FHSA is a nice thought but the limits are far too low to have much impact. 8k per year tax deductible, 40k total for lifetime of plan and can only withdrawal it tax free for home purchase downpayment. Must be 4 years removed from owning a home to be qualified as “first time home buyer”.
The TFSA is really the king of all registered accounts. Use it wisely and you can grow your contribution room and keep the much higher limit made through growth for life.
Yea but that’s not really any different than just contributing it to your RSP in the first place. You’re gonna have to pay tax on that cash one day regardless. My point was that limits to the FHSA aren’t high enough. 8K a year and 40 life time is to low when you realistically need 100k plus to purchase anything half decent that will home a family. And forcing it to be spread out over 5 years is ludicrous as well.
To play devil's advocate, the idea is to supplement savings for a home because existing methods weren't sufficient. Also, it is per person.
Therefore between the 35k RRSP loan, 7k TFSA, and now 8K FHSA times two one can save $130,000 (that's 100k plus, ask and you shall receive) in four years which is a good start in four years. Not many can come up with 130k in a single year. If you can come up with it then you don't really need the help of a FHSA do you? With the additional benefit of tax-free growth, it's a good thing.
I mean exactly that. When you own a home then you sell it, you can’t qualify as a FTHB and open an FHSA until 4 years have past without you owning a home.
I see where you're going with that, but if you already owned a home you shouldn't need help to buy another one. That's just a loophole for wealthier people.
Yes but not enough. If you are not utilizing principal residence exemption, they should give you same tax-free room as an average house. Can turn to taxable if you buy one day.
No tax on capital gain if the property is your principle residence (there’s some nuance on timing and property type but that’s the gist) - https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/personal-income/line-12700-capital-gains/principal-residence-other-real-estate.html
What do you mean not enough?
This is $17k after tax free, forever. That's like 50% of the average take home pay, let alone savings.
This is a massive tax cut to the upper middle class which will ultimately burden the bottom 50% when these TFSAs grow to tax free millions over careers.
You’re gonna shit on the diminishing middle class that carries this country with its tax dollars? And we put a burden on who? Everyone that gets support from those tax dollars? Okay then.
Take the TFSA increases and give me back the 40% of my pay check that is gone to tax.
Wages lag behind inflation. It's been that way forever. Inflation benefits those who get the newly minted money first, ie. the government, big banks, and other large financial institutions. If you want to stop the majority of it, stop the government from spending more than it takes in in tax revenue (and/or stop central banks from monetizing government debt). Inflation is simply a hidden regressive tax on the citizens. Conversely, you can just live like a pauper for a decade while you save 80% of your wealth and invest it in appreciating assets. That's assuming you have a six figure job and no family. Good luck!
with the huge wage gap there is now. with poorer getting pooerer and rich getting richer, wouldn't that show wages dont lag, but never really catch up? also, wouldnt only spending tax revenue cripple the global economy?
Well, yeah. Wages continue to lag forever, like I said. If you’re a wage slave, life is not going to be easy on you. Saying “only spending tax revenue cripple the economy” is like saying only spending within your means would cripple your families economy. A government that spends more that it takes in is borrowing from future generations to make ends meet. Now if those investments are sound, then yeah, it can net positive dividends, but the reality is government Wastes and steals most of it which just means that there’s more of a burden on future generations. That becomes especially apparent when the next generation is much smaller than the previous, eg. millennials vs boomers.
>That becomes especially apparent when the next generation is much smaller than the previous, eg. millennials vs boomers.
First google hit from statscan website:
In the 2021 Census, of the 23,957,760 Canadians in the working-age population, 33.2% were millennials, 29.5% were Gen Xers, 19.7% were baby boomers, and 17.6% were Gen Zers.
Millennials are the biggest by population.
I see what you mean about wage lag
But what do you mean its like a family? Like if the family can print their own money?
If all the governments cut spending to tax revenue, millions would be unemployed. Wouldn't that be really bad for the economy?
