# News on potential TFSA expansion



## gardner

It's mainly leftist rhetoric, but could have some influence:

http://www.cbc.ca/news/politics/doubling-tfsa-limit-will-only-help-wealthy-study-argues-1.2967796



> Doubling TFSA limit will only help wealthy


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## relk19

gardner said:


> Doubling TFSA limit will only help wealthy


Well duh....

Those that are struggling to make rent or pay their mortgage are not maxing out their TFSA every year. Those that have planned appropriately and max it out every year are the ones that will benefit from this increase, and I for one will take full advantage if it does.


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## 1980z28

I believe that it is meant to help the retirement population

It would be great


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## gardner

relk19 said:


> Those that have planned appropriately and max it out every year are the ones that will benefit from this increase


Yes, but that doesn't make those folks KC Irving. They use the word "wealthy" when they should use "middle class". To someone who is truly wealthy, the TFSA is bubkes and always will be.


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## BoringInvestor

gardner said:


> It's mainly leftist rhetoric, but could have some influence:
> 
> http://www.cbc.ca/news/politics/doubling-tfsa-limit-will-only-help-wealthy-study-argues-1.2967796


Doubling the TFSA limit effectively provide a tax break. The tax breaks will mainly benefit, and be heavily skewed, towards those who are better off financially.
We'd be reducing government income, and associated government spending on social programs and infrastructure, and funneling it towards the richest members of our society.

I don't believe this is in the best interests of Canada.


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## Guban

BoringInvestor said:


> Doubling the TFSA limit effectively provide a tax break. The tax breaks will mainly benefit, and be heavily skewed, towards those who are better off financially.
> We'd be reducing government income, and associated government spending on social programs and infrastructure, and funneling it towards the richest members of our society.
> 
> I don't believe this is in the best interests of Canada.


I agree that this would generally not be good for the country, but TFSAs could really help the lower income people too. Using TFSAs, they can take income off their tax returns and qualify for low income subsidies such as GIS.


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## My Own Advisor

Increasing the TFSA contribution room, would effectively, make the RRSP obsolete for low-income earners. This might very well be a good thing since low-income Canadians shouldn't probably use the RRSP account anyhow unless their TFSA is maxed out to begin with.

Increasing the TFSA contribution room, for higher-income Canadians, would be a huge win. 

So, long-term, there are less tax revenues for our government. Less money to mismanage?


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## BoringInvestor

Guban said:


> I agree that this would generally not be good for the country, but TFSAs could really help the lower income people too. Using TFSAs, they can take income off their tax returns and qualify for low income subsidies such as GIS.


In theory - sure.

Practically - most Canadians cannot correctly identify basic rules surrounding eligible TFSA investments, *including the yearly contribution room*, less than half of Canadians have a TFSA, and the average TFSA is not maxed out.
In addition, a $10,000 TFSA limit for two adults with a median household income, represents a savings rate of ~26% of gross income, when the average Canadian household is savings closer to ~5%.

We can't justify a TFSA increase by saying it will provide a needed tool for the lower-to-middle class to save adequately for retirement. The numbers don't support it.


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## peterk

Disagree. Doubling will proportionately help young low-mid income families and low-mid income retirees the most.

Young couples will be trying to scrimp away for a house. Most two-income 20 something's saving for a house are able to put away more than 11k/year. So the increase helps them. If not, perhaps having the extra TFSA room will inspire them to save or earn more! (heaven forbid).

Retiree's who are getting a pension or being forced to liquidate their RRSPs need to keep the extra money somewhere. TFSA is perfect for them as well.

Middle to high income people will of course use this as well to the fullest extent, but so what? Less taxes for the rich does not mean less services for the poor. The money is _squandered_ away on stupid stuff. Studies and meetings and testing that doesn't need to happen, billions spent on projects that eventually get turfed anyways, and salaries for jobs that shouldn't exists in the first place.

When tax season comes who benefits the most from saving a couple hundred bucks extra? It won't make a difference to the rich. But for low-middle class families and retirees that little bit extra will go a long way!


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## tenoclock

So if I earn a 7% return on an extra $5,500 which is sheltered from tax, that's $385 of sheltered income in the first year. Assuming a 40% tax rate, thats $154 per 'rich' person in the first year which the government has collected less of.


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## Letran

IF it happens, that will be great. 

Why is it so bad that "middle class" will stand to benefit the most? The idea is to help Canadians save for retirement and to alleviate senior citizen poverty in the future which might then cause Ottawa more money. That is why they reward people for saving via RRSP and with TFSA with it opens up for short term savings as well for young families or low income. 

Also let's not forget that there are already many tax benefits credits that specifically only applies to low income group or (could hide income group). My kids don't qualify for OSAP, got to pay more for health benefits etc. Just to name a few. All I know is that whenever I go to my tax accountant and I mention tax credits or deductions that most people can take advantage of he'll say "your income is too high, you don't qualify for that".

Sometimes I feel that our tax system encourages people to make less. (or at least find a way to declare less)

This at least will encourage people to save more, and there is nothing wrong with that.

I'm still miffed that they put a cap of $22500/yearly for RRSP contribution as oppose to the straight 18% rule


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## BoringInvestor

peterk said:


> Disagree. Doubling will proportionately help young low-mid income families and low-mid income retirees the most.
> 
> Young couples will be trying to scrimp away for a house. Most two-income 20 something's saving for a house are able to put away more than 11k/year. So the increase helps them. If not, perhaps having the extra TFSA room will inspire them to save or earn more! (heaven forbid).
> 
> Retiree's who are getting a pension or being forced to liquidate their RRSPs need to keep the extra money somewhere. TFSA is perfect for them as well.
> 
> Middle to high income people will of course use this as well to the fullest extent, but so what? Less taxes for the rich does not mean less services for the poor. The money is _squandered_ away on stupid stuff. Studies and meetings and testing that doesn't need to happen, billions spent on projects that eventually get turfed anyways, and salaries for jobs that shouldn't exists in the first place.
> 
> When tax season comes who benefits the most from saving a couple hundred bucks extra? It won't make a difference to the rich. But for low-middle class families and retirees that little bit extra will go a long way!


Harper and the Conservatives have been in power since 2006. If you're aware of billions of waste at the Federal level, it's something the Conservatives haven't recognized, or been able to halt, after nearly a decade.
Please email your local MP immediately with the details of the savings to rectify this situation.


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## Eclectic12

80% + don't know the TFSA contribution limit, eh?
I'm wondering why I'm having trouble running into those who aren't aware of the yearly contribution room.

But then, again - the updated version for 2014 surveyed 1,000 people and says the mix of investments is unchanged from a year before, with 60% cash, 25% MFs and 20% in GICs. With the investment types totaling 105% - what could possibly be wrong? :biggrin:

Then too, it must be the bank only as I doubt that the BMO Investorline TFSAs have 0% stock.

http://www.investmentexecutive.com/-/canadians-remain-unfamiliar-with-tfsa-rules


As for the TFSA's not being maxed out ... that is likely a sign that low to mid income earners *are* using the TFSA, n'est pas? 




BoringInvestor said:


> ... We can't justify a TFSA increase by saying it will provide a needed tool for the lower-to-middle class to save adequately for retirement. The numbers don't support it.


Yet according to Service Canada in 2013 - from what appears to be the same BMO survey, it says that given a choice of putting a limited sum of money into an RRSP or a TFSA, *more people* would put the money into the TFSA.

That's despite there being far more that have RRSPs. 
[Which are also not maxed out - should the gov't get rid of both? ] 

Again I'd like to see the survey itself as the numbers don't add up. Supposedly 43% preferred to contribute to the TFSA yet 56% listed a feature that made the TFSA attractive.

http://www.benefitscanada.com/pensions/other-pensions/many-canadians-prefer-tfsas-to-rrsps-35804

Cheers


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## none

Like many things the conservative government has done to the tax code this is terrible. I'll use it of course but will use my vote to put an end to the fiscal mismanagement of the country.

I think it's hilarious that people think conservatives are good with money. Whenever you look at conservative or republican government they're always fiscal disasters.

Full disclosure: My TFSA is maxed. It's such a ridiculous money grab for someone in my tax bracket I can't say no.


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## BoringInvestor

Eclectic12 said:


> As for the TFSA's not being maxed out ... that is likely a sign that low to mid income earners *are* using the TFSA, n'est pas?


Possibly, but if they're currently using it, and not maxing their TFSA contributions, we can't justify needing to increase the limit to benefit lower-to-middle class Canadians.


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## namelessone

gardner said:


> Doubling TFSA limit will only help "Those who have the will power and actions to get wealthy.


Fixed!
Being wealthy is a choice. Most people including the poor have the same potential to get rich on a different level.


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## gibor365

> IF it happens, that will be great.
> 
> Why is it so bad that "middle class" will stand to benefit the most? The idea is to help Canadians save for retirement and to alleviate senior citizen poverty in the future which might then cause Ottawa more money. That is why they reward people for saving via RRSP and with TFSA with it opens up for short term savings as well for young families or low income.
> 
> Also let's not forget that there are already many tax benefits credits that specifically only applies to low income group or (could hide income group). My kids don't qualify for OSAP, got to pay more for health benefits etc. Just to name a few. All I know is that whenever I go to my tax accountant and I mention tax credits or deductions that most people can take advantage of he'll say "your income is too high, you don't qualify for that".
> 
> Sometimes I feel that our tax system encourages people to make less. (or at least find a way to declare less)
> 
> This at least will encourage people to save more, and there is nothing wrong with that.


 Exactly what I think about this situation!!!



> Please email your local MP immediately with the details of the savings to rectify this situation.


I emailed my PM several months ago requestiong TFSA increase.... if GB can handle 3-4 times higher TFSA room (include TFSA for minors), sure that Canada can


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## BoringInvestor

namelessone said:


> Fixed!
> Being wealthy is a choice. Most people including the poor have the same potential to get rich on a different level.


Research refutes your claim.


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## namelessone

BoringInvestor said:


> Research refutes your claim.


The Inequality people complaining about is between classes. The fact is, we have the freedom to move to whatever class we want. The choice is ours. Check the mobility between classes. 
Most millionaires in Northern America are self made, not from inheritance. And many of them are immigrants. They are hard working people unlike people feeling entitled to everything.

http://news.nationalpost.com/2013/0...almost-half-of-them-are-newcomers-poll-shows/


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## namelessone

BTW, TFSA is only a bonus for the wealthiest people. The tax saving from TFSA is insignificant compared to their net worth.


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## andrewf

gardner said:


> Yes, but that doesn't make those folks KC Irving. They use the word "wealthy" when they should use "middle class". To someone who is truly wealthy, the TFSA is bubkes and always will be.


What is your definition of middle class? People not in the top decile of income? Because families with the median income already have plenty of available tax shelters. Adding additional tax shelter room benefits families with considerably higher than the median income.


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## andrewf

gibor said:


> Exactly what I think about this situation!!!
> 
> 
> I emailed my PM several months ago requestiong TFSA increase.... if GB can handle 3-4 times higher TFSA room (include TFSA for minors), sure that Canada can


Are you interested in GB levels of income and value added tax?


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## none

namelessone said:


> The Inequality people complaining about is between classes. The fact is, we have the freedom to move to whatever class we want. The choice is ours. Check the mobility between classes.
> Most millionaires in Northern America are self made, not from inheritance. And many of them are immigrants. They are hard working people unlike people feeling entitled to everything.
> 
> http://news.nationalpost.com/2013/0...almost-half-of-them-are-newcomers-poll-shows/


How amazingly racist. By that line of thinking black and natives must be genetically predisposed to sloth.


