-less than half the share of TFSAs based on individual incomes. At the other end of the income spectrum, only 4.4 percent of families had incomes of $200,000 and higher-but they held more than triple that share of all TFSA balances at 15 percent.

Upper-income families enjoy TFSA tax savings to an even more unbalanced degree than those statistics might suggest: they typically generate higher investment returns on their TFSA assets than lower earners, and they avoid the higher personal tax rates that would otherwise apply on the income from assets shifted into their tax-free accounts.

Even without any hike in the TFSA contribution limits, this tilt toward higher income families will increase over time as more moderate-to-middle income families exhaust their holdings of taxable assets available for transfer into TFSAs. A doubling of the TFSA limits would accelerate and exacerbate this tilt by favouring high earners with substantial taxable assets to continue shifting into their TFSAs far into the future.

perhaps "punishing poor people" isn't the best description to use. should have said "accelerate income inequality"

[blownz]

Originally posted by sabad66

perhaps "punishing poor people" isn't the best description to use. should have said "accelerate income inequality"

I totally agree with that comment. Again the problem is people living beyond their means. I know a lot of people that make comfortably over $100K a year and either don't have a TFSA or have only a couple of grand in there. High income helps, but doesn't guarantee you will eventually have "wealth".

You could give every person in the country an equal amount of money an after some time, you will still end up with the 1% ers and the poor people. Some people will just never get there.

[msommers]

So if you can't afford to max out RRSP and TFSA each year and you don't have company matching RRSP....TFSA then?

[sabad66]

Originally posted by msommers
So if you can't afford to max out RRSP and TFSA each year and you don't have company matching RRSP....TFSA then?
If you already have a house then yes, TFSA all the way IMO.

If no house yet i'd get RRSP up to 25k, stop, then max out your TFSA contributions. Use the 25k for home buyer's plan.

[Xtrema]

Originally posted by msommers
So if you can't afford to max out RRSP and TFSA each year and you don't have company matching RRSP....TFSA then?

The lower the tax bracket you are in, the better tfsa is.

Otherwise, you do RRSP, get refund (usually at 30-40% range for most), then do TFSA.

The only time RRSP doesn't make sense is a) you are close to retirement or b) you need the liquidity since you have no other access to cash.

[know1edge]

.

[Mys73ri0]

aaa

[TomcoPDR]

Originally posted by leftwing
So if you have been maxing out since 2009 you would have $32,500 assuming 0% gains.

Where did you get maxed contribution of $32,500 from 2009 (including 2015)? :confused: :confused: I'm $4,000 over contributed then... I'm under the understanding of the following.

2009 = $5,000
2010 = $5,000
2011 = $5,000
2012 = $5,000
2013 = $5,500
2014 = $5,500
2015 = $5,500

:dunno: :dunno: :dunno:

[bwling]

Tomco is right.

The annual TFSA dollar limit for the years 2009, 2010, 2011 and 2012 was $5,000. The annual TFSA dollar limit for the years 2013, 2014 and 2015 is $5,500.

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

[killramos]

Glad it turns out I wasn't providing BS information, i was pretty sure. I have found the CRA's online TFSA tools to be quite helpful.

Its thinking of as going both ways that it starts to make more sense.

[HiTempguy1]

Money Sense disagrees with most of your assessments of TFSA vs RRSP :dunno:

When looking at the tax implications, TFSA makes sense only at below $50k per year.

However, the final answer is any saving/investing is better than none.

I could scan the article for you guys if there was interest? Its quite in depth and covers many financial scenarios.

[killramos]

Originally posted by HiTempguy1
Money Sense disagrees with most of your assessments of TFSA vs RRSP :dunno:

When looking at the tax implications, TFSA makes sense only at below $50k per year.

However, the final answer is any saving/investing is better than none.

I could scan the article for you guys if there was interest? Its quite in depth and covers many financial scenarios.

I think it really depends if you value the flexibility of TFSA in retirement.

You was a guaranteed income fund? RRSP.

Want a retirement slush fund? TFSA all the way.

A bit of both seems the way to go.

