NDP Hates TFSA!

[schocker]

I will be like toma, post an old article
http://ottawacitizen.com/news/politics/gordon-on-tfsa-hike-opposition-parties-offer-no-good-alternatives

TFSA is a tool to get people to save money and NDP thinks that they are only for the rich even though the stats say otherwise.

Unfortunately, committing to a TFSA hike would also mean having to admit the accounts are excellent policy (buried as they might be in the Tories’ goofy collection of other tax-cut baubles). Instead, both opposition parties immediately committed to rolling back the increase as a way to stick it to the evil rich. Said NDP leader and former lawyer Thomas Mulcair, whose salary comes in well above $200,000 per year: an enhanced TFSA is “great if you’re having trouble making your payments on your second BMW, but it does nothing for the middle class that is actually earning less than today than it was 30 years ago.”

Wealth, in the eyes of Mulcair’s NDP, is apparently yucky, to be achieved only by the most heartless Canadians (never mind that a BMW costs little more than a Honda Odyssey or Toyota Sienna — second vehicles many parents would presumably use to ferry their kids to the NDP leader’s heavily subsidized, ultimately unsustainable daycares at significant expense to every other tax-paying Canadian).

The problem with Mulcair’s narrative, however, is that it completely misrepresents what TFSAs are about, who uses them, and how much of an advantage they provide to the “rich.”

Whereas RRSPs are meant to serve as a retirement saving vehicle, TFSAs offer everyday Canadians an efficient way to save not only for retirement, but also for a home, a car, a university education, an emergency situation, or simply boost their salaries a bit with some investment income. As the government’s budget document pointed out, 80 per cent of those who’ve opened TFSAs have incomes under $80,000 per year, and those individuals owned 75 per cent of all assets held in the accounts. Furthermore, 60 per cent of individuals contributing the maximum amount had incomes of less than $60,000, so clearly there’s some room to grow.

The fact is, the new limit amounts to about 20 per cent of the average Canadian’s salary — not an outlandish or extravagant sum. Most financial advisors recommend saving 10 per cent of gross income, but note that 20 per cent should be the target in order to ensure a really comfortable, even affluent retirement. And that’s what government should be encouraging Canadians to pursue.

[D'z Nutz]

20 shocking facts you didn't know about TFSA!

[birdman86]

And to think this clown actually has a chance of getting voted in? What's the max TFSA contributed capacity today, like $55K? Hardly a "rich persons" tool. Unless Mulclair thinks you have to be uber-rich to set aside anything more than a hundred bucks a month. Which wouldn't actually surprise me.

Jesus christ almighty.

[Toma]

With the TFSA's very low limits, i dont think its evil.

That only 10% of Canadians are able to max it out though, is more telling

[ickyflex]

Originally posted by Toma
With the TFSA's very low limits, i dont think its evil.

That only 10% of Canadians are able to max it out though, is more telling

What does the 10% entitle though (out of curiosity).

Does that include anyone who has contributed or is it anyone over 18 etc etc.

[Toma]

The actual stat is that of all eligible Canadian, 7 to 10 % have maxed out their contribution.

[Canmorite]

Raising TFSA contribution limits does benefit the rich the most, same with RRSP limits. They're a great tool for sheltering tax.

[Mibz]

Originally posted by Toma
only 10% of Canadians are able to max it out Able? Or willing?

[phreezee]

Why the heck would I save money? The government will pay for my retirement.

[sputnik]

Originally posted by Mibz
Able? Or willing?

Exactly. Leave it to the NDP to somehow classify 93% of us as poor just because we choose to put our money elsewhere.

[Toma]

Originally posted by Mibz
Able? Or willing?

Im not into this investing stuff....

Is there any downside to a TFSA (besides if you are an American citizen)

[HuMz]

Well we don't know that the NDP will change the TFSA, what we do know is that they think it is simply a tool for the rich, and that is very alarming. A TFSA doesn't fit well with a government that favors wealth re-distribution. Not because it is only a tool used by the rich, but because they want to incorrectly paint the TFSA as being a rich mans saving scheme.

Reality is different from how the NDP wants the world to be. The data clearly shows us that a TFSA is a great tool for Canadians to build private wealth and help better their financial situation.