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## tenoclock

namelessone said:


> The Inequality people complaining about is between classes. The fact is, we have the freedom to move to whatever class we want. The choice is ours. Check the mobility between classes.
> Most millionaires in Northern America are self made, not from inheritance. And many of them are immigrants. They are hard working people unlike people feeling entitled to everything.
> 
> http://news.nationalpost.com/2013/0...almost-half-of-them-are-newcomers-poll-shows/


+1

In a free market society, being wealthy is a choice because working harder and smarter results in wealth. Most people who are poor are so because their parents, their friends and family are poor and these people are not taught, either by someone else or by their surroundings on how to actually become wealthy. They do not learn the habits that are required to accumulate wealth and to remain rich. This is why lottery winners and rags to riches artists and athletes go broke so often even when they are gifted with seemingly unlimited amounts of cash. Spending more than you make, is a sure fire way to poverty, especially when those expenditures are on depreciating assets.


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## namelessone

none said:


> How amazingly racist. By that line of thinking black and natives must be genetically predisposed to sloth.


Completely out of topic and illogical. You do realize immigrants come from all over the world. 
It's not about race. It's about culture and attitude. 






tenoclock said:


> +1
> 
> In a free market society, being wealthy is a choice because working harder and smarter results in wealth. Most people who are poor are so because their parents, their friends and family are poor and these people are not taught, either by someone else or by their surroundings on how to actually become wealthy. They do not learn the habits that are required to accumulate wealth and to remain rich. This is why lottery winners and rags to riches artists and athletes go broke so often even when they are gifted with seemingly unlimited amounts of cash. Spending more than you make, is a sure fire way to poverty, especially when those expenditures are on depreciating assets.


Yep. It's all about mindset. 
Many wealthy people said it again and again that remove all their asset and let them start over, they will be rich again in a very short time. It's just a number game.


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## none

namelessone said:


> Completely out of topic and illogical. You do realize immigrants come from all over the world.
> It's not about race. It's about culture and attitude.
> 
> Because rather is highly correlated with socioeconomic status you can use either for predictors when modelling financial inequity.
> 
> If everyone TRULY had an equal chance at wealth and success you would expect comparable proportions of wealthy people from each race based on representative population size.
> 
> YOU DON'T. Try to figure that out - you may not think it but your statement has negative racial connotations and is effectively racist.


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## tenoclock

No, it's about culture and attitude towards wealth that creates wealthy people. 

If a population subgroup (due to culture) has a negative attitude towards business or getting specialized higher education, they are more likely to be poor than rich. Often some of these attitudes are internalized during childhood so it's very hard to break out from that. Poor kids born in poor neighborhoods who have poor friends are very likely to remain poor their whole lives because they are not exposed, in close terms to the traits that are required to become wealthy. 

So yes, nobody gets equal opportunity. We all are born in diversely different families who have different financial circumstances and we all learn and internalize good or bad lessons during childhood which are hard to forget.

However this lack of equality cannot be blamed on one particular group of people. I find that blaming others for our misfortune is a sign of weakness, a trait more common in the poor than the rich.


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## none

Yes the poor misfortune of the rich <eye-roll>


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## sags

Any serious research I have read, has shown that 'opportunity" is by far the biggest factor in financial success.

As to raising the TFSAS, it would fulfill an election promise by the Conservatives and pander to their base, but they would have to fund it the way they have funded everything else.

They would have to borrow the money and add the cost to the huge debt THEY have created since taking office.

Increasing the TFSA to benefit the wealthy, while Canada's economy is in the tank..............is typical of the Conservatives.

Benefit middle income and retirees ? This is the same government who eliminated income trusts and refuses to enhance the CPP.

So go ahead Conservatives and increase the TFSA limit..........just don't bother to whine, cry and complain about the cost of OAS or the public service.


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## none

^ This guy gets it.


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## tenoclock

Life is not fair. Some are born beautiful, others not so. We cannot make everyone equal. It's not the someone else's fault that nature dealt one a bad hand. 
In Canada, everyone has the opportunity, some have more and some have less. . Yet nobody can say that they cannot get rich because they have no opportunity to do so, unless they are severely disabled or mentally handicapped. It's a sense of entitlement that creates the victim complex. Nobody owed me a job, nobody owes me high or decent or 'fair' wages. In a free society, you get rich by creating value for others, whatever that may be. Others do not have the right to forcefully feed off that value created. It is simply immoral to do so.

I agree with the Conservative government creating a load of debt. But then, are Liberals or NDP going to solve this? Not really. They raise taxes, and they spend even more on useless things. If Conservatives pander to their votebank, so does every political party.


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## janus10

Letran said:


> I'm still miffed that they put a cap of $22500/yearly for RRSP contribution as oppose to the straight 18% rule


http://www.cra-arc.gc.ca/limits/

It's been quite a few years since the limit was $22,500


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## sags

Garth Turner has entered the TFSA debate with a timely post on the subject.

http://www.greaterfool.ca/

The wealthy already get more than their fair share of tax breaks.


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## sags

A guy who works in a factory, and is supporting a wife and 5 kids...........isn't going to have money left over to max out a TFSA..........even for himself.

A guy who works as an investment banker, and is supporting a wife and 5 kids..................has lots of money to buy TFSAs for everyone in the family that is eligible.

Hence............the TFSA is inherently advantageous to the wealthy.


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## Letran

janus10 said:


> http://www.cra-arc.gc.ca/limits/
> 
> It's been quite a few years since the limit was $22,500


Lol, this tells me how much attention I pay when I do my banking.


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## gibor365

sags said:


> A guy who works in a factory, and is supporting a wife and 5 kids...........isn't going to have money left over to max out a TFSA..........even for himself.
> 
> A guy who works as an investment banker, and is supporting a wife and 5 kids..................has lots of money to buy TFSAs for everyone in the family that is eligible.
> 
> Hence............the TFSA is inherently advantageous to the wealthy.


And whose fault is that 1st guy decided to work at the factory? Maybe he was too lazy to study?! And how much money, time, and nerves spent 2nd guy who became investor banker? Do you know how many hours per week they work ? I read that the highest suicide and stress level among investor bankers....


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## gibor365

andrewf said:


> Are you interested in GB levels of income and value added tax?


and what is your point?
Level of income is pretty similar between GB and Canada. Also


> In the United Kingdom, companies pay UK corporation tax on their profits and the remainder can be paid to shareholders as dividends. Basic rate tax payers have no further tax to pay as the dividend is deemed to have been received net of 10% tax.


VAT is higher than in Canada 20%, eg most food and children’s clothes


> Zero-rated goods and services, eg most food and children’s clothes


but check out GB TFSA http://en.wikipedia.org/wiki/Individual_Savings_Account


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## tenoclock

My guess is that the investment banker is still paying several times more taxes than the factory worker, even after the TFSA break.


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## gibor365

tenoclock said:


> My guess is that the investment banker is still paying several times more taxes than the factory worker, even after the TFSA break.


 That;s right! and he also support from his taxes those 5 kids who has factory worker


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## sags

tenoclock said:


> My guess is that the investment banker is still paying several times more taxes than the factory worker, even after the TFSA break.


If he is..............then he wouldn't be worth his pay as an investment banker............


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## carverman

It all depends on how fortune has smiled on you in your life...
certainly any proposed TFSA increase from the present $5500 a year, would more than
likely go unused in a retired person's financial situation.

I try and save as much as I can each year..but there is always some financial issue that crops up every year to dwindle my TSFA savings What I take out of my TFSA in one year, is added to the max contributions to the TFSA for next year, and can be carried for future years as well. 

For example, last year, I spent about $20k upgrading things on my house. A good portion of the one time expense for the roof and insulation upgrade was from my TFSA "reserve fund". 
This year, that withdrawal has added to my 2015 contribution max of $5500, so any expansion of the max contributions would not benefit me anyway. 

I can't put that much away being on pension, with prices and property taxes rising each year.


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## Causalien

I do not think this will help the rich much. The current rich won't really even blink at a 5000 increase in potential to generate more cash. Not to mention the risk of investing you still have to take.

In my opinion, this will benefit the young who just started out in life. Over a 10 year span, the TFSA will allow the fiscally responsible ones to launch themselves ahead of the debt ridden spenders. I am saying this because the TFSA has been a game changer for me.


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## Eclectic12

sags said:


> A guy who works in a factory, and is supporting a wife and 5 kids...........isn't going to have money left over to max out a TFSA..........even for himself.


YMMV ... my brother-in-laws neighbourhood is similar to what you are describing and from the conversation, I can tell that some are spending on vacations/cars a fortune while others are making use of their RRSP/TFSA.

One of these factory types was flabbergasted to hear that I had to pay towards my medical/dental/sick benefits. I am not sure he believed me.


Cheers


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## Retired Peasant

Further to the guy in the factory with 5 kids, I heard a comment yesterday that many don't think about. Eventually he and his wife will have an empty and likely large house. When they downsize, they could have a large lump sum fall into their laps. All that TFSA room that went unused could then be used.


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## Toronto.gal

tenoclock said:


> My guess is that the *investment banker* is still *paying several times more taxes* than the factory worker...


The debate would get more interesting if said figures were taken into account as well, rather than just the amount of money higher-income earners are able to make/save. Of those who don't save & have no money left for TFSAs [excluding those unable to save], I wonder how much they actually were very willing to spend on daily rituals, such as cappuccinos & lattes. Even a non-fancy coffee at TH - most likely one in the morning and one in the afternoon, would cost over $800/yr, or about 15% of one's TFSA's annual contribution. Add a few # of non-fancy lunches/dinners a year, and that could easily represent 100% of one's TFSA. 

What has changed in the last 2 years?
http://business.financialpost.com/2...-the-wealthy-in-canada-earn-and-pay-in-taxes/


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## Eclectic12

carverman said:


> It all depends on how fortune has smiled on you in your life...
> 
> certainly any proposed TFSA increase from the present $5500 a year, would more than
> likely go unused in a retired person's financial situation...


YMMV ... without numbers it's hard to tell.

Based on the number of articles complaining about OAS clawbacks, one could think there's going to be many retired folk who are going to have the money to make use of expanded TFSA contribution room.

Then too ... where the retiree might not have the cash, if there's an inheritance from the folks or a pile of cash from selling the homestead to downsize - the situation could change dramatically.


Cheers


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## Chris L

No amount of incentive or lack of incentive will help the truly poor become wealthy. It's a mind-set. You either have it or you don't. There's nothing in the free world that locks you into one class or another.

For starters, the poor can stop buying RE and start renting and stop wasting their money on junk.

Work harder, take some risks, be more careful with your money and delay gratification. Easily said, but for most, difficult to execute.

I also don't really care if it benefits the poor or not, if they can't save $5500/year does it matter that they can't save $11k/year? 

Fact is the TFSA is the greatest gift to getting rich (or said differently not inhibiting lifelong poverty) that our government has ever provided. That most don't put anything in it suggests factors beyond a person's inherent desire or capability to control. Let them do what they do and let us do what we do. I stuff mine full, they stuff their lives full of other stuff. I don't make much, but I'm free - because I gave up other things. It's a choice and it's not about income or anything. You can't change someone's personality - learned that long ago. So dust them, leave them behind. You can't change that mindset.