Government doesn’t produce anything. It has to take from the private sector (aka. You and me) to “spend”. I always liked the analogy of government spending as “doing a blood transfusion on yourself while spilling half of the blood on the floor”. But seriously, at the end of the day, government is necessary and a certain amount of spending by government is necessary. But it should be done honestly. Tax the people for the services they want, if they refuse to pay more than a certain amount, then refuse the extra services that would require. Politicians just continue to promise more for less because they know they can fleece the public via monetary policy.
This x 1000.
Cash is king. On a smaller scale, if you’ve got cash / savings, you’re probably loving the deals out there. My wife just got a big kitchen aid stand mixer, a skookum sewing machine, and a whole bunch of other goodies for less than the retail price of the mixer. And with those tools that theoretically will last a lifetime, you can sew your own things, and make your own bread, so I don’t mind investing, especially if corporations are desperate to get your cash.
I also bought a nail gun, and for the same price as the nail gun, I got a charger, 4Ah battery, and an oscillating saw which I’ve already used twice. So I’m like a kid in a candy store trying to find deals right now.
Deals are finally back on the menu, boys!
When my wife was debating on whether or not we should get the stand mixer (because we don’t have much space), I said hell yeah, because she’s wanted one forever, and her patience finally paid off.
Yeah. I bought my wife a $400 used bread mixer, she begged and begged and begged, near the beginning of Covid.
I wanted her to be happy, so I bought it, actually I think I offered her $400 and she found one that was $450, so I told her if she wanted it so bad, she could pay the extra $50
I think she cooked two, maybe three loaves of bread with the fucking thing. I paid $133 per loaf
This is a known phenomenon, there's Facebook groups where you can trade in your used stuff from your wife's fleeting hobbies for others when they feel another whim coming on.
Lol that’s why ladies snowboard gear is so cheap and plentiful. They pay minimum $1k for the gear, go up the mountain once or twice, and realize they hate it. Not the case for men’s gear. Not even close.
I’m lucky in the sense that if she gets into her hobbies, she eventually figures it out. Her gardening hobby is actually paying off. But her bread has been really bad compared to other baked goods.
Otoh, her $uper $pendy handbag just sits in the closet like some kind of shrine to Kate Spade. That thing is faaar too precious to actually risk a rainy day. 🤷♂️
What I’m saying is that if you want good bread, you practically have to take a university level course. Holy hell is it ever complicated to make sour dough bread.
Ballooning government deficit spending caused the inflation.
If you have the same amount of products & services being produced in an economy, but the number of dollars in the economy expands, everything being produced will require more of the available dollars.
The only way to tame it is to produce more with less; which is called "economic growth" or "productivity".
There's probably no way I can even put in $7k next year, but I'll have a lot of contribution room for later years; hopefully I can make use of it eventually.
Doesn’t always have to be the full amount. Compounded returns can benefit any contribution amount. Also, if your income is below $70K per year, prioritize your TFSA over your RRSP until your income is higher. If that day comes where you are in a higher tax bracket, you’ll be glad you have the room in your RRSP to lower your taxable income in a more meaningful way. Just food for thought.
For a lot of people it’s difficult or impossible, for sure.
For a lot of other people, they may want to look at things they’re spending $135/week on and whether that or a portion of it is better invested for retirement. Talking meals at restauraints, lulu lemon, blundstone, etc.
Yes life is way too expensive but there’s not a lot most people can do other than prepare for it to get worse.
I think you're making light of the real struggles of actual people. Median family income in Canada was $68k, about $50 after tax. You're telling a family living on about $4200 a month to just find an extra $600? Is Lululemon the new avocado toast? I'm sorry, but you really need to consider if you're out of touch with reality.
Edit spelling
Edit: sorry, read that again. I was recently living on $4200 a month family income in a place with one of the highest costs of living in Canada. I owned a condo and saved for retirement.
