# What is the 2012 TFSA limit? Can someone clarify with CRA officially?



## the-royal-mail (Dec 11, 2009)

OK let's use this thread to get this sorted out. While the amount is known and stated as $5000, the gov'ts own rules say that there should be an inflation adjustment of $500 next year, bringing the limit up to $5500.

The problem is the official website says nothing about this new limit and I've only read about it on some unofficial sources. Even among CMFers there is confusion. I would like to see it written on the official CRA website before I deposit the higher amount and not rely on 3rd hand info.

Will someone be talking to CRA in the near future? Would it be possible to ask them to update their website with the updated amount (if it exists)? The fact that they haven't updated their website at this point tells me they aren't aware of this change for next year.


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## Four Pillars (Apr 5, 2009)

Here's the number TRM - let us know what you find out: 1-800-959-8281


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## Ethan (Aug 8, 2010)

My understanding is the contribution limit increases in $500 increments based on the rate of inflation. I don't think the CRA has announced if there will be an inflation increase for 2012 yet.


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## andrewf (Mar 1, 2010)

We don't have inflation numbers for 2011 yet, so perhaps CRA is waiting for this.


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## yyzvoyageur (Apr 10, 2009)

Anyone want to work out the numbers on this?

Subsection 207.01(1) of the _Income Tax Act_:



> “TFSA dollar limit” for a calendar year means,
> 
> (a) for 2009, $5,000; and
> 
> (b) for each year after 2009, the amount (rounded to the nearest multiple of $500, or if that amount is equidistant from two such consecutive multiples, to the higher multiple) that is equal to $5,000 adjusted for each year after 2009 in the manner set out in section 117.1.


And section 117.1:



> 117.1 (1) The amount of $1,000 referred to in the formula in paragraph 8(1)(s), each of the amounts expressed in dollars in subparagraph 6(1)(b)(v.1), subsection 117(2), the description of B in subsection 118(1), subsection 118(2), paragraph (a) of the description of B in subsection 118(10), subsection 118.01(2), the descriptions of C and F in subsection 118.2(1), subsections 118.3(1), 122.5(3) and 122.51(1) and (2), the amounts of $925 and $1,680 referred to in the description of A, and the amounts of $10,500 and $14,500 referred to in the description of B, in the formula in subsection 122.7(2), the amount of $462.50 referred to in the description of C, and the amounts of $16,667 and $25,700 referred to in the description of D, in the formula in subsection 122.7(3), and each of the amounts expressed in dollars in Part I.2 in relation to tax payable under this Part or Part I.2 for a taxation year shall be adjusted so that the amount to be used under those provisions for the year is the total of
> 
> (a) the amount that would, but for subsection (3), be the amount to be used under those provisions for the preceding taxation year, and
> 
> ...


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## loonieca (Dec 6, 2011)

I guess we may be able to check the automatically updated TFSA room on our CRA account once it is 2012...


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## mind_business (Sep 24, 2011)

yyzvoyageur, I just did the math .... and it looks like 2012's contribution room is $0


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## fersure (Apr 19, 2009)

mind_business said:


> yyzvoyageur, I just did the math .... and it looks like 2012's contribution room is $0


Based on Harper's and Flaherty's past actions with income trusts and more recently with REITs, it wouldn't suprise me in the slightest if TFSAs were quietly left to die... With all the talk, talk, talk regarding how uneducated Canadians are about financial literacy, the Conservatives' silence on TFSAs is deafening.


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## andrewf (Mar 1, 2010)

Doubtful. They just campaigned on doubling the contribution room per year.


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## KaeJS (Sep 28, 2010)

andrewf said:


> Doubtful. They just campaigned on doubling the contribution room per year.


Whaa?

I never heard about this.

"Siri; search the web for TFSA double contribution room"

If this happens, it just got a lot easier to become wealthy.


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## iherald (Apr 18, 2009)

KaeJS said:


> Whaa?
> 
> I never heard about this.
> 
> ...


They did mention this, but it wouldn't come into effect until they paid off the deficit (if I remember correctly). So save up for 2050.


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## cardhu (May 26, 2009)

TRM said:


> Even among CMFers there is confusion.


Ha ... good one. 

The limit for 2012 will remain at $5000, according to the gov’t own rules. 



andrewf said:


> We don't have inflation numbers for 2011 yet, so perhaps CRA is waiting for this.


The indexing adjustment for federal programs, for 2012, is 2.8%


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## yyzvoyageur (Apr 10, 2009)

cardhu said:


> The indexing adjustment for federal programs, for 2012, is 2.8%


Where did you get that number from? Looking at the YMPE for CPP, it was $48 300 in 2011, but will be $50 100 in 2012. That's a 3.7267% increase.


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## cardhu (May 26, 2009)

I worked it out ... see Sec 117.1 of ITA for the method ... its also confirmed here.

YMPE adjustments are based on wage inflation, not CPI, so it’ll always be different.


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## andrewf (Mar 1, 2010)

KaeJS said:


> Whaa?
> 
> I never heard about this.
> 
> ...


Did you vote in the last election? If yes, I am very disappointed in you.