In the end the rich, ambitious, and hardworking provide for the rest anyway. They should be compensated for that.


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## Chris L

sags said:


> A guy who works in a factory, and is supporting a wife and 5 kids...........isn't going to have money left over to max out a TFSA..........even for himself.
> 
> A guy who works as an investment banker, and is supporting a wife and 5 kids..................has lots of money to buy TFSAs for everyone in the family that is eligible.
> 
> Hence............the TFSA is inherently advantageous to the wealthy.


Maybe you shouldn't have 5 kids if you work in a factory.


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## Eclectic12

Toronto.gal said:


> The debate would get more interesting if said figures were taken into account as well, rather than just the amount of money higher-income earners are able to make/save.


+1.




Toronto.gal said:


> Of those who don't save & have no money left for TFSAs [excluding those unable to save], I wonder how much they actually were very willing to spend on daily rituals, such as cappuccinos & lattes. Even a non-fancy coffee at TH - most likely one in the morning and one in the afternoon, would cost over $800/yr, or about 15% of one's TFSA's annual contribution. Add a few # of non-fancy lunches/dinners a year, and that could easily represent 100% of one's TFSA.


Yes ... when I moved into my first better paying job, I was astounded at colleagues who had access to a coffee maker to brew their own for a buck or two. 

Instead, most were going to StarBucks *four* times a day during the working week. When I pointed out that this was over $400 a month, they went into denial mode. I also pointed out that to replace that money, likely they needed even more money as the money spent was after-tax, the replacement money would be before tax.

BTW - I found it amusing that some of those in line were complaining about how expensive gasoline for their SUV was yet were quite happily paying a lot more per litre for a fancy coffee.


Cheers


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## none

I find it hilarious (in a very sad way) that it appears that the vast a majority of you people consider the 'poor' to actually be middle to lower middle class.


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## gibor365

none said:


> I find it hilarious (in a very sad way) that it appears that the vast a majority of you people consider the 'poor' to actually be middle to lower middle class.


they are not poor"...they just call themselves "poor"  there are no "poor" people in Canada...


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## none

I'm sure the 200,000 homeless people in Canada would disagree. <face-palm>

http://www.cbc.ca/strombo/news/10-things-you-might-not-know-about-poverty-in-canada


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## Toronto.gal

sags said:


> Any serious research I have read, has shown that *"opportunity" is by far the biggest factor in financial success.*


A factor, that is all, but IMHO, certainly not the biggest! 

How do those opportunities come about, knocking at one's door? What's your own definition of opportunity when it comes to financial success?

The list of factors in the real stories of failure/success is rather long; with the latter, one could start from attitude/emotional intelligence/education{self or formal}/savings/LBYM/working hard{sometimes at more than 1 job}/sacrifice, and most definitely luck & timing!

The belief that successful people are plain lucky is mostly a myth. 

Remember the thread about Mr. Read, the janitor/gas station attendant who died with $8m? You said in that thread: 'The guy in the story had 8 million dollars. Why didn't he donate some while he was alive? *I think he probably had issues.'* Some of his issues turned out to be: educating himself/saving/living below his means/huge generosity written in his will, etc., etc. 

'Average people have a lottery mentality. Rich people have an action mentality.'
http://www.businessinsider.com/how-rich-people-think-differently-from-the-poor-2012-8?op=1


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## gibor365

none said:


> I'm sure the 200,000 homeless people in Canada would disagree. <face-palm>
> 
> http://www.cbc.ca/strombo/news/10-things-you-might-not-know-about-poverty-in-canada


actually


> On any given night, about 30,000 Canadians are homeless.


 and how many of them choosing such life style?!
Why those people don't want to go to shelters?


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## Chris L

They don't go to shelters because they don't want (or can't handle) ANY accountability or responsibility including moving their bodies to a specific location at a specific time.


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## gardner

gibor said:


> Why those people don't want to go to shelters?


Mental illness, mainly.


----------



## gibor365

Chris L said:


> They don't go to shelters because they don't want (or can't handle) ANY accountability or responsibility including moving their bodies to a specific location at a specific time.


It was Rhetoric question


----------



## Toronto.gal

Chris L said:


> Maybe you shouldn't have 5 kids if you work in a factory.


+1.

I know a couple who decided to have one child, not because they didn't want to have more, but because given that they came from a former communist country, where they had been rather poor, they wanted to be able to give the best to their child in terms of education. Scroll forward 18 years, the only thing that family has gotten from tax-payers, has been educational scholarships. AFAIK, the young man himself, has fully contributed to his TFSA from money he saved from p-time work.

*Eclectic:* $400/month?! Were they buying mini versions of quadriginoctuple fraps or what? For maximum shock, I would have given them the 10 yr. cost, which excluding interest/price increases, it would amount to a monstrous $48K, even if their salaries were equally monstrous.


----------



## RCB

I find this TFSA is bad conversation interesting. As someone that grew up blue collar comfy, with hard times here and there, it's not like I stayed in that financial position. Three times as a single young adult I had to move, as in change regions of the country. Not for a better job, but for A job. Twice my sole-support, blue collar husband has taken 25% pay cut, to either advance eventually, or pick up a trade with better employment opportunities. Over 30 years, I have been in and out of the middle class so much I could have been on a pogo stick.

Sure, we couldn't have sunk savings into a TFSA many of those years, but we can now. Some years we may not be able to hit the contribution limit, other years we may be able to top up for past years.

I think it's rather ridiculous to ignore the vast opportunity to be upwardly, financially mobile in this country. There are some very unfortunate situations when reality continues to knock you down regardless, however the vast majority can hit the middle or upper middle with some thought and effort over time.

"Poor" people that think the TFSA is not good must see themselves as never getting ahead. Perhaps that creates a motivational issue that only they can address.


----------



## uptoolate

gardner said:


> Yes, but that doesn't make those folks KC Irving. They use the word "wealthy" when they should use "middle class". To someone who is truly wealthy, the TFSA is bubkes and always will be.


Yes the use of the word 'wealthy' is rich! All of the wealthy are waiting to rearrange their finances as soon as they can pressure Harper to slip this through. I also like the idea that putting more money in consumers hands is a bad idea as opposed to letting the government have it to fund the highly effective Senate or do whatever else they would like to do with it.


----------



## Eclectic12

Chris L said:


> No amount of incentive or lack of incentive will help the truly poor become wealthy.
> It's a mind-set.


I can agree on the mind set ... but have also witnessed an effective teacher/communicator to break through the mind set, resulting in a complete turnaround.

I've posted several times about the factory guy for whom all it took for him to switch decide learning to manage money was important and should have been started years earlier was his perception that a good paying job would make this skill worthwhile.




Chris L said:


> You either have it or you don't. There's nothing in the free world that locks you into one class or another.


And there are those that have something open their eyes as well.




Chris L said:


> Fact is the TFSA is the greatest gift to getting rich (or said differently not inhibiting lifelong poverty) that our government has ever provided.
> 
> That most don't put anything in it suggests factors beyond a person's inherent desire or capability to control ...


+1 on the TFSA part but see the second part as YMMV. As other posts have pointed out, desire/control for many people could drastically change what they are able to put away with the same job as today.


Then too - some of the other questionable numbers from the study make me wonder if "less than half of Canadians" stat is including those under 17, who are not eligible for a TFSA. If so, the true number is likely higher.


Cheers


----------



## sags

Toronto.gal said:


> A factor, that is all, but IMHO, certainly not the biggest!
> 
> How do those opportunities come about, knocking at one's door? What's your own definition of opportunity when it comes to financial success?
> 
> The list of factors in the real stories of failure/success is rather long; with the latter, one could start from attitude/emotional intelligence/education{self or formal}/savings/LBYM/working hard{sometimes at more than 1 job}/sacrifice, and most definitely luck & timing!
> 
> The belief that successful people are plain lucky is mostly a myth.
> 
> Remember the thread about Mr. Read, the janitor/gas station attendant who died with $8m? You said in that thread: 'The guy in the story had 8 million dollars. Why didn't he donate some while he was alive? *I think he probably had issues.'* Some of his issues turned out to be: educating himself/saving/living below his means/huge generosity written in his will, etc., etc.
> 
> 'Average people have a lottery mentality. Rich people have an action mentality.'
> http://www.businessinsider.com/how-rich-people-think-differently-from-the-poor-2012-8?op=1


They write newspaper articles on the 10% or less success stories. They don't write about the 90% of small business owners, who despite their incredible hard work and dedication end up failing.

We have a strip mall near us that has had 8 pizza places in the same location. The scorecard so far is 0 successes in 8 tries.

I know one of the owners........2 brothers from Iraq actually, and they put all their finances and all their families finances into one of the 8 failed businesses, and lost everything.

One is now working as a truck driver and the other as a construction laborer.

Hard work and dedication alone simply isn't a guarantee for success.

Lots of kids want to be NHL hockey players, but regardless of how determined they are or how hard they work...............the odds are stacked heavily against them.

Yet..............sons of current and former NHL players are often given the "opportunity" over another player of equal or better calibre.

Opportunity often makes the difference between success and failure.

In corporate America, it is as much about who you know, as what you know.

Career advancement is often dependent on the opportunity that a mentor presents before you.


----------



## tenoclock

Their businesses failed to create value for others, so they failed. It's no one else's fault. If something is not creating value for others, you need to cut your losses and move on to something else. You cannot expect a subsidy from others for your business if your business is failing to create value.

Luck is simply when opportunity meets preparedness. And opportunity strikes at every door, and it does not wait, it moves on. If you are prepared, you will get lucky more often than not. You will succeed more than you will fail. 

If the mentality is to dismiss other people's hard work and effort as 'luck' - then there is a high chance those people who do so won't get much luck themselves because when opportunity comes, they will either totally fail to spot it or be unprepared to take it.


----------



## Blue Horseshoe

gardner said:


> Yes, but that doesn't make those folks KC Irving. They use the word "wealthy" when they should use "middle class". To someone who is truly wealthy, the TFSA is bubkes and always will be.



Yeah I love that...every CBC article on the TFSA expansion seems to focus on that false dichotomy - that there's only the poor and the 'wealthy'. Someone pulling over mid-6 figures and up doesn't give a **** about tax-free earnings on $35k. The TFSA benefits middle-class Canadians more than any other group. If people are going to point fingers at reduction in tax revenue, there's a whole host of other places the Conservative government should be taking blame.


----------



## Chris L

Blue Horseshoe said:


> Yeah I love that...every CBC article on the TFSA expansion seems to focus on that false dichotomy - that there's only the poor and the 'wealthy'. Someone pulling over mid-6 figures and up doesn't give a **** about tax-free earnings on $35k. The TFSA benefits middle-class Canadians more than any other group. If people are going to point fingers at reduction in tax revenue, there's a whole host of other places the Conservative government should be taking blame.


Exactly. 

The wealthy benefit from living on the planet, should we take that away from them too? The wealthy just play the game of money better, that doesn't mean we should punish them for everyone else's lack of game.

Whenever taxes are reduced or eliminated, for anyone, this is a good thing.


----------



## Eclectic12

sags said:


> They write newspaper articles on the 10% or less success stories.
> They don't write about the 90% of small business owners, who despite their incredible hard work and dedication end up failing.


 ... which is why some use other methods such as spending less than they make, education or whatever else to build wealth.