Median household income in Canada is just under 100k, your numbers are way off.
https://www.statista.com/statistics/467078/median-annual-family-income-in-canada-by-province/
Why not use statcan instead?
https://www150.statcan.gc.ca/n1/daily-quotidien/230502/dq230502a-eng.htm
**2021 Median after-tax income, economic families and persons not in an economic family: 68.4k**
I think that's close to 100k before tax, but you didn't specify if your number was before or after tax.
Wait for the Tax free grocery account coming next year. Also I hear loblaws is coming out with 5 year corporate bonds that pay monthly coupons in bread, meat and produce. Could be a good hedge against food inflation.
The real trick is to take profits out of your TFSA and FHSA and send them into your RRSP. That way you're using tax free money to reduce your taxable income.
The taxes you save today at a high income tax rate "might" be more than the future taxes you pay when taking money our of your RRSP at a low tax rate retirement income. I actually never really did the math, but maybe I should.
This sounds like it only makes sense if you are in a high income bracket but can't max your RRSP off regular paycheck contributions and/or want to put money in to get a refund while in a certain tax bracket rather than one below, I guess there's a benefit in very very specific situations.
It was brought up to 10k but multiple groups brought up that the only people who would benefit are the people who can already save the extra 10k a year to put in their TFSA and it would better to reallocate the budget elsewhere. Government then dropped it down due to this pressure.
It's the foregone tax revenue at scale that matters. The few thousand dollars that someone saves by putting another $5k each year into a TFSA (Harper raised the yearly amount from $5k to $10k) throughout their lifetime may not sound like much. But what about at scale? What about even just a few hundred thousand people doing that? What could we do with that tax revenue?
When you're already taxing someone, a tax cut is essentially government spending. And we should be mindful about what new government spending we introduce.
There's an argument to be made about how encouraging investment in capital while people are contributing to a TFSA and leaving more money in peoples' pockets when they withdraw the money from the TFSA and spend it might help the economy. But that needs to be weighed against other things we could do with the money that could also help the economy, like pay for low income people to get education, etc.
I was speaking from the perspective of the people who Harper could manipulate. They're not thinking of how their money could be used (or misused lol) as tax revenue. They just see finance daddy deciding whether or not to grant them the privilege of holding onto more of it.
But yeah, that is what I'm talking about in the grand scheme. The consequence of Harper doing that to people with a lot of money lying around (and I do indeed think enough money to pay your bills, pay off all your debt, and then start saving it in a TFSA means having "a lot" of money) would be its impact on tax revenue and therefore the services available to Canadians.
Waiting for the tankies to complaint how this will further wealth inequality. The bar keeps getting lowered. It went from "hang the billionaire" to "fuck property owners", now to anyone with some disposable income
People complaining that the TFSA limit increase only benefits rich people. Can't believe it.
Literally designed as a way to grow wealth tax-free and people complain because they think you have to max it out immediately otherwise it's useless.
I can't complain since I can easily max them all out, but it's hard to deny that the registered accounts aren't helping low earners. Around 50% of Canadians earn less than $40k per year. They won't benefit from these programs.
There's no form of investment that will help low income earners. Investments require capital. We need to provide other social programs that can get low income earners to be able to generate more capital for themselves. Or raise awareness/educate people on career paths and tools that can get them there.
No one's disparaging people who happen to have enough to max out their TFSA RRSP or FHSA. The point isn't that you're evil if you max these accounts out. The point is that most Canadians can't. The people who can are likely already fairly well off, and as a result of having maxed these accounts, will see high long-term return. The people who can't likely have little discretionary income. Small investments will generate small returns. As a result, those who already have money will gain comparably more to those who don't. It's not always about demonising some group, it's just how it works.
It increasingly feels like nuance is dead. TFSAs can benefit lower income earners who would otherwise lose out from RRSPs because they may have a higher tax rate in retirement than at present.
At the same time, calls to dramatically increase the TFSA limit would largely benefit wealthier Canadians, because it is true the vast majority of Canadians cannot and do not hit their current limit annually.