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## yyzvoyageur (Apr 10, 2009)

cardhu said:


> I worked it out ... see Sec 117.1 of ITA for the method ... its also confirmed here.
> 
> YMPE adjustments are based on wage inflation, not CPI, so it’ll always be different.


I see. Thanks. Wage inflation was 3.7% last year? Judging by my pay cheque, I sure missed out!

So it looks like the rate for 2010 was 0.6% and for 2011, 1.4%. Adding in the 2.8% for 2012, I come up with $5243.23, just seven dollars below the amount that would trigger an increase in TFSA annual contribution room to $5500. Is that how you calculated it?


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## cardhu (May 26, 2009)

yyzvoyageur said:


> I come up with $5243.23... Is that how you calculated it?


Yup.


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## MoneyGal (Apr 24, 2009)

yyzvoyageur said:


> I see. Thanks. Wage inflation was 3.7% last year? Judging by my pay cheque, I sure missed out!


(Actually it is a five-year rolling average)

Then you must not be a federal civil servant, where average salaries have increased by 52% over the past decade! 

(We need a "stirring the pot" smilie...)


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## yyzvoyageur (Apr 10, 2009)

MoneyGal said:


> *Then you must not be a federal civil servant*, where average salaries have increased by 52% over the past decade!


 Actually I am. Our collective agreement expired in June. I'm only expecting about 1.5% a year with a loss of severance to boot. I'm certainly not asking you to shed any tears for me. I'm quite comfortable. It's the 52% figure that confuses me. Some people pretty high up must be seeing big increases.


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## Four Pillars (Apr 5, 2009)

yyzvoyageur said:


> Actually I am. Our collective agreement expired in June. I'm only expecting about 1.5% a year with a loss of severance to boot. I'm certainly not asking you to shed any tears for me. I'm quite comfortable. It's the 52% figure that confuses me. Some people pretty high up must be seeing big increases.


The 52% represents an annual increase of 4.28%, which seems pretty decent considering low inflation.

What do you mean by "loss of severance"?


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## yyzvoyageur (Apr 10, 2009)

Four Pillars said:


> The 52% represents an annual increase of 4.28%, which seems pretty decent considering low inflation.


I've not averaged that. I'm not saying the numbers are wrong. I'm just saying I haven't seen those increases myself.



Four Pillars said:


> What do you mean by "loss of severance"?


During this round of collective bargaining, the employer is keen to drop the severance pay upon retirement provision. This is a lump sum of one week per year of service (to a maximum of 30 weeks) that one receives upon retirement when one is eligible to receive an immediate annuity or an immediate annual allowance under the _Public Service Superannuation Act_.


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## CanadianCapitalist (Mar 31, 2009)

MoneyGal said:


> Then you must not be a federal civil servant, where average salaries have increased by 52% over the past decade


Average salaries are calculated by taking the total compensation bill and dividing by the number of workers. The average could go up for any number of reasons. One reason according to the story is that the government of late has been hiring workers who typically earn more such as lawyers, IT workers etc.


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## CanadianCapitalist (Mar 31, 2009)

I think we should get a betting pool going. My bet is on $5,000.


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## MoneyGal (Apr 24, 2009)

CanadianCapitalist said:


> Average salaries are calculated by taking the total compensation bill and dividing by the number of workers. The average could go up for any number of reasons. One reason according to the story is that the government of late has been hiring workers who typically earn more such as lawyers, IT workers etc.


Yep. In another thread recently I just argued you can't take population-wide information and particularize it to every individual. I was just being controversial (avoiding work, actually).


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## P_I (Dec 2, 2011)

TFSA dollar limit for 2012 has been official announced,


> With the application of the indexation increase of 2.8% for 2012 and rounding the result to the nearest $500, the TFSA dollar limit for 2012 remains at $5,000.


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## the-royal-mail (Dec 11, 2009)

Thanks PI!

CC wins a free MCD coffee next time we meet up!

Good thing we checked with official sources. I know some websites out there were saying $5500.


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## Toronto.gal (Jan 8, 2010)

the-royal-mail said:


> Good thing we checked with official sources. I know some websites out there were saying $5500.


CRA is the only source to be trusted for such matters.

I don't even trust the banks as they have been wrong more often than I care to remember and not just about TFSA's, but about many things.

Thanks P I for providing the official update.

Oh, and welcome to the forum!


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## CanadianCapitalist (Mar 31, 2009)

Thanks for posting P_I. Yay, MCD coffee!

I agree with Toronto.gal. It's always wise to double check everything including what we read in the media or information the banks put out.


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## Four Pillars (Apr 5, 2009)

Toronto.gal said:


> CRA is the only source to be trusted for such matters.


Not always. I remember when the RESP contribution rules were changed in 2007, I had my RESP pages updated right away. The CRA and HRSDC (canlearn site) took several months to reflect the change.


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## Toronto.gal (Jan 8, 2010)

What I meant is that whatever information/update I learn from non-official sites, I call CRA to confirm, but naturally if there would be contradiction, I would investigate further. 