[Toma]

With only 7% maxing it out, at what? $ 55k

I dont actuslly see it as all that relevant to anything. Its literally a drop in the Ocean. The money is fully taxable, just the interest on it isnt. Big woop. If the limit was $2 million, then it would be a concern.

I MUCH prefer the Greens promise to close off shore tax heavens. Seems far more relevant.

[Xtrema]

Originally posted by Toma
The actual stat is that of all eligible Canadian, 7 to 10 % have maxed out their contribution.

That's just quoting stats for your agenda.

There are 10.7M TFSA holders in this country. That's almost 1/3.

Yes, 10% or 1/3 of those holders are able to max it out.
Yes, TFSA favors the rich and people with disposable income.
Yes, it rip off tax revenue from future governments.

Don't forget, these program in theory is to reduce government's liability on social programs and keep them for the needy.

But again, future prediction how that will swing really depends on what kind of outcome you want to present.

[sabad66]

Originally posted by Toma
With only 7% maxing it out, at what? $ 55k

I dont actuslly see it as all that relevant to anything. Its literally a drop in the Ocean. The money is fully taxable, just the interest on it isnt. Big woop. If the limit was $2 million, then it would be a concern.

I MUCH prefer the Greens promise to close off shore tax heavens. Seems far more relevant.
You put after-tax money in this account, then any growth is not taxable. The growth could be interest, capital gains, dividends. So you could put in 55k, invest in some decent stocks, then 5 years later have 100k and the 45k you made is all yours - no taxes.

That's why NDP is against it... their view is that only rich people have the means to max it and grow it which will create a bigger wealth gap. Not to mention all the taxes they AREN'T getting on that growth which could be very significant, especially after 20, 30, 50 years.

[Toma]

Originally posted by Xtrema


That's just quoting stats for your agenda.

There are 10.7M TFSA holders in this country. That's almost 1/3.

Yes, 10% or 1/3 of those holders are able to max it out.
Yes, TFSA favors the rich and people with disposable income.
Yes, it rip off tax revenue from future governments.

Don't forget, these program in theory is to reduce government's liability on social programs and keep them for the needy.

But again, future prediction how that will swing really depends on what kind of outcome you want to present.

What Agenda is that?

At current levels, i dont see it as relevant.
Harpers plan to.double it though, I agree is pushing it and does not benefit the vast majority.

I don't follow this shit anymore, is there still a capital gains exemption limit, and how much is it?

[Nitro5]

It shows the ideological base of the NDP. They decide how much money we are allowed to have, not us deciding how much we want to save. They get first crack at our money

[Toma]

Originally posted by Nitro5
It shows the ideological base of the NDP. They decide how much money we are allowed to have, not us deciding how much we want to save. They get first crack at our money

No one is telling you how much you can save. Where did you get that from?

Government always gets first crack in our capitlsist, money changer society. Are you suggesting its different under Harper? Taxes always come off your check first, then you get yours. lol

[JustinL]

Originally posted by Toma
Its literally a drop in the Ocean.

I read this with the valley girl accent in my head and chuckled.
By "literally" do you mean "figuratively"?

The TFSA currently isn't a problem, but it could become a problem that the next generation will have to deal with. Having said that, my family uses it to the maximum while it's available to us.

[ickyflex]

I dunno about you guys but the TSFA hasn't done me any good :rofl:

[Feruk]

Originally posted by Xtrema
Don't forget, these program in theory is to reduce government's liability on social programs and keep them for the needy.

Bingo! This is the one big advantage of the TFSA (in theory) from the government's stand point.

If you invest in a taxable cash/margin account and your TFSA isn't full, you're an idiot.


Originally posted by Toma
I don't follow this shit anymore, is there still a capital gains exemption limit, and how much is it?
100% forever, even on withdrawals. Money in is never taxed again.

[Toma]

Originally posted by Feruk


Bingo! This is the one big advantage of the TFSA (in theory) from the government's stand point.

If you invest in a taxable cash/margin account and your TFSA isn't full, you're an idiot.


100% forever, even on withdrawals. Money in is never taxed again.

I was referring to straight capital gains exemption, not TFSA related.