In any case, I believe the idea was that just about everyone can try ... I do not recall anyone saying "starting a business is a guarantee of becoming wealthy". 




sags said:


> We have a strip mall near us that has had 8 pizza places in the same location. The scorecard so far is 0 successes in 8 tries.
> 
> I know one of the owners........2 brothers from Iraq actually, and they put all their finances and all their families finances into one of the 8 failed businesses, and lost everything.


Did they not do their research to figure out it would a challenging spot?
Or did they believe what they were doing was different somehow?




sags said:


> Hard work and dedication alone simply isn't a guarantee for success.


 ... same as having the education and/or right doors opened for one will not make up for squandering the opportunity or having unrealistic expectations.




sags said:


> Career advancement is often dependent on the opportunity that a mentor presents before you.


It can help ... but it is not the only factor.


Cheers


----------



## RBull

sags said:


> A guy who works in a factory, and is supporting a wife and 5 kids...........isn't going to have money left over to max out a TFSA..........even for himself.
> 
> A guy who works as an investment banker, and is supporting a wife and 5 kids..................has lots of money to buy TFSAs for everyone in the family that is eligible.
> 
> Hence............the TFSA is inherently advantageous to the wealthy.


I suspect your idea of wealthy is far different than mine. To me "wealthy" is a tiny fraction of the population and TFSA amounts are small potatoes to them. 

In your example I would read as the investment banker decides to have a family size with a career that he can provide good living standards and one he can maintain in retirement. His/her choice and action.

The factory worker has a family size and career that may limit his ability to maintain a good standard of living for his family and may inhibit his future retirement standard of living/ability to save. His/her choice and action. 

Yes the TFSA is inherently advantageous to those who plan wisely and make decisions in life and career that include the financial repercussions. 




sags said:


> They write newspaper articles on the 10% or less success stories. They don't write about the 90% of small business owners, who despite their incredible hard work and dedication end up failing.
> 
> We have a strip mall near us that has had 8 pizza places in the same location. The scorecard so far is 0 successes in 8 tries.
> 
> I know one of the owners........2 brothers from Iraq actually, and they put all their finances and all their families finances into one of the 8 failed businesses, and lost everything.
> 
> One is now working as a truck driver and the other as a construction laborer.
> 
> Hard work and dedication alone simply isn't a guarantee for success.
> 
> Lots of kids want to be NHL hockey players, but regardless of how determined they are or how hard they work...............the odds are stacked heavily against them.
> 
> Yet..............sons of current and former NHL players are often given the "opportunity" over another player of equal or better calibre.
> 
> Opportunity often makes the difference between success and failure.
> 
> In corporate America, it is as much about who you know, as what you know.
> 
> Career advancement is often dependent on the opportunity that a mentor presents before you.


The possible difference between us is I operate on the principle of "if it's to be it's up to me". Personal responsibility. I started, operated and sold one business. Was it luck- maybe; but more likely I did my homework first, worked hard and smart and created the opportunity to sell. 

You seem to see a system that is riddled with flaws and believe these are the main reasons why some don't make it. In many cases they just didn't make good decisions.


----------



## sags

Bringing the discussion back to the TFSA........because I am probably guilty of running it down this side road, I would be surprised if Mr. Harper raises the TFSA limit.

It would be handing the opposition a gift that they would clamp onto like Hoss Cartwright on a T-Bone steak.

I can imagine the opposition standing at a new conference with charts and graphs, and twenty five 8 X 10 glossy pictures with red lines and arrows on the front, and a paragraph on the back, describing for everyone watching on television, recycled endlessly on the 24 hour news cycle, tweeted and retweeted around the world.......how Mr. Harper was giving more tax breaks to the wealthy.

True or not...........those would be powerful optics in an election campaign.

So what do you say, Mr. Harper............'Do you feel lucky" ?

*television, movie or song references in the creation of this post endangered no wild animals.


----------



## BoringInvestor

sags said:


> They write newspaper articles on the 10% or less success stories. They don't write about the 90% of small business owners, who despite their incredible hard work and dedication end up failing.


Yup, survivorship bias.


----------



## sags

RBull...........I guess we are different.

I had my job/career solely through opportunity. I knew the wife of a guy who could get me hired, over tens of thousands of others who would have loved the same opportunity.

Opportunity kept me employed, when layoffs loomed and a fellow worker was involved in an accident and off work for years. I replaced him and was the bottom person on the seniority list.

The others who were laid off............were never rehired.

When work slowed down in that location, and the employee returned to work..........I had the opportunity to move to another location. 

Opportunity and luck kept me working for a solid 40 years. There is nothing special about me that I deserved to be so much more fortunate than so many others.


----------



## peterk

sags said:


> They write newspaper articles on the 10% or less success stories. They don't write about the 90% of small business owners, who despite their incredible hard work and dedication end up failing.
> 
> We have a strip mall near us that has had 8 pizza places in the same location. The scorecard so far is 0 successes in 8 tries.
> 
> I know one of the owners........2 brothers from Iraq actually, and they put all their finances and all their families finances into one of the 8 failed businesses, and lost everything.
> 
> One is now working as a truck driver and the other as a construction laborer.
> 
> *Hard work and dedication alone simply isn't a guarantee for success.*
> 
> Lots of kids want to be NHL hockey players, but regardless of how determined they are or how hard they work...............the odds are stacked heavily against them.
> 
> Yet..............*sons of current and former NHL players are often given the "opportunity" over another player of equal or better calibre.*
> 
> Opportunity often makes the difference between success and failure.
> 
> *In corporate America, it is as much about who you know, as what you know.*
> 
> *Career advancement is often dependent on the opportunity that a mentor presents before you.*


Perception is reality.

Of course we all know perception isn't reality, objectively. But the sooner you internalize and accept this law of human nature, the sooner you can begin to make efforts to bend perception to your benefit.

The real reality of almost any situation doesn't matter. Only the perception of those who are in charge and making the decisions. 

Life is not fair, and absolutely never will be. It's best not to try and fight it...


----------



## gibor365

> There is nothing special about me that I deserved to be so much more fortunate than so many others.


 maybe there is, but you don't notice it


----------



## Toronto.gal

sags said:


> sons of current and former NHL players are often given the "opportunity" over another player of equal or better calibre/Opportunity kept me employed


And how different would that be from your friend's husband, who gave you the job that you said 'tens of thousands of others' would have not only loved to have, but that perhaps were even more qualified than you? You didn't exactly have to beat down that 1st opportunity door, did you?


----------



## RBull

sags said:


> RBull...........I guess we are different.
> 
> I had my job/career solely through opportunity. I knew the wife of a guy who could get me hired, over tens of thousands of others who would have loved the same opportunity.
> 
> Opportunity kept me employed, when layoffs loomed and a fellow worker was involved in an accident and off work for years. I replaced him and was the bottom person on the seniority list.
> 
> The others who were laid off............were never rehired.
> 
> When work slowed down in that location, and the employee returned to work..........I had the opportunity to move to another location.
> 
> Opportunity and luck kept me working for a solid 40 years. There is nothing special about me that I deserved to be so much more fortunate than so many others.


You have been fortunate and so have I. 

Everyone got their job/career through an opportunity. Some basically had it handed to them or had a real help, some searched out an existing one that they earned or qualified for in some way, some created one with their own vision, or idea somehow. Where the person ends up from there has mostly to do with that individual, since there will be both roadblocks and future opportunities for virtually everyone.

As far as TFSA's its doubtful to me anything is going to happen for a while. If I'm not mistaken the US Roth IRA limit which I believe is similar to a TFSA is $5500
I would like to see the limits carefully reviewed and raised but only to a point where it is not going to have a noteworthy damaging affect on the countries finances across the population.


----------



## namelessone

sags said:


> A guy who works in a factory, and is supporting a wife and 5 kids...........isn't going to have money left over to max out a TFSA..........even for himself.
> 
> A guy who works as an investment banker, and is supporting a wife and 5 kids..................has lots of money to buy TFSAs for everyone in the family that is eligible.
> 
> Hence............the TFSA is inherently advantageous to the wealthy.


Have you watched the movie "Idiocracy"? 
A guy who works as an investment banker, is not likely to have 5 kids, maybe 1 or 2 because he's rational.





Causalien said:


> I do not think this will help the rich much. The current rich won't really even blink at a 5000 increase in potential to generate more cash. Not to mention the risk of investing you still have to take.
> 
> In my opinion, this will benefit the young who just started out in life. Over a 10 year span, the TFSA will allow the fiscally responsible ones to launch themselves ahead of the debt ridden spenders. I am saying this because the TFSA has been a game changer for me.


The rich benefits more from leveraging other people's money than the tiny TFSA room.


----------



## namelessone

"Rinehart told readers to stop complaining and spend less time "drinking, or smoking and socializing, and more time working." The Australian government called the quote "insulting," according to AFP."

Wow, even the government has victim mentality and is so sensitive. Society likes comforting lies rather than hurtful truths. (No racism intended here. I like to think objectively).


----------



## Causalien

gibor said:


> maybe there is, but you don't notice it


Jantelova!?? Er der Norge???


----------



## Eclectic12

sags said:


> ... Opportunity and luck kept me working for a solid 40 years. There is nothing special about me that I deserved to be so much more fortunate than so many others.


Maybe ... but then again, I've watched people have the same opportunity/luck but because they knew better, they made choices that didn't take advantage of the opportunities and are still stuck where they are thirty years ago.


Regardless ... I suspect the TFSA won't be bumped up ... but have been wrong before.


Cheers


----------



## peterk

namelessone said:


> A guy who works as an investment banker, is not likely to have 5 kids, *maybe 1 or 2 because he's rational.*





namelessone said:


> "Rinehart told readers to stop complaining and spend less time "drinking, or smoking and socializing, and more time working." The Australian government called the quote "insulting," according to AFP."
> 
> Wow, even the government has victim mentality and is so sensitive. * Society likes comforting lies rather than hurtful truths.* (No racism intended here. I like to think objectively).


Here's a hurtful truth. Successful people with intelligence and resources should all be producing 4+ children themselves, and devoting a substantial amount of personal resources towards raising them to a high level of competency. If the successful people of the West continue to think having 0 or 1 or 2 children is "rational", then western culture as we know it will soon crumble.


----------



## Toronto.gal

Eclectic12 said:


> 1. made choices that didn't take advantage of the opportunities and are still *stuck where they are thirty years ago.*
> 2. I suspect the *TFSA won't be bumped up* ... but have been wrong before.


*1.* The comfort zone scenario, that's not always a bad thing. It's estimated that people who stay with same employer over a long period of time, [not necessarily in same roles], end up earning considerably less over the course of employment. Days when salary increases were in double digits are long gone after all. I'm personally not in favour of the other extreme, that of routinely changing jobs every few years.

I have a friend who was not aggressive enough when it came to initial salary negotiations for a particular job, and because of some silly rules the company had [or not], they had to find ways other than salary increase/promotion to eventually give her the salary that she demanded in order to retain her, but it took some time. She says now that her patience had been worth it, but it's nearing the 7 year itch.

*2.* I doubt it will double, but it might increase to Britain's junior version of their ISAs, so about a 50% increase perhaps?


----------



## Chris L

peterk said:


> Here's a hurtful truth. Successful people with intelligence and resources should all be producing 4+ children themselves, and devoting a substantial amount of personal resources towards raising them to a high level of competency. If the successful people of the West continue to think having 0 or 1 or 2 children is "rational", then western culture as we know it will soon crumble.


From a rational standpoint. Does it matter? 

See...