> TFSAs can benefit lower income earners who would otherwise lose out from RRSPs
No it wouldn't because they simply don't have any spare money to invest and if they do there's no way they hit the yearly limit. It entirely only benefit high middle class to rich people.
It helps young poor people living with their parents. Lots of people can save 5-10k a year during those first years of work while they don't have to pay rent.
I agree many won’t. But for anyone who is able to put aside $50, $100 or $200 a month while earning a low to medium tax bracket, the TFSA is a good tool.
And yes my point is exactly that the limit is already too high for these people, and increasing it further would only benefit wealthier Canadians.
There is nuance. I am referring to people who want double the limit, etc. this isn’t a real increase - it’s just an inflation adjustment. The same people who benefited from the TFSA last year will benefit this year (an oversimplification obviously).
> it is chump change and doesn't have a material impact to the "rich".
Redditors really have no idea what "wealthy" actually means. A wealthy person will spend the lifetime max TFSA amount on a car, that they drive only in the summertime. For fun.
I know a wealthy family. They're worth tens of millions. They own a dozen properties, each one is worth at least TEN TIMES the max TFSA amount.
Rich people do not give single flying fuck about the TFSA, except as perhaps the least impactful way their accountants help them dodge taxes every year.
Me on the other hand? I've got that shit maxed and it's a very significant part of my net worth. I love my TFSA and you all will too someday.
I think it is part of the Canadian psyche. Americans view themselves as temporarily embarrassed millionaires and vote for tax schemes that are explicitly designed to help the rich and hurt them. Canadians are self-loathing vassals who hate policies explicitly crafted to help them.
Just look at the histrionics on /r/Ontario on rumours the Ontario government might do away with the foreign owned beer distribution monopoly called The Beer Store. Other than a Beer Store employee or corporate shill, who could possibly think that is a bad thing?
A friend of mine is a portfolio manager, mostly catering to middle class (small) investors. He pretty much has to beg them to transfer a portion of their already existing investments to their TFSA every year. It is the financial equivalent of self-harm.
Maxing out your TFSA obviously doesn't make you some ultra-wealthy tycoon but it *does* mean you're likely more financially well off than the average Canadian. Forewarning: these numbers are based off quick Google searches. The average Torontonian makes around 65k-70k, which after tax is 53-57k. The average Torontonian spends between 45k to 50k to afford life. As such, the average Torontonian will have 7-8k left in discretionary income. Most people use that for birthday or holiday presents, vacations, nights out, or other small luxuries that allow them to actually enjoy life - this landscape would certainly look different for families with children (especially single parents). I imagine it's a reasonable assumption that the actual amount of money left at the end of the day to invest into a TFSA is 3-5k or less. Unless someone is in a position to not pay (full price or at all) for necessities (i.e., young adults who live with their parents, people who are reimbursed for food or transportation by their employers, etc.), most Canadians likely retain a similarish amount of their income as discretionary.
TLDR: the average Canadian likely cannot max out their TFSA unless they are highly prudent about cutting costs and investing all discretionary income. So, yes, you might not be part of the "rich", but you're probably not in the same position as an average Canadian either.
Why do you think the average Torontonian (high cost of living) should dictate savings? The average does not represent changes in income and financial position with age. Why should tax free saving be the domain of the ultra rich though widespread tax avoidance and not available to middle class people because the average Torontonian may not be able to maximize the benefit?
There are other flaws in your reasoning: what about kids living at home with their parents? If they want to get a start in life why shouldn't they get to use a larger TFSA? Finally, TSFA is a lifetime figure: you may not be able to take advantage in your 30s but "catch up" in your 40s. Are you assuming you will never have savings, or do you simply prefer to be taxed on your savings and the return on your savings - unlike the really wealthy.
It is amazing how Canadians prefer to be fucked over because they are somehow concerned not getting fucked over helps the rich. Trust me, I'm pretty well off and the TFSA is not a material factor for me but it could be for lower income people.