I did not mean that CRA is always up to date nor correct for that matter as they can make mistakes like anyone else, but I imagine it would be easier blaming them than the banks.


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## Four Pillars (Apr 5, 2009)

Toronto.gal said:


> What I meant is that whatever information/update I learn from non-official sites, I call CRA to confirm, but naturally if there would be contradiction, I would investigate further.
> 
> I did not mean that CRA is always up to date nor correct for that matter as they can make mistakes like anyone else, but I imagine it would be easier blaming them than the banks.


Makes sense. That's pretty much what you have to do.


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## fersure (Apr 19, 2009)

*TFSAs costing the Treasury too much moola?*



P_I said:


> TFSA dollar limit for 2012 has been official announced,


What a strange way to announce what is argueably the single greatest way for Canadians to save money and for the CONs to promote financial literacy. No press release issued, either on the GoC's site or Revenue Canada's site; no cheesy announcement in front of some small town bank. Just two lines on an obscure and hidden website. This coming from a government that issues a release whenever Harper breathes.

Does anyone know where you can find an analysis on how much TFSAs are costing the Treasury? I'll go out on a limb and say that the CONs underestimated the cost of the program and are pooping bricks about the affordability of TFSAs. There is no way they can afford to double the contribution room, let alone maintain the current $5,000 contribution room.


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## KaeJS (Sep 28, 2010)

$5,000?

That's disappointing.


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## fersure (Apr 19, 2009)

Gordon Pape explains the TFSA contribution room decision in clearer language. Needless to say, not many here will be pleased to learn that the darn guv'mnt decided to use a different inflation calculation, than what is used in every single other government program expenditures tied to inflation!


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## ddkay (Nov 20, 2010)

I wasn't expecting anymore than $5000 tbh, I can live with that, thank you Canada


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## kcowan (Jul 1, 2010)

How much do people have in their TSFA right now?


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## DanFo (Apr 9, 2011)

about 15600 ( I never took much risk yet just gic's and interest) with another 5K ready for next week.....I'm going to dump 8K between 2 stocks this year hoping for a slightly better return but who really knows.....


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## Sampson (Apr 3, 2009)

About $41k in two accounts.

Timing was everything. Somehow we managed to make a couple buys in the first quarter of 2009. 

Aside from buying some bond ETFs and REITs, there has been no activity aside from interest payments and re-invested distributions.


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## Financial Cents (Jul 22, 2010)

Hope to max out TFSA this year, with a couple dividend-paying stocks. 

I look at it this way, it could always be much worse (there is no TFSA).


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## Financial Cents (Jul 22, 2010)

Sampson said:


> About $41k in two accounts.
> 
> Aside from buying some bond ETFs and REITs, there has been no activity aside from interest payments and re-invested distributions.


Very nice work Sampson.


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## humble_pie (Jun 7, 2009)

24,554.92. I had 2-3 good buys in 09 & 10. Now it sits around the 24k mark. Did not lose in 2011. Some hi-yield energy plus an obscure small reit that doesn't seem to want to go down.


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## Sampson (Apr 3, 2009)

humble_pie said:


> I had 2-3 good buys in 09 & 10.


This is probably pretty common. If people were using them, and putting money in say within the first 1-6 months of the past few years, hard to imagine most accounts aren't at least a little inflated.


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## jamesbe (May 8, 2010)

I put $30k Total in for the two of us in August and am up to $31,400. Not bad I think . 4.5% return in a few months.


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## Kalergie (Jan 7, 2011)

Quick question to the TFSA gurus here. When is the cut-off date for TFSA withdrawals and reinvestments? Is it December 31-January 01? I want to withdraw from my current TFSA today and reinvest it into a new TFSA January 02. Would this account as a legitimate transaction. 

Thanks


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## jamesbe (May 8, 2010)

Dec 31st is the last day. Be on the safe side do it on the 30th before the weekend


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## fersure (Apr 19, 2009)

*TFSAs costing the Treasury $220 million in 2011*



fersure said:


> What a strange way to announce what is argueably the single greatest way for Canadians to save money and for the CONs to promote financial literacy. No press release issued, either on the GoC's site or Revenue Canada's site; no cheesy announcement in front of some small town bank. Just two lines on an obscure and hidden website. This coming from a government that issues a release whenever Harper breathes.
> 
> Does anyone know where you can find an analysis on how much TFSAs are costing the Treasury? I'll go out on a limb and say that the CONs underestimated the cost of the program and are pooping bricks about the affordability of TFSAs. There is no way they can afford to double the contribution room, let alone maintain the current $5,000 contribution room.


Anyone thinking that TFSAs will be a long term vehicle for sheltering trading profits is sadly mistaken.
http://www.theglobeandmail.com/news/politics/flahertys-tax-credits-costing-ottawa-billions/article2296695/


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## the-royal-mail (Dec 11, 2009)

fersure, it isn't necessary to quote every time you respond to a thread. Please use the reply button instead. Esp to quote yourself, given the tone of your previous msg suggests to me you have an anti-TFSA agenda. Please tone it down. CMF isn't the place for you to promote your agenda.


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