----------



## carverman

Toronto.gal said:


> *2.* I doubt it will double, but it might increase to Britain's junior version of their ISAs, so about a 50% increase perhaps?


With the current state of the economy, you can forget about the Feds raising the TFSA to $10K max contribution.
The TFSA was introduced for the 2009 taxation year with a $5k max. It was raised in a $500 increment in 2013 to
$5500. That was about 5 years after it first got introduced.

We might expect it to see it raised another $500 for tax year 2017/18 based on the inflation rate.
So the" middle class" out there shouldn't br "chaffing at the bit" expecting another "gift horse" any time soon, at least not for the next 3 years. 



> The $5,500 annual contribution limit is indexed to the Consumer Price Index (CPI), in $500 increments, in order to account for inflation


----------



## Cal

I think raising the TFSA is more about optics for an upcoming election than anything else. Vote for Harper, middle class, so you can stick it to the man and not pay as much in taxes.

I doubt Harper will run his campaign mentioning how most people don't use them for investments, nor how many are not able to max the TFSA or their RRSP's.

If they can balance the budget, they just might use this to buy a few votes. Although they may drop the indexing portion after raising the contribution level.


----------



## Eclectic12

Toronto.gal said:


> *1.* The comfort zone scenario, that's not always a bad thing.


The comfort zone is fine for what you are describing ... I would call what I am describing more like the zombie zone.

Graduate with honours from university in a marketable program ... insist it's not worth starting with a company unless it's in the field of choice at level x without paying any attention to the job market, do not take advantage of help getting a job as the job opening is not right and do not relocate if some other locale had such jobs available. There's more but these seemed to be the biggest obstacles, IMO.

The end result ... the person in question's classmates started lower (as low as the mail room) and after demonstrating their abilities, had worked their way up to their desired job in about six to ten years (or higher).

Our illustrious example has worked sporadically in his field over thirty years, where most of that work is coming from his girlfriend passing on consulting jobs that her employer is setting up.


Back to the comfort zone ...



Toronto.gal said:


> I'm personally not in favour of the other extreme, that of routinely changing jobs every few years.


*grin* ... you wouldn't have done well at the one company as the new management made it clear when they took over that anyone who had not changed companies or hadn't taken on enough new responsibilities for their liking in three years was dead wood in their mind, that should be declared redundant then fired out the door.




Toronto.gal said:


> ... I have a friend who was not aggressive enough when it came to initial salary negotiations for a particular job, and because of some silly rules the company had [or not], they had to find ways other than salary increase/promotion to eventually give her the salary that she demanded in order to retain her, but it took some time ...


That's where observation of what management is doing can help provide direction.

At one company, I watched management evaluate the requested small raise for a good performers then decide it was inappropriate. Even but Eventually the good performer would gave up and shifted companies for a significant raise - at which point, management would at best pay 5x the requested raise to the replacement ... or at worst, would need to hire two replacements to cover what used to be covered by one employee.

The justification was that the small raise was an unnecessary expense while the replacement costs were fmv. 




Toronto.gal said:


> ...*2.* I doubt it will double, but it might increase to Britain's junior version of their ISAs, so about a 50% increase perhaps?


It will be interesting to see what happens.


Cheers


----------



## fplan

I think based on statistics, there wont be any increase to TFSA contribution room.. statistics are also not so accurate . here are some examples:

1. I have a colleague with good salary ( about 150k) , so far didn't contribute anything to TFSA. Last month he wanted to day trade in oil stocks , so I suggested him to open TFSA and trade. so he opened a Questrade TFSA and put 5k and bought some shares.

2.another colleague of mine( makes 100k) told me that he got 90c interest for the funds in his DPSP. he doesn't even have a clue about TFSA.

Based on these examples, I can say there are many people who are capable of maxing TFSA but didn't. 

I think people who make ( 18k or less or 400k or more) dont even care about TFSA room as low income people dont have enough to save and contribution room is too small for high income people. And they very well know that govt cant mess with them. Its only middle income people who are interested. No matter what ever govt do , there wont be equality, as people simply save/invest in the products they are comfortable with.( for ex three months back , one taxi driver mentioned that he had 3 houses in Calgary. this guy is comfortable with real estate investments. some people invest only in stock market ).. and smart guys will make money with/with out the increase..

If there is no reward for smart/hard work , then everybody wants to work as bank cashier.. no mental stress, no physical stress..


----------



## gibor365

I'd like to see any TFSA room increase, but for us it will be more beneficial to increase Income split cap from $2000 to $4000 or cancel the cap at all.... 
Doubling TFSA room, for couple, will give less than $300 "guarantee" non-taxable income (2.5% in HISA), doubling Income split cap will give us additional $2000 of income


----------



## kcowan

CRA said:


> Some salient points emerging from the analysis are:
> 
> * TFSAs are a popular means of savings for individuals across all income levels. In particular, individuals with incomes below $80,000 accounted for about 80% of all TFSA holders and TFSA contributions in 2011.
> * Overall, over 30% of adult tax filers had a TFSA in 2011. With respect to age, TFSA participation rates are relatively stable between ages 25 and 49, and generally increase with age thereafter, with take-up among seniors being especially strong.
> * Low-income seniors have also been taking advantage of the TFSA. In 2011, Guaranteed Income Supplement (GIS) recipients represented about 6% of TFSA holders, and their TFSA participation rate was 23%—3 percentage points higher than that of low-income individuals in general.


Source
So it seems to be successful for lower income tax filers. Maybe they will introduce a cap?


----------



## uptoolate

For the over 71 year old crowd, it's the only tax-free game in town. My 82 year old mother maxes hers every year with excess money coming out of her RRIF. I think many in her peer group do the same thing.


----------



## none

The TFSA limit will absolutely be raised to at least 10K per year. I would bet money on this. WHy?

Harper promised it in his election platform and we have seen that he will deliver on them regardless of whether they help or hurt the Canadian economy or (and this is the really bitter pill to swallow) whether it makes any economic sense whatsoever. We saw it with the GST cut, the closing of the great lakes, the new fisheries legislation. It's all stupid and retarded but he'll deliver no matter what.

I think it's dumb but it's all but a done deal.

This is the NA election cycle. Left leaning government get into power (democrats in US / Liberals here) they clean up the mess of the republicans/conservatives, things get better, electorate gets complacent and then the repubs/cons get voted in again the the cycle repeats.


----------



## banjopete

I can't help but think that in reality the issue of increasing the contribution limit is a drop in the bucket issues wise and much as they did in the states on the last election the more left leaning parties will try to seize the concept as a working sally vs the capitalist pig fight. Something simple, digestible and fun for the media to latch onto and repeat to death. I get the play as if most people don't read the news, or vote for that matter we're talking about a small percentage of people that matter, and an even smaller percentage that will go to bat for an issue like this that quite frankly doesn't raise an eyebrow for most.

The media can raise any issue up and make something of it but unless the comment sections explode they probably just reload and try again. Test the water kind of thing. Look at vaccinations, the current topic du jour. People can't get over themselves with opinions so naturally it leads in many news factories. Simple stuff in my mind. Make money where you can, how you can. Rinse, repeat. News is no different.

I hope they do help out the poor middle class hard working family, we deserve it!:biggrin: ...


----------



## banjopete

none said:


> Left leaning government get into power (democrats in US / Liberals here) they clean up the mess of the republicans/conservatives, things get better, electorate gets complacent and then the repubs/cons get voted in again the the cycle repeats.


Same same, a happy conservative would likely say the same with the opposite inference. It's always interesting to hear. I heard a fascinating podcast called red state blue state on thisamericanlife (which is great podcast stuff imo) where they remarked on the amazing similarity of the disparate views between the two party's supporters. Same same, just different beliefs that the other was responsible for all the ill. Interesting no?


----------



## none

It is. And although there is clear evidence that economies perform better under left leaning governments - it gets a bit more hazy when you really dig into it to identify causal mechanisms.

I'm not an anti-conservative per se but some of the amazingly clear and stupid economic decisions the current cons have made is infuriating. We should all live and for gods sake GOVERN on best available science and decision making but this party seems to do nothing but go for votes. Ultimately, governing should be about good governance and getting re-elected should be a secondary consideration (and should follow good governance anyway).


----------



## Guban

none said:


> The TFSA limit will absolutely be raised to at least 10K per year. I would bet money on this. WHy?
> 
> Harper promised it in his election platform and we have seen that he will deliver on them regardless of whether they help or hurt the Canadian economy or (and this is the really bitter pill to swallow) whether it makes any economic sense whatsoever. We saw it with the GST cut, the closing of the great lakes, the new fisheries legislation. It's all stupid and retarded but he'll deliver no matter what.
> 
> I think it's dumb but it's all but a done deal.


He promised to increase the limit, but it was contingent on balancing the books. With the drop in oil prices and the corresponding tax revenues, this is not a sure thing.

I hope that he doesn't too. Not that I won't use it, but rather because the loss in tax revenue is not good for the country.


----------



## RBull

none said:


> It is. And although there is clear evidence that economies perform better under left leaning governments - it gets a bit more hazy when you really dig into it to identify causal mechanisms.
> 
> I'm not an anti-conservative per se but some of the amazingly clear and stupid economic decisions the current cons have made is infuriating. We should all live and for gods sake GOVERN on best available science and decision making but this party seems to do nothing but go for votes. Ultimately, governing should be about good governance and getting re-elected should be a secondary consideration (and should follow good governance anyway).


Show me a government that doesn't make stupid economic decisions. Governing is always motivated by and for political reasons and isn't the exclusive domain of the Conservatives. Our system isn't set up to incent and regulate politicians to only follow what is truly good for the long term interests of the country- and the truth is most Canadians wouldn't accept the things that would happen if it were.


----------



## My Own Advisor

RBull said:


> Show me a government that doesn't make stupid economic decisions. Governing is always motivated by and for political reasons and isn't the exclusive domain of the Conservatives. Our system isn't set up to incent and regulate politicians to only follow what is truly good for the long term interests of the country- and the truth is most Canadians wouldn't accept the things that would happen if it were.


+1 

This why I believe the more investors/Canadians can be in control of our financial destiny, i.e., more TFSA account room; the better off with options and opportunities we are. We live in a great country but our political system is set-up for short-term power plays.


----------



## none

RBull said:


> Show me a government that doesn't make stupid economic decisions.


If your bar is that everyone else makes crappy decisions so that makes crappy decisions OK then we've already lost. Seriously? Yeash.

Country with good fiscal policies? How about Denmark?

Actually by most measures Canada is extremely mediocre and not terribly impressive. Canadian's really need to get over their ego's and be a bit more introspective. Wrapping yourslef in the flag and thinking we're awesome "just 'cause' is juvenile and simple.


----------



## Sherlock

I think the TSFA favors families at the expensive of single individuals. RRSP too. I think contributions to a spouse's TFSA should be taxed because it's not fair to single guys such as myself they they get this benefit and I don't.


----------



## none

Welcome to western society. Single people always get screwed.


----------



## cainvest

none said:


> Welcome to western society. Single people always get screwed.


I think you and Sherlock should talk to a few divorced people and get their point of view.


----------



## Davis

Wait- how is not fair to give two people twice as much as one? And how would it make sense to give two people the same as one? I don't follow.


----------



## Jon_Snow

Sherlock said:


> I think the TSFA favors families at the expensive of single individuals. RRSP too. I think contributions to a spouse's TFSA should be taxed because it's not fair to single guys such as myself they they get this benefit and I don't.


Seriously? Lol.