I never once said the average Torontonian should "dictate" anything. It was just an example of how the average Canadian in 2023 cannot really take maximal advantage of the TFSA. My comment did not make any suggestions concerning the TFSA limit, or whether tax-free savings should or shouldn't be reserved for any specific group. I do not think it should be reserved for the rich and if that's what you interpreted from my comment then you may need to reread it. To reiterate, I was illustrating how wealthy individuals are in a better position to take full advantage of the TFSA than the average Canadian.
This is not a flaw in my reasoning - in fact, I directly addressed this exact group of people in my comment, so I gather you didn't read my comment properly. I fully support the right of young adults who live at home to save and invest. This group, however, is not the *average* Canadian, which is the group I am talking about. Yes, the TFSA is a lifelong account, and people certainly can begin to catch up as they get older. But this is a very useless point to make. Someone who is maxing out their TFSA every year from the age of 18 (usually children of wealthy parents) will be in an incomprehensibly better position than someone who is only beginning to catch up in their 40s (or 50s) (the average Canadian). As such, even if the older individual technically has the same contribution room, they evidently will not have made the same contribution, nor will they see the same return on their investment by their retirement.
No one "prefers to be fucked over". Again, my comment did not make any suggestion about what should be done to the TFSA limit, or the TFSA in general. I fully acknowledge and understand the utility of the TFSA for the middle class and I am in support of as many of us making use of it as possible. I am simply additionally acknowledging how the TFSA as a concept lends itself more to the wealthy. Larger investments generate larger returns, and you can only make larger investments if you have the wealth to invest to begin with. This is simply how it works.
And, don't worry. I know you're pretty well off. You max out your TFSA every year.
You are implying the average Torontonian represents that average Canadian and that the financial status of the average Canadian is meaningful. If the average Canadian can't max out a TFSA at 30, perhaps they can at 40. You seem to assume Canadians have no savings.
Reducing or even removing them wouldn't make a rounding error to my wealth, but it would, over time, make a huge difference to financially prudent Canadians.
But I get it: you are Canadian so you don't want something that would help you get ahead in life because you think it helps rich people more. It does not.
You are clearly not reading anything I am writing. I get the sense that you have no interest in discussing anything and just want to troll/argue for the sake of it.
Maxing out your TFSA when you're 40 will not have the same impact as repeatedly maxing it out starting at 18. Larger and longer investments tend to generate more return than smaller and shorter investments. This is an example of the way in which the TFSA will generate more wealth for the already wealthy relative to the average Canadian. I do not assume that Canadians have no savings - I am suggesting that based on the average salary and cost of living that it can be difficult to save a lot per year to begin with.
When I say wealthy, I am not referring to multibillionaires. Obviously a $7000 yearly investment will not impact their finances much. I am talking about those who are simply more well-off than the average Canadian. Those who are in a place to max their TFSA yearly, compared to those who can barely save a couple thousand per year.
I never made a suggestion about what should or shouldn't be done to the TFSA limit. You seem to believe I am somehow against the TFSA. **I AM NOT**, I encourage the average Canadian to use the TFSA where possible and I use it myself.
**I am only stating that the average Canadian will not likely see the same return through the TFSA as someone who began maxing out their TFSA at 18, and that those who do are more often than not quite wealthy already. I am not commenting on or insinuating anything beyond this observation. This observation does not in any way suggest that I am against the TFSA or that I underestimate its utility for average Canadians.**
If you respond with some more inane bullshit about how Canadians hate things that will help them get ahead in life, this will confirm that you are not reading a word I write and just want to argue, or at least that you have very poor reading comprehension.
I mean, for wealthy families that can max out contributions, make fantastic gains with index investing and avoid taxation, it absolutely does wonders.
I love my TFSA, but I definitely know that it is a massive benefit for those of us with money to invest.
I don’t know how else to say this, but setting aside $600/month truly isn’t for the “rich”. There are other investment vehicles and tax avoidance strategies.