[ickyflex]

I thought it was just 500k on private capital gains but no straight capital gains

Edit: Looks like 800k (not sure if that is 800k cap gains or 400k except)

[Toma]

Originally posted by ickyflex
I thought it was just 500k on private capital gains but no straight capital gains

Edit: Looks like 800k (not sure if that is 800k cap gains or 400k except)

If that's the case, that's to high imo.

[ickyflex]

Originally posted by Toma


If that's the case, that's to high imo.

It's not just someone buying and flipping a stock though. This is strictly for if you've held onto a private company for two years minimum. I don't think many people if ever get that kind of opportunity.

Lots of entrepreneurs though so maybe I'm wrong.

[Toma]

I quickly googled it, and appears the personal capital gains exemption for investors, stock flippers etc, is actually gone.

interesting.

[msommers]

Seems rather bizarre how they came to that conclusion. Unless they're cherry-picking the minute amount of TFSA users who are sneaky and use it for day-trading, and do very well.

[Type_S1]

Originally posted by msommers
Seems rather bizarre how they came to that conclusion. Unless they're cherry-picking the minute amount of TFSA users who are sneaky and use it for day-trading, and do very well.

I day trade my TFSA. To be honest most of my day trading money is in the TFSA. My low risk money is sitting in regular accounts. Why would I let the government tax me when I hit a 10 bagger when a TFSA is available. After the first few years some people have significant funds available in these accounts from home runs.

[Toma]

It certainly is ideal for that, bu5 again, benefits a very tiny portion of Canadians.

[msommers]

Originally posted by Type_S1


I day trade my TFSA. To be honest most of my day trading money is in the TFSA. My low risk money is sitting in regular accounts. Why would I let the government tax me when I hit a 10 bagger when a TFSA is available. After the first few years some people have significant funds available in these accounts from home runs.

Obviously it's the best tax shelter one can legally hope for, and why people do it. People have 7-figures in their TFSAs.

The risk you carry of course that is that CRA audits you and considers the account a business. But the whole thing is a grey area and CRA hasn't given any definitive guidelines (or at least from what I've seen on their website).

[Nitro5]

Originally posted by Toma


No one is telling you how much you can save. Where did you get that from?

Government always gets first crack in our capitlsist, money changer society. Are you suggesting its different under Harper? Taxes always come off your check first, then you get yours. lol

I agree. I personally would rather see no income tax and higher consumption taxes.

I save first then spend and get taxed.

I agree that it's the same under Harper, but the NDP is much more socialist and part and parcel with that is that the government wants more control over your money deciding how to spend a greater portion. Thus they don't like any tax relief on money earned.

They talk about it framing it as lost tax revenue. Even though it's money not even earned (future potential investment/interest) they see it as a lose.

[Mibz]

Originally posted by Toma
It certainly is ideal for that, bu5 again, benefits a very tiny portion of Canadians. Does benefit? Or could benefit?

[dezmarez]

I don't understand the argument of how this only benefits the rich.

You don't have to maximize the TFSA to benefit from it.

If a 30 year old were able to save $5,200/year ($100/week) over the next 35 years and earn a modest 5% on his savings. They would end up with just shy of $470,000. Total capital invested would be $182,000.

If they continued to earn 5% into retirement, the capital alone could produce almost $2,000/month in after-tax dollars.

The type of return doesn't matter either, as all income is tax free.

Currently the maximum you can earn from CPP at age 65 is $1,065, which is taxable income. Assuming a 25% average tax rate, that is $800ish after tax.

To match the after-tax income of CPP now, giving the same 30 year old, and assumed growth rate. You would have to contribute about $175/month to your TFSA.

I'm leaving out a number of factors, but you get the point.

Sure there isn't an immediate benefit, but over the long-term these benefit a lot more than the rich.

[Xtrema]

Originally posted by Toma
It certainly is ideal for that, bu5 again, benefits a very tiny portion of Canadians.

Why do you keep calling it tiny when 1 in 3 Canadians (that's including kids) has TFSA?

[schocker]

Originally posted by Xtrema
Why do you keep calling it tiny when 1 in 3 Canadians (that's including kids) has TFSA?
Yup. I had never seen stats on the TFSA before looking into it and was very surprised, that is why I posted this.