----------



## RBull

none said:


> If your bar is that everyone else makes crappy decisions so that makes crappy decisions OK then we've already lost. Seriously? Yeash.
> 
> Country with good fiscal policies? How about Denmark?
> 
> Actually by most measures Canada is extremely mediocre and not terribly impressive. Canadian's really need to get over their ego's and be a bit more introspective. Wrapping yourslef in the flag and thinking we're awesome "just 'cause' is juvenile and simple.


Your post might have a lot more credibility if you didn't state something being said that clearly wasn't. I neither said making crappy decisions is acceptable nor did I suggest in any way we're (Canadians) awesome in relation to anything. Perhaps you are inferring that when I am really saying most Canadians won't accept tougher medicine, which to me is reductions in spending, programs and size of governments; to eliminate deficits and debt so current and future generations can prosper. Furthermore the conversation was about Canadian governments making decisions about Canadian investment policies. 

Implying someone else is juvenile and simple because you don't share their opinion isn't warranted or appropriate behaviour on any board. Judging by some of your posts it might be time to take it down a notch.


----------



## sags

The Liberals were piling up surpluses year after year, paying down the debt on a regular basis..............and they got turfed out when Harper was elected.

I don't think people know exactly what they want.

We just wait until the politicians pass something so we can pick a side and debate it.

More than anything else, I think people just get tired of the same old faces on the news, and want to see some new ones to mix it up a bit.

We vote out of boredom.


----------



## MrMatt

none said:


> It is. And although there is clear evidence that economies perform better under left leaning governments - it gets a bit more hazy when you really dig into it to identify causal mechanisms.
> 
> I'm not an anti-conservative per se but some of the amazingly clear and stupid economic decisions the current cons have made is infuriating. We should all live and for gods sake GOVERN on best available science and decision making but this party seems to do nothing but go for votes. Ultimately, governing should be about good governance and getting re-elected should be a secondary consideration (and should follow good governance anyway).


I don't quite agree, Europe traditionally under left leaning governments and they're in shambles.
The results of any policy take more than half a term to show up anyway, some take several terms.
Look what NAFTA brought us, and people still think it's horrible.


----------



## Guban

sags said:


> The Liberals were piling up surpluses year after year, paying down the debt on a regular basis..............and they got turfed out when Harper was elected.
> 
> I don't think people know exactly what they want.
> 
> We just wait until the politicians pass something so we can pick a side and debate it.
> 
> More than anything else, I think people just get tired of the same old faces on the news, and want to see some new ones to mix it up a bit.
> 
> We vote out of boredom.


As I recall, the world (and US) economy was generally good in those Liberal years, and getting surpluses is much easier in good economic times.

Also, it seemed to me that the federal government downloaded a lot of problems to the provinces, and that resulted in ballooning deficits here in Ontario, at least.


----------



## Davis

And I suppose Harper's deficits have nothing to do with his tax cuts, like two points off the GST?


----------



## carverman

Guban said:


> Also, it seemed to me that the federal government downloaded a lot of problems to the provinces, and that resulted in ballooning deficits here in Ontario, at least.


Well you can't blame Harper for all of Ontario's deficits..McGuinty and his fiberals had a LOT to do with all the taxpayer's waste that went on for years, and nobody ever got convicted for that. 

Wynne just carries on in his tradition, so once the Ontario economy is well underwater with a ballooning deficit. nothing is going to have any effect to fix that now ..unless they take drastic measures to raise the PST to 10%, raise income taxes on the wealthy, stop all the mass migration of third world country immigrants into Toronto...immigrants that depend on welfare for free healthcare and benefits who have never worked in this country before and paid taxes, subsidized housing and so on..all paid by the taxpayers
and adding to the deficits.


----------



## KaeJS

carverman said:


> ...immigrants that depend on welfare for free healthcare and benefits who have never worked in this country before and paid taxes, subsidized housing and so on..all paid by the taxpayers
> and adding to the deficits.


I just wanted to quote this to make sure nobody missed it.


----------



## sags

All it proves is that political parties are all cut from the same cloth........Ontario Liberals debt..........Harper debt..........

The "difference" is in particular governments I believe, regardless of the party.

The Chretien/Martin government understood it was prudent to match revenues with spending. They raised taxes to accomplish their goals.

Past Liberal governments........for example, Pierre Trudeau's were not very good at managing finances.

Perhaps Paul Martin's experience in business was the difference.

Harper is anything but a fiscal conservative, and given his record has no legitimate claim as a strong steward of finances.

Perhaps if Mr. Harper allowed more decision making to his cabinet, to people such as former Finance Minister Jim Flaherty, things would have been different.

Would it be any better with the Liberals or NDP in power? Maybe you have to look beyond the leader to the people who will form the cabinet.

At this juncture in history for Canada, spending money we don't have to create more tax breaks such as income splitting and raising the TFSA is probably not a good idea.


----------



## none

http://www.pbo-dpb.gc.ca/files/files/TFSA_2015_EN.pdf


----------



## Toronto.gal

sags said:


> Past Liberal governments........for example, *Pierre Trudeau's were not very good at managing finances*/Would it be any better with the Liberals or NDP in power? Maybe *you have to look beyond the leader* to the people who will form the cabinet.


Maybe JT will be better at managing finances than Trudeau senior, right? :tongue:

Let's look beyond the leader then, any idea who's JT's Principal Advisor?


----------



## gibor365

none said:


> Welcome to western society. Single people always get screwed.


Western?! Give me a break  In CCCP if male didn't have kids he was paying additional tax...people called it "balls tax" , btw, females without kids shouldn't pay this tax...
No it's all fair, 13% flat tax for everyone


----------



## OnlyMyOpinion

Toronto.gal said:


> Maybe JT will be better at managing finances than Trudeau senior, right? :tongue:
> Let's look beyond the leader then, any idea who's JT's Principal Advisor?




http://www.macleans.ca/politics/ottawa/the-inner-circle-inside-trudeaus-economic-advisory-team/


----------



## gibor365

> stop all the mass migration of third world country immigrants into Toronto...immigrants that depend on welfare for free healthcare and benefits who have never worked in this country before and paid taxes, subsidized housing and so on..all paid by the taxpayers
> and adding to the deficits.


Agree regarding refugees ....Government tells about it


> Our compassion and fairness are a source of great pride for Canadians... These values are at the core of our domestic refugee protection system and our resettlement program. Both programs have long been praised by the United Nations Refugee Agency (UNHCR).


"
http://www.cic.gc.ca/english/refugees/canada.asp

This all BS as majority of refugees coming here just to increase their level of life...


> From 2009 to 2013, Canada gave refugee status to 122,518 people. That's an average of 24,514 people in each year --- 67 per day


 and how many refugees didn't get status and were living here on account of Canadian taxpayer for years?!

Regarding independent immigration ... Canadian embassies abroad should have better selection process and give permanent resident status for families who won't look for welfare from day 1....


----------



## Toronto.gal

OnlyMyOpinion said:


> http://www.macleans.ca/politics/ottawa/the-inner-circle-inside-trudeaus-economic-advisory-team/


I wasn't talking about just advisory teams. Can't write more now. nthego:


----------



## JosephK

I would support expanding the TFSA if adjustments were made to the dividend and capital gains tax to offset the corresponding decrease in revenue. Otherwise, this would be an extremely regressive measure that shifts the tax burden onto labour even further than it already is. I do not buy that expanding the TFSA will "encourage saving and help the economy". The economy is driven by consumer spending. How does it help anyone if I'm able to afford to buy a few more shares of BMO?


----------



## My Own Advisor

If you had more tax-free income, wouldn't you be able to spend more?


----------



## sags

I think the people who would benefit the most are the least likely to spend the extra money.

The people who use the TFSA as a basic savings account would probably spend any extra, and they wouldn't have much if they put money in the TFSA and take it out again.

According to the stats I have seen.........80% of TFSA money is parked in GICs or cash, and most TFSAs have little or nothing in them.

It is the wealthy who benefit, by topping out a TFSA for everyone in the family, investing the money and letting it grow.

Like the executive director/chief financial advisor for ING who had $275,000 in his TFSA by finding loopholes.........like shorting stocks through a 3X leveraged ETF.

http://business.financialpost.com/2014/11/06/tfsa-canada-strategy/?__lsa=4d6d-f47c

I wonder if he advised any of his clients to do the same ?


----------



## Guban

carverman said:


> Well you can't blame Harper for all of Ontario's deficits..McGuinty and his fiberals had a LOT to do with all the taxpayer's waste that went on for years, and nobody ever got convicted for that.
> 
> Wynne just carries on in his tradition, so once the Ontario economy is well underwater with a ballooning deficit. nothing is going to have any effect to fix that now ..unless they take drastic measures to raise the PST to 10%, raise income taxes on the wealthy, stop all the mass migration of third world country immigrants into Toronto...immigrants that depend on welfare for free healthcare and benefits who have never worked in this country before and paid taxes, subsidized housing and so on..all paid by the taxpayers
> and adding to the deficits.


Oh no, I don't blame Harper. I was referring to his Liberal predecessors that Sags was referring to who balanced the federal budget. 

McGuinty has brought government waste to an entirely new level. I can't believe that nobody has been criminally convicted yet. I also can't believe that they were not punished at the polls.


----------



## lonewolf

I think it should be mandatory for anyone running for election to have to make public their credit rating, record for declaring bankruptcy & their perhaps their net worth. Perhaps there should be a standard that has to be met before anyone can run for election.

If you are not responsible with your own money how are going to be responsible with the tax payers money? ( All x Goldman employees should be banned from governments around the world )


----------



## banjopete

JosephK said:


> How does it help anyone if I'm able to afford to buy a few more shares of BMO?


It helps us all because maybe, just maybe, by saving for retirement, you won't rely on government/tax handouts down the road. This is why the low participation rate in these tax shelters is scary, so few people take advantage of it early that it's possible that down the road the line ups for handouts will be large and the few that saved will be few.

It's the same silly reason that provincial pension plans have a leg to stand on. Really the idea should be thrown out but, so few people save or even consider it, that it's likely to be their only chance at a retirement as they imagine it.


----------



## none

^^^ That makes no sense. Government / tax handout are based on your taxable income - the very thing TFSA's are designed to avoid.


----------



## carverman

banjopete said:


> It helps us all because maybe, just maybe, by saving for retirement, you won't rely on government/tax handouts down the road. T*his is why the low participation rate in these tax shelters is scary, so few people take advantage of it early that it's possible that down the road the line ups for handouts will be large and the few that saved will be few.*


This is the sad reality of retirement for many in this country, especially all the new refugee immigrants that haven't worked in this country for 20 years, are not what would be considered skilled, and have no company pension plan or saved for retirement. 

This is the beginning of a transition as the baby boomers retire, and eventually are gone along with their private sector retirement pensions with them.
All that will be left for most of those without the job skills to produce enough income to save in RRSPs and TFSA dependent mostly on government pensions.

Most of the low income earners will not be able to afford market rate rents, so they will have to be subsidized by the rest of the taxpayers that still have enough income in their retirement to pay taxes.

Besides subsidized accomodations, OAS and GIS may be the only source of gov't assisted income for these growing numbers of people, so the entire demographics of socio-economics will be changing when that happens and the pressure will increase as the demand grows.

This is why Wynne and the provincial Liberals are pressing for an Ontario Pension plan...remains to be seen how successful that will be as the economic scene and job prospects are changing every year.