An example is if you want to pull 100k+ out of RRSP for something. Boat, Car, Vacation, Time share, who cares. With RRSP you would pay through the nose in tax for taking that much out. TFSA is much more flexible in that sense. And if you need money temporarily you can always re contribute the next year while you are retired to reshelter gains.

[riander5]

Just put money in both you nancies

[sabad66]

Originally posted by know1edge
I say max out your TFSA before your RRSP. The TFSA renders the RRSP obsolete for the average person.

If you're in the lowest bracket, there is zero reason to contribute to RRSP instead of TFSA. Basically, you should only contribute to your RRSP if you're in a higher tax bracket now, than you will be in retirement.
Also consider that marginal tax rates will most likely increase by the time you retire.

About the HBP, it's a lot easier to withdraw the 25k from the TFSA. No forms to fill out, and no commitment to repay.
Yeah but then you miss out on a refund... Minimum $7250 refund on a 25k RRSP contribution. I'll gladly fill out some forms for that. Repayment is peanuts IMO. 25k over 15 years is 1666 per year ($140 a month)

[blownz]

I agree with the comments to start with the TFSA when you are in a lower tax bracket. Then fill the RRSP later when you are in a higher bracket. I personally did just that. And the last 3 years that I have been comfortably into the highest tax bracket I have been putting about $30K a year into my RRSP to catch up. Obviously I took advantage of company match contributions earlier regardless of my tax bracket, but I didn't put more in when I was in a lower tax bracket. Another few years and I should have both maxed out which should ultimately be everyones goal.

[Khyron]

Originally posted by msommers
So if you can't afford to max out RRSP and TFSA each year and you don't have company matching RRSP....TFSA then?

Depends on how you think your salary will look through your career. If you're a lawyer student or a new doctor, then nothing in RRSP now because you can use that room with your higher income brackets later. But if you're pretty much at your career income ceiling then I'd put more in RRSP regardless of matching.

If you make 100K, put 10 in an RRSP, get 3600 back as refund and put that in TFSA.

If you make 50K, put 5 in RRSP gets you 1600 refund. That's still a pretty good incentive to save. Under 44K, access is probably more important so just tfsa it.

2015 AB Brackets:
15% $0-$44,701
32% $44,701-$89,401
36% $89,401-$138,586
39% $136,270+

[M.alex]

Originally posted by riander5
Just put money in both you nancies

This. I can't believe how many people I hear arguing about should they invest into their tfsa or rrsp. fill up both each year and move on. if you can't, you fail at budgeting

[blownz]

Originally posted by M.alex


This. I can't believe how many people I hear arguing about should they invest into their tfsa or rrsp. fill up both each year and move on. if you can't, you fail at budgeting

Although I agree with you and it all comes back to living beyond your means, I still don't think it is that black and white all the time. I think there are times when it makes sense to put your extra money into paying down the mortgage rather than maxing out RRSP's if you are in a lower tax bracket and will be in a higher one in later years.

[riander5]

Everyone should put all their money into oil and gas companies in their TFSA right now. If for some reason they don't return at least 50% in the next year to year and a half, well it was worth the risk for the upside.

That's what im doing anyways - luckily I didn't get hammered too hard when o&g fell.

Iv always seen them as this

TFSA - high / medium risk (high risk keep a stop loss)
RRSP - low risk (retired)

[killramos]

Well its done. 11k/yr TFSA's here we come

http://www.ctvnews.ca/politics/feds-introduce-balanced-budget-legislation-1.2317265

[ercchry]

Originally posted by sabad66

great article



you're making a lot of assumptions there on how you think all rich people operate. When i say 'rich' I mean 170k+ household income. Yes I know my definition is arguable but whatever. The folks doing the tax haven stuff are like the 0.5%. from the above article, here are some real stats for you:



perhaps "punishing poor people" isn't the best description to use. should have said "accelerate income inequality"

how much wealth does that 0.5% hold vs the rest of canada? yeah... LOTS. poor people punish themselves, i dont think we should punish the middle class because of that. a strong middle class is good for everyone. the way i see it is it gives the middle class a chance to pull some cash out of the hands of the rich, and when i say rich i actually mean rich... not people that in calgary would still be struggling to raise a family on a single income :nut:

[JRSC00LUDE]

Originally posted by M.alex
This. I can't believe how many people I hear arguing about should they invest into their tfsa or rrsp. fill up both each year and move on. if you can't, you fail at budgeting

Further proof you live nowhere near the real world.