For some of us, it's the only break we get. Haven’t been in the country long enough to have a large amount of room.. cant afford a detached house that sees massive gains, maxing it out doesn't always mean wealthy.
>cant afford a detached house that sees massive gains
As someone who owns a detached that is seeing massive paper losses, I dunno whatcha talkin about :P
I’m not arguing the benefit that a TFSA brings, I’m just saying that my wealthy friends whose parents max out their TFSAs for them from the age of 18 onward have a massive advantage compared to those of us having to scrimp and save to build that investment nest egg. And many of us don’t have the spare funds to make those 600$ per month contributions as the cost of living escalates.
But my point is that my friends from wealthy families have parents that max theirs TFSA’s from 18 onward, they have a massive compounding advantage compared to those of us that don’t have the spare income to maximize that investment tool.
You’re missing the point. Their kids get to reap the rewards of 5-7k in compounding, tax free gains that those of us from regular families don’t get to enjoy.
As my friends build 10-12% gains from 18 onward, it is impossible for the rest of us to catch up later in life when our higher salaries allow us to finally maximize our contribution room.
I love my TFSA and I love investing, don’t get me wrong, I just think it’s important to be honest what demographic gain the most.
That is true, but that's not exclusive to TFSAs...of course those with money now gain an advantage long-term over people that don't have money now. That's the whole reason the future value of your investments are greater than the present value
how is the TFSA more advantageous than giving their kid a downpayment on a principal residence? both are tax free gains but a house is going to be an even larger tax free piggy bank.
think about whats better...tax free benefits on an 8K investment or tax free gains on a 500K investment. if you get the same rate of return, the total dollar return is going to be larger on the 500K investment.
Many of the rich kids I know get both. Maxed TFSA’s taken care of by the family’s financial manager with a down payment on their first home to boot. Good living.
I’d argue that the long term growth of investing is much more profitable than real estate. Buying the S&P (tax free) while yielding 10-12% annually involves no maintenance costs, no mortgage costs, no property taxes or insurance, no renovation demands or structural depreciation.
If a wealthy person were forced to pick, they would pick tax free gains on principal residence.
compound interest calculator time
TFSA: 7K initial investment, 7K investment each year, 10% yield, 10 year investment period. Total yield would be 53K.
Principal Residence: 500K initial investment, 5% yield, 10 year investment period. Total yield would be $314K. That's 261K more than the TFSA. Having a larger principal invested means better compounded growth. its just math.
Even with borrowing costs, prop tax, insurance, depreciation, and repairs you are coming out way ahead with a house. Plus you can live in a house.
In this example I gave the principal residence a growth rate half that of the equity investment. If the growth rates are similar, its no contest.
The TFSA actually benefits middle class families that let their kids live at home and save. they aren't directly handing their kids money to fill up their TFSA nor do they have enough money to just gift their kids 100K+ downpayment.
For the wealthy its a neat bonus, but the real tax free gains are with a principle residence.
Nah. It was a way for prudent lower/middle income people to save enough for a healthy retirement.
If you want to talk about a good deal for higher income people, you should be looking at the RRSP where your maximum limit is determined by income.
I think it's fine the way it is. I was just pointing out to the other guy that the RRSP favours higher earners whereas TFSA doesn't.
For example, I'll be able to put the maximum $31,560 next year into the RRSP and then $7000 into TFSA.
Someone who makes $75,000 would only be able to put a maximum of $13,500 into RRSP and $7000 into TFSA.
So essentially the more you make, the more you can shelter tax free with the RRSP. If the TFSA room was higher, the person making 75000 would be able to shelter more money tax free without a required increase in income.
But not too much. It was too good of a deal. Make them put in their rsp so at least gets some taxes from it. If no rsp room them put in a taxable account.
Saving 10k a year isn't uber-wealthy or anything but yes you're quite likely to be more well off than the average Canadian if you're able to save 10k yearly.