You can't save for retirement on burger joint/pizza parlor or taxi driver wages.


----------



## kcowan

carverman said:


> Besides subsidized accomodations, OAS and GIS may be the only source of gov't assisted income for these growing numbers of people, so the entire demographics of socio-economics will be changing when that happens and the pressure will increase as the demand grows.


It is likely true that demand will grow but that is no reason to panic. Many seniors survive on those pensions today and have for 50 years. By 2023, they will be waiting another 2 years. That is what the government thinks is necessary. Our taxes will go up.


----------



## Davis

banjopete said:


> It helps us all because maybe, just maybe, by saving for retirement, you won't rely on government/tax handouts down the road.


It is frustrating seeing this put forward as a defence of TFSAs here and in the media when it is so clearly bogus. TFSA withdrawals do *not *reduce someone's entitlement for any governmnet seniors benefits. If you invest your TFSA money in penny stocks that take off, and end up with half a million dollars or more in your TFSA like those people featured in Moneysnse magazine, you will still be eligible for the full GIS and OAS, seniors drug benefits, HST credits, etc. TFSA assets or withdrawals do not enter into your net income for tax purposes, so any income-tested benefits based on the tax return will not be reduced. 

That TFSAs do not impact OAS and GIS clawbacks is cited by TFSA supporters as one of the advantages of the policy. You can't suck and blow at the same time: i.e., say that they are good for seniors because they don't reduce benefits, and they are good for the country's finances because they reduce reliance on government handouts.


----------



## carverman

kcowan said:


> It is likely true that demand will grow but that is* no reason to panic.* Many seniors survive on those pensions today *and have for 50 years*. By 2023, they will be waiting another 2 years. That is what the government thinks is necessary. Our taxes will go up.


That is a motherhood statement if I ever heard one. Seniors on fixed incomes are getting squeezed more every year.

Property tax or rent increases, hydro increases, transportation increases, insurance (property or renter contents), cost of food increases, cost of additional services etc etc. 

Meanwhile the gov't gives them a tiny increase each year based on what the gov't thinks is the cost of living based on inflation..and only certain things are included in that calculation.

For instance: This year the gov't has determined that the inflation rate is down to 1% based on the the lower cost of oil/gasoline. What else has gone down? 

Just go into a grocery store and see what foods have actually come down in price.


----------



## carverman

Davis said:


> It is frustrating seeing this put forward as a defence of TFSAs here and in the media when it is so clearly bogus.
> 
> TFSA withdrawals do reduce someone's entitlement for any governmnet seniors benefits.


How?



> *If you invest your TFSA money in penny stocks that take off, and end up with half a million dollars or more in your TFSA like those people featured in Moneysnse magazine,* you will still be eligible for the full GIS and OAS, seniors drug benefits, HST credits, etc. TFSA assets or withdrawals do not enter into your net income for tax purposes, so any income-tested benefits based on the tax return will not be reduced.


Yes, the mags always try and show what can happen when you invest in penny stocks, just like winning a lottery...but the reality of it f*or most seniors or those on very low incomes *that any TFSA savings could be withdrawn if some unexpected emergency comes up.


----------



## kcowan

carverman said:


> Just go into a grocery store and see what foods have actually come down in price.


I agree that CPI is not a good measure. No argument there. I use 4% in our personal planning! Part of "our" problem is that gasoline is not a big factor in our COL.


----------



## Toronto.gal

sags said:


> 1. *80% of TFSA money is parked in GICs or cash,* and most TFSAs have little or nothing in them.
> 2. *It is the wealthy who benefit*, by topping out a TFSA for everyone in the family, investing the money and letting it grow.
> 3. Like the executive director/*chief financial advisor for ING who had $275,000 in his TFSA* by finding loopholes.........like shorting stocks through a 3X leveraged ETF.


*1.* If most people are not taking advantage of TFSAs, and not willing to learn & take informed risks, whose fault is it? Some use it as a short-term investing vehicle, in which case GICs is the right approach, but those with longer-time horizons, whose fault is it if they are content with the microscopic returns the banks give them? I know several young people, who themselves contributed to their TFSAs with p-time work dollars [not with those of their {poor}/rich parents as you suggested above], and I can tell you that they did not invest in GICs.

*2.* And some call that belief: 'monomaniacal obsessions that paralyze the collective cerebral cortex.'
*3.* Should financial advisors, or how about all knowledgeable investors be exempted from having TFSAs? Anyone could have done same, be aggressive I mean [not referring to his controversial/legal strategy]. 

Did you happen to read/agree with any part of this article?

'Whereas programs like the TFSA, though they may disproportionately benefit the rich — or may not: see below — are otherwise sensible economic policies that happen also to be distributionally regressive. *To focus obsessively on the latter, to the total exclusion of the former, is not only to omit half the story. It’s also to suggest a false opposition*, as if the distributional impact could not be offset in other ways.'
http://news.nationalpost.com/2015/0...its-a-myth-that-they-mostly-benefit-the-rich/


----------



## Davis

_TFSA withdrawals do reduce someone's entitlement for any governmnet seniors benefits._



carverman said:


> How?


What I should have written was: "TFSA withdrawals do *not* reduce someone's entitlement for any government seniors benefits."

I've corrected it above. Thanks, carverman.


----------



## Eclectic12

sags said:


> ... According to the stats I have seen.........80% of TFSA money is parked in GICs or cash, and most TFSAs have little or nothing in them.


Not that it's likely to change things dramatically ... but I suspect these numbers are an over-statement considering that the survey's I have seen have listed the investment category percentages so that the total is over 100% by anywhere from 5% to 30%.

Which strikes me as a silly thing to do.

Cheers


----------



## uptoolate

Bear in mind that even without TFSAs (data for 2009), Canadian seniors are pretty much the best off in the world from a financial point of view. OECD data has less than 6% of seniors in Canada below the poverty line while the number in the US and Japan was 22% and even in places we think of as very well off the rate is over 15%. Switzerland was 17.6%. Canada has better numbers than any country it's size or larger. In comparison, the poverty rate for the entire population in Canada is 12%.

I'm definitely using my TFSA and encouraging my kids to do the same. I think it would be foolish not to.


----------



## humble_pie

Davis said:


> TFSA withdrawals do *not *reduce someone's entitlement for any governmnet seniors benefits. If you invest your TFSA money in penny stocks that take off, and end up with half a million dollars or more in your TFSA like those people featured in Moneysnse magazine, you will still be eligible for the full GIS and OAS, seniors drug benefits, HST credits, etc. TFSA assets or withdrawals do not enter into your net income for tax purposes, so any income-tested benefits based on the tax return will not be reduced.



Davis are you able to share your views on whether or not TFSAs should be included in the picture - in some fashion - when determining eligibility for GIS & OAS?

via clawbacks? or some modality of taking note of their presence & their dollar capital amount, although not including their withdrawals in income? or including TFSA withdrawals in taxable income? or all 3?

i'm in favour of some recognition - i don't quite know how yet - of the existence of a healthy TFSA in order to limit government-subsidized senior assistance.

otherwise, as time passes, we risk to raise a cohort that's driving towards an old age living in McMansions with big Tax-Free in hand, meanwhile snorting up public payola.


----------



## cainvest

humble_pie said:


> i'm in favour of some recognition - i don't quite know how yet - of the existence of a healthy TFSA in order to limit government-subsidized senior assistance.


Something will likely be done about it if and when a number of people abuse GIS/OAS. Maybe the total amount and/or withdrawl amounts get reported but obviously not taxed.


----------



## Davis

Humble Pie: thank you for asking.

TFSAs have been sold as a policy initiative in part as a way for low income seniors to avoid the GIS clawback, HST credit reduction and other benefits reduction. It also help higher income seniors avoid the OAS clawback. 

If I have a leak in my roof, I can set up a bucket with an overflow tray, then a pipe from the overflow tray to take the water out the front door and down to the storm sewer in the street. Or I could fix the roof.

If Harper were really concerned about clawback and benefit reductions for low income seniors, he could have fixed those programs instead of creating a big tax break for middle and high income people.

Don't get me wrong: I max out my TFSA contribution every January, but from a policy perspective, it isn't as effective or efficient in achieving the policy goal as other changes would have been.

Even for low-income seniors, TFSAs are a problematic policy. If Prakesh and Patience each have the same $9,000 from CPP, and each have $300,000 in investments, they could end up getting very different benefits. Prakesh gets $15,000 a year from his RRSP/RRIF and so doesn't qualify for GIS, HST credits etc. Patience managed to get good tax planning advice, put her money in a TFSA, so her $15,000 investment income doesn't count - she can fill her boots with all of the benefits, even though with $24,000 in total income, she's doing pretty well.

Prakesh pays a big penalty for his failure to tax plan well. The financial planning industry, understandably, focuses its attention on rich people. Low income people are the least likely people to get the advice that they need about putting money into TFSAs.

So I think that income earned in TFSAs should be counted in determining income-tested benefits, and the high clawback rates be reduced to address the problem of low-income people have little incentive to save.

What to do about the capital withdrawn from TFSAs is something I want to think on. It is money available to the person, so it should reduce eligibility for income-tested benefits just as RRSP withdrawals do.

The key thing to remember is that determining eligibility for benefits provided to address needs is fundamentally different from determining income for tax purposes.


----------



## none

^^ This is a really good and thoughtful answer.


----------



## OnlyMyOpinion

It would be great if lower income individuals who can only save enough money for one or the other, choose to save in the TSFA so that their GIS/OAS is not at risk of being reduced. I don't know how often that happens though because the long history of RRSP's and the lure of a tax refund (apparent 'free' money) are probably deeply ingrained - and TSFA withdrawl rules seem complicated to many. 
Those who have had the ability and have saved in both a TSFA and an RRSP should expect the tax liability and the claw-backs when the RRSP is finally accessed. They also benefit from the TSFA, but they also contributed to it with after-tax dollars the same as anyone else (probably at a higher tax rate) and did take the initiative to save. I'd think the simplest and most politically viable tweak would be to adjust the claw-back income levels over time, but leave the TSFA universal in its rules and impact. 
Like others, I think doubling the allowable TSFA contribution these days would cause the resulting CBC comments to exceed the capacity of most servers


----------



## fplan

Davis said:


> What to do about the capital withdrawn from TFSAs is something I want to think on. It is money available to the person, so it should reduce eligibility for income-tested benefits just as RRSP withdrawals do.


how about another scenario: a person owns two houses . one of the house is worth 300k and get yearly rent 15k. with the same 9k cpp.. that income is 24 k and always get OAS etc ..but if add TFSA withdrawals .. that is disadvantage for people with large TFSA vs multiple houses..

I think if the benefits are based on net worth then its level playing field..other wise people own multiple houses have advantage vs people with one house ,TFSA , RSSP ...


----------



## Synergy

OnlyMyOpinion said:


> It would be great if lower income individuals who can only save enough money for one or the other, choose to save in the TSFA so that their GIS/OAS is not at risk of being reduced. I don't know how often that happens though because the long history of RRSP's and the lure of a tax refund (apparent 'free' money) are probably deeply ingrained - and TSFA withdrawl rules seem complicated to many.


I agree with you wholeheartedly but most people are terrible savers. Having no penalty for withdrawing money from a TFSA is a major issue for the average saver. They end up spending their retirement savings on a new car, upgrades to their house, clothing, vacations, education for their kids, etc. Even if a TFSA is a more tax efficient vehicle for low income earners, an RRSP may actually be the better choice for those with poor spending habits.