[ercchry]

Originally posted by JRSC00LUDE


Further proof you live nowhere near the real world.

retired hedge fund manager? of course he does... just in a different part that not many people have access to :rofl:

[JRSC00LUDE]

Originally posted by ercchry
of course he does... just in a different part that not many people have access to :rofl:

No you're thinking of BavarianBeast, it's called "The Glencoe Club". :rofl:

[leftwing]

Originally posted by TomcoPDR


Where did you get maxed contribution of $32,500 from 2009 (including 2015)? :confused: :confused: I'm $4,000 over contributed then... I'm under the understanding of the following.

2009 = $5,000
2010 = $5,000
2011 = $5,000
2012 = $5,000
2013 = $5,500
2014 = $5,500
2015 = $5,500

:dunno: :dunno: :dunno:

Math>Me

[M.alex]

$10k now :drool:

It says $10k effective immediately, so I guess if you contributed $5,500 already you can add another $4,500 for 2015? :dunno:

[ercchry]

im waiting for the cra to update their website... not going to trust media outlets on this one

[M.alex]

Originally posted by ercchry
im waiting for the cra to update their website... not going to trust media outlets on this one

I don't see any updates; somebody needs to work on their definition of "immediately" :whipped:

[Manhattan]

•NEW: Economic Action Plan 2015 proposes to increase the TFSA annual contribution limit from $5,500 to $10,000, starting in 2015.

Source: http://www.tfsa.gc.ca/

Oh wait...it's just a "proposal". :rolleyes:

[sputnik]

Originally posted by Manhattan


Source: http://www.tfsa.gc.ca/

Oh wait...it's just a "proposal". :rolleyes: [/B]

It is an election year.

There is no way that the Liberals or NDP would vote against it.

[Feruk]

NDP and Liberals have been saying for month that they don't think this benefits the middle class. There is no way they would do a complete 180 and vote for it.

[Manhattan]

I think it's already taken effect. Trudeau Jr. just said he'd scrap the TFSA changes this fall if elected.


Kevin Millligan, an economist at the University of British Columbia who has studied the TFSA programs, said the rising tax expenditure for the TFSA program may force a future discussion on a lifetime cap on contribution for individuals of $100,000 to 200,000. :bullshit:

[ercchry]

Originally posted by Manhattan
I think it's already taken effect. Trudeau Jr. just said he'd scrap the TFSA changes this fall if elected.

:bullshit: [/B]

hrm... i like his stance on pot... but not so much on this :whipped:

[sputnik]

Originally posted by Feruk
NDP and Liberals have been saying for month that they don't think this benefits the middle class.

The so-called "middle class" should learn how a TFSA can be a huge benefit for their retirement. Especially those of us in our 30s who could have the potential for contributing $250-350k into a TFSA between now and retirement and then withdrawing from it tax free.

[killramos]

Yup for real 1%'ers 10k a year is a drop in the bucket. Sure they might take advantage of it but its not going to make them appreciably richer.

Unless the Liberals and the NDP are now calling anyone with the ability to save 4 figures a year upper class...

The "middle class" is a buzzword that parties like to use to refer to potential voters without ever defining what it means to them. Everyone wants to think that they are middle class as well which perpetuates the problem.

Sometimes middle class means people making 30k a year. Sometimes it refers to people making 80. :dunno: :dunno:

[realazy]

So anyone actually contirbute up to the $10,000 limit for 2015 yet? Basically an additional $4,500 for people that have contirbuted the $5,500 already.

From what I've been reading, the CRA will not penalize the contirbution even if the budget is voted down. Worst outcome would probably be the $4,500 contribution being counted towards the 2016 contribution room, which is still a benefit because of early contribution.