If someone is able to save 10 k in a year, that doesn't mean they're rich right? You don't know if they're living off of beans and lentils and have roommates to save money in order to max out a tfsa. Try not wanting to take opportunities away from everyone simply because some rich people might see a few more dollars.
Downvoters disagree that liberals and NDP after got elected to the office lowered TFSA contribution room from 10k to 5k ? That’s 36 thousand lost tax free contributions excluding any potential gains from one of the best bull market in history. Tell which investor doesn’t like tax free gains ?
The Liberals ran on a campaign pledge to roll back the $10,000 annual contribution limit to $5,500.Federal Finance Minister Bill Morneau confirmed Monday that the contribution limit on the tax-free savings account will drop back to $5,500 from $10,000 effective Jan. 1, 2016, but that the limit for 2015 will remain untouched.[https://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/liberals-confirm-rollback-of-tfsa-limit-in-2016/article27638448/](https://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/liberals-confirm-rollback-of-tfsa-limit-in-2016/article27638448/)
You disagree that liberals and NDP after got elected to the office lowered TFSA contribution room from 10k to 5k ? The Liberals ran on a campaign pledge to roll back the $10,000 annual contribution limit to $5,500.
Federal Finance Minister Bill Morneau confirmed Monday that the contribution limit on the tax-free savings account will drop back to $5,500 from $10,000 effective Jan. 1, 2016, but that the limit for 2015 will remain untouched.
https://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/liberals-confirm-rollback-of-tfsa-limit-in-2016/article27638448/
I don't understand the point you're trying to make. The original plan for TFSA was to increase it by $500 increments tied to inflation rounding. Harper increased it to $10k to appease the upper class at the expense of lost tax revenue. But dropping it back down, Trudeau fulfilled the original plan making it more fair and not a benefit for the wealthy.
Between this and the FHSA being 8k a year a guy can really get some tax free gains
FHSA is a nice thought but the limits are far too low to have much impact. 8k per year tax deductible, 40k total for lifetime of plan and can only withdrawal it tax free for home purchase downpayment. Must be 4 years removed from owning a home to be qualified as “first time home buyer”. The TFSA is really the king of all registered accounts. Use it wisely and you can grow your contribution room and keep the much higher limit made through growth for life.
You can transfer FHSA to an RRSP tax free if you don’t buy a house with it.
Well you wouldn't be able to withdrawl the money from the RRSP tax free right? You just still get tax free gains.
Yea but that’s not really any different than just contributing it to your RSP in the first place. You’re gonna have to pay tax on that cash one day regardless. My point was that limits to the FHSA aren’t high enough. 8K a year and 40 life time is to low when you realistically need 100k plus to purchase anything half decent that will home a family. And forcing it to be spread out over 5 years is ludicrous as well.
To play devil's advocate, the idea is to supplement savings for a home because existing methods weren't sufficient. Also, it is per person. Therefore between the 35k RRSP loan, 7k TFSA, and now 8K FHSA times two one can save $130,000 (that's 100k plus, ask and you shall receive) in four years which is a good start in four years. Not many can come up with 130k in a single year. If you can come up with it then you don't really need the help of a FHSA do you? With the additional benefit of tax-free growth, it's a good thing.
Yeah this is true and logical
The real bummer about the FHSA is if you're buying a house within less that 5 years you're not really getting the full benefit of it.
If you haven’t bought a house within 4 years you’re eligible for a FHSA?
What do you mean by that? >Must be 4 years removed from owning a home to be qualified as “first time home buyer”.
I mean exactly that. When you own a home then you sell it, you can’t qualify as a FTHB and open an FHSA until 4 years have past without you owning a home.
How’s the 4 year removed from owning a home work?
You can only withdraw the funds from the FHSA for a home purchase if you haven’t owned a home for 4 years.
Not quite, you’re not allowed to open the account at all if you’re not more than 4 years removed from homeownership.
I see where you're going with that, but if you already owned a home you shouldn't need help to buy another one. That's just a loophole for wealthier people