----------



## sags

Synergy...........very true.

But I think the real solution is mandatory contributions within an expanded CPP.

Simple, stress free, and proven successful.

The additional contributions by employers doubles the benefits, and there is no concern at retirement of how to turn capital into steady retirement income.

The TFSA is a nice add on for those use it, but isn't going to provide a decent retirement for most people.


----------



## RBull

^that has its warts too. 

Only employed people get benefits (maybe not so bad) but why should employers fund employees retirement beyond what they do now.


----------



## Synergy

RBull said:


> ^that has its warts too.
> 
> Only employed people get benefits (maybe not so bad) but why should employers fund employees retirement beyond what they do now.


Because people are useless and can't save for themsevles? IMO it simply promotes creative accounting on the part of employers and will eventually be factored into any future promotions / raises, etc. I'm not a big fan, but what are the alternatives - a new retirement tax?


----------



## Davis

fplan said:


> I think if the benefits are based on net worth then its level playing field..other wise people own multiple houses have advantage vs people with one house ,TFSA , RSSP ...


Beenfits based on net worth would probably be the fairest -- social assistance, the "program of last resort" -- takes int o account assets, but it is cumbersome and costly to administer, and intrusive for applicants. income-based benefits are much less costly to administer and les intrusive since they can be determined based on information that is already being provided for tax purposes. Can you imagine having to file an annual statement of net worth (liquid investments, real estate with evaluations, collections of antiques, stamps, art, etc.)? This would add in a whole new layer of administration and audit, and so would cost a bucket to run.

income-testing may fall short on meeting the "equity" goal of tax and benefits policy, but it succeeds in meeting the "simplicity" goal, at least compared to wealth-based tests.

Regarding the comments about increasing CPP premiums and benefits, these costs will ultimately be borne by employees. Canadian reseach shows that increased payroll costs for employers are generally passed through to employees through reduced wages (or lower wage increases) over a five year period. 

I think there is merit to the forced-savings argument as a way of keeping employed and self-employed people (who also pay CPP) out of poverty and dependence on GIS in their old age.


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## cheech10

Surely liquid investments like financial instruments and real estate assets would be pretty simple information for the government to obtain on an annual basis? The former are mainly held at financial institutions, and the latter from property tax rolls. Might meet both the goals of simplicity and equality that way. There would have to be some formula to weight assets vs income for qualifying for assistance, but it could be done.


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## Davis

Cars, boats, foreign vacation properties, stamp collections, gold sitting in a safe, jewellery.... Lots of things can't be tracked, and you don't want to give people reasons to hold physical/non-traceable wealth when they otherwise would be better off holding income-producing assets. Also, property tax valuations are not considered to be accurate assessments of market value. Banks get their own valuations for mortgage purposes rather than on relaying on property tax valuations, for example.


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## uptoolate

And let's not forget corps and trusts. Those favourite tools of the well off. Would have to figure out a way to include those in any net worth calculations.


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## RBull

Synergy said:


> Because people are useless and can't save for themsevles? IMO it simply promotes creative accounting on the part of employers and will eventually be factored into any future promotions / raises, etc. I'm not a big fan, but what are the alternatives - a new retirement tax?


Perhaps I see a broader picture. 

"Some" people can't save for themselves and "some" people might be considered "useless". As a former small business owner I believe raising the CPP employer contributions would have a negative impact on the finances of the business. As you said this is likely to be recaptured somehow with lower wages, reduced benefits etc. and I would agree. Some companies can afford pension plans and offer them, however not all small operators can afford this. This is the free market. I would not be in favour of more mandated retirement costs imposed on business. 

A simple solution is to have the employee contribute more to their CPP- a well managed, low cost saving vehicle for them. Say double the amount up to 9%.


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## pwm

RBull said:


> A simple solution is to have the employee contribute more to their CPP- a well managed, low cost saving vehicle for them. Say double the amount up to 9%.


I agree, but I think it should be a voluntary employee extra contribution which doesn't require any more cost to the employer.


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## OnlyMyOpinion

I have to say, I was disappointed the feds would not explore that avenue further and instead came up with (were sold?) the PRPP. Maybe there were good reasons but they lost a lot of points in my book. I would think it would be a lot easier to incent folks to have a few more bucks of CPP come off their paycheck than enter into a new, separate plan.


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## sags

It could be a voluntary employer contribution as well. Some employers pay bonuses or RRSP and might choose to change to CPP contributions.

Assuming that employers are going to raise wages in the future, they could offer the employee a choice of a 2% raise or 2% contributions to the CPP.

People who don't work should also be able to contribute their 9%.


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## humble_pie

Davis said:


> ... I think there is merit to the forced-savings argument as a way of keeping employed and self-employed people (who also pay CPP) out of poverty and dependence on GIS in their old age.



yes, although any mention of forced savings would sure tick off the voters.

i see your point about net worth audits being grotesquely cumbersome & costly. But surely not too difficult for gummints to include the municipal tax evaluation of the owned home (i know i know, not accurate, but there's nothing else so cheap & handy that could be used as a measure of a home's value.) Plus the gummint could easily include the value of any TFSA the GIS applicant owned, there's not much bureaucracy or cost attached to obtaining that data.

(interesting how that latter idea, ie include the value of a TFSA, would - over time - surely cap the upper limit of a tax-free account? because at a certain value level that is not yet determined, the income from added TFSA cvontributions would get clawed back)

do all remember how Argonaut's BC university refused him a student loan as soon as they discovered his TFSA account?

if the news stories that many middle-agers are not saving for their retirement are true - are, in fact, still owing on debt in their post-retirementr years - then younger canadians do need to start thinking about increased CPP or other forms of forced savings.

i can't agree with those who believe that TFSAs will mean happy neverneverland tinker bell stories about how blissful senior savings will rescue them all from GIS dependence.

Davis you didn't mention how to force increased savings? if by taxing workers more heavily, imho this won't fly. If by docking existing benefits & payments to seniors, imho this won't fly either. Wondering where we could get the money for increased savings?


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## Davis

"Forced savings" is how an economist would characterize it. A politician would never use that term. Well, other than a soon-to-be-former politician. 

An other issue with property assessments is that a household is not the same things as a family for tax or benefit purposes. Your family for determining the income on which benefits provided on the basis of net income for tax purposes is you, you spouse and minor children, or adult children who are dependent because of a disability. It does not include elderly parents, indigent siblings, the 20-something kid still living at home, etc. Assigning the value of the house to the person on the deed may not give you the right answer. 

Furthermore, senior homeowners have managed to convince politicians that they should not have to give up their homes (or borrow against them) in order to finance their retirement. I don't know how this happened, but look at how common property tax breaks are for seniors.

Senior tenants have not been as successful -- if you can't afford it, find somewhere cheaper to rent. As a result, I don't expect to see any politicians (other than the soon-to-be-former kind) proposing to restrict benefits on the basis of property values.

Forcing increased savings is exactly what expanding CPP or introducing a new retirement pension plan in Ontario would do. Chile has taken a different approach: employees are required by law to put money into a self-directed RRSP type of plan -- mandated, but not government-run.

Most Canadians like the security provided by CPP. Expanding that would provide more retirement security to a lot of people in a very cost-effective way. It would really p*ss-off those who are saving and investing on their own, however. 

A middle-of-the-road approach would be to create an opt-out-able part of CPP -- your employer would autmatically deuct higher contributions to fund a larger CPP entltlement, but you could, if you wanted to, fill out a form (maybe one that is long and complicated and available only in Inuktitut) to opt out and reduce your contributions and future entitlements to the levels of the current program. Most people would go along with the expansion, but those who want to manage their on money could opt out (or "opt down"). I'd also tie that option to renunciation of entitle to other future benefits somehow, but this is just fantasy policy league stuff now.


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## fplan

Davis said:


> Senior tenants have not been as successful -- if you can't afford it, find somewhere cheaper to rent. As a result, I don't expect to see any politicians (other than the soon-to-be-former kind) proposing to restrict benefits on the basis of property values.
> 
> Forcing increased savings is exactly what expanding CPP or introducing a new retirement pension plan in Ontario would do. Chile has taken a different approach: employees are required by law to put money into a self-directed RRSP type of plan -- mandated, but not government-run.


I think forced saving through CPP is better without employee opting out.. Otherwise people who opted out will collect from GIS/OAS later while people who contributed more will not be eligible for GIS .. and I think if property value of their house is excluded , but TFSAs are included will not be fair .. if you live in house worth 800k and eligible for GIS/OAS etc but people who live in 400k house with 400k tfsa are not eligible for GIS/OSA is not fair for responsible people.. its a choice people make ( own a large (or expensive) house vs small house ( inexpensive) and other investments).. Govt should not favor one group over other group...


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## Jungle

When can we expect to know if they are doubling the limit ?


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## Davis

Most likely it would be announced in the budget in May or so, and "leaked" beforehand.


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## banjopete

Davis said:


> It is frustrating seeing this put forward as a defence of TFSAs here and in the media when it is so clearly bogus.


I get where you're coming from Davis, my point wasn't that TFSAs would avoid every situation and permutation of tax avoidance out there, more in general that someone with the ability to save tax free for their own retirement needs would be less likely to rely on and require government assistance despite the fact as you correctly pointed out that many of the systems in place for lower income individuals would still remain an option for them. If the above situation did indeed become a problem I would imagine that much like we have clawbacks for other retirement benefits we'd have a similar stress test of qualification for the TFSA's down the road. Currently the option is so new that few people can live off their current contribution limit save for the lottery winner moneysense folks you pointed out.


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## banjopete

humble_pie said:


> Davis you didn't mention how to force increased savings? if by taxing workers more heavily, imho this won't fly. If by docking existing benefits & payments to seniors, imho this won't fly either. Wondering where we could get the money for increased savings?


I'm not sure how you reverse the trend of decreased saving per household but a shock to the current system clearly is in order. In the US post GFC it seems a shift in priorities occurred for some if not all. The success of marketing and the seeming 24hr access to buying opportunities as well as our current home pricing has made personal savings a last option for many. I mean take this group of similarly minded individuals that worry and care enough to post here. We're a tiny group of a tiny group that probably all wonder how everyone does it around us, new cars, new houses, new phones, new clothes etc and etc but ask about TFSA's and ? wha? That's part of the reason I don't follow the fuss with expanding the TFSA program, I just don't believe that jane average in Canada will take advantage of it enough for it to be a major problem like the PBO fear mongering paper suggested.


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## fplan

http://www.moneysense.ca/save/how-to-save-400000-by-age-50

interesting read..


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## Barwelle

So 28k gross income... his 4,000 RRSP contribution is about 3100 net, plus 5100 TFSA, plus 3000 non-registered for a total of 11,200 net savings. Taxes are about 4,100. He lives on about $12,700/year. Pretty frugal!

Too bad they don't go deeper into his lifestyle. Would be interesting.


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## CalgaryPotato

That is way too frugal for my liking... what's the point of retiring at 50, and never having enough for more than the bare necessities. Even at that though, I'm assuming he must have some sort of inherited, free or paid off living arrangement. Even renting a room, plus food and other basics would have to push over $1000 a month.


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## mrPPincer

Cost of living in the Belleville area might not be too bad compared to more densely populated areas.
I live on something similar, but I'm a homeowner in a rural area, would be pretty much impossible in a major city I think.


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## Barwelle

Maybe he still lives with his parents? :biggrin:


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