[dezmarez]

Originally posted by sputnik


The so-called "middle class" should learn how a TFSA can be a huge benefit for their retirement. Especially those of us in our 30s who could have the potential for contributing $250-350k into a TFSA between now and retirement and then withdrawing from it tax free.


Exactly my thoughts.
Those that use it for emergancy/rainy day funds aren't going to experience the long term benefits of the TFSA.

[16hypen3sp]

Didn't read the entire thread but whats this I hear about CRA coming after people who have capital gains within their TFSA??

[killramos]

Originally posted by 16hypen3sp
Didn't read the entire thread but whats this I hear about CRA coming after people who have capital gains within their TFSA??

Only for people who are effectively running a trading business within their TFSA and making mad skrilla while doing this. We are taking people who have turned their 30k TFSA contributions into million dollar plus accounts.

I think its still BS but apparently it has some basis in tax law.

[ercchry]

i still stand by if you are not withdrawing it, its not income... income would be something you'd still need to survive... so how can the tfsa be income?! its still all in the account being reinvested... with the potential to still turn into $0

[ZenOps]

Personally, I don't think it contributes to the middle class either.

Its does however, allow the rich an outlet to gamble.

[ercchry]

Originally posted by ZenOps
Personally, I don't think it contributes to the middle class either.

Its does however, allow the rich an outlet to gamble.

as of right now... you might have a point. BUT its still a new program and the future middle class in 20 years or so could have huge benefits. compound interest is a beautiful thing

[Xtrema]

Originally posted by realazy
So anyone actually contirbute up to the $10,000 limit for 2015 yet? Basically an additional $4,500 for people that have contirbuted the $5,500 already.

From what I've been reading, the CRA will not penalize the contirbution even if the budget is voted down. Worst outcome would probably be the $4,500 contribution being counted towards the 2016 contribution room, which is still a benefit because of early contribution.

We are only 5 month to election. While it's not like Liberal and NDP have a chance, but it may get voted down if Cons become a minority government again.

I'm going to wait. $4500 over 5 months isn't that big of a deal in the whole scheme of things.


Originally posted by ZenOps
Personally, I don't think it contributes to the middle class either.

Its does however, allow the rich an outlet to gamble.

It contributes a bit because TFSA is a good vehicle to ride out on when RRIF kicks in. Or when you know your RRSP portfolio is too huge and need alternative.

So while it doesn't benefit working middle class, it does benefit retiring middle class.

Conservative policy is all about old men with a couple of bucks. :rofl:

[Manhattan]

Kinda stupid how everyone says this benefits seniors more. Last time I checked life expectancy in Canada is 80+. So everyone that lives long enough will benefit. Actually this probably benefits young people more. If you're 18 today and max out your TFSA every year til retirement you'll have a huge retirement fund to draw on without being taxed a cent while receiving old age benefits. Seniors today are getting shafted because they've only have a couple years to build up a TFSA portfolio.

[Xtrema]

Originally posted by Manhattan
Actually this probably benefits young people more. If you're 18 today and max out your TFSA every year til retirement you'll have a huge retirement fund to draw on without being taxed a cent while receiving old age benefits. Seniors today are getting shafted because they've only have a couple years to build up a TFSA portfolio.

No way. Very few people under 40 will reap benefit from this. You have school loans, mortgage and if you pop out a couple of kids as well, you will have a hard time saving.

[ercchry]

Originally posted by Xtrema


No way. Very few people under 40 will reap benefit from this. You have school loans, mortgage and if you pop out a couple of kids as well, you will have a hard time saving.

you dont have to max it out from day one to take advantage... i bet you'll find more young people using their tfsa vs rrsp as we move forward

if you have school loans then by the time you are 40 you SHOULD have a pretty decent career too :nut:

[killramos]

Originally posted by Xtrema


No way. Very few people under 40 will reap benefit from this. You have school loans, mortgage and if you pop out a couple of kids as well, you will have a hard time saving.

:confused:

So do you actually think anyone below the age of 40 is incapable of saving money?

Besides even if you theory is correct they will still have every dollar of that contribution room available to them ( ~$200,000 ) when they magically turn 40 and are able to save money. :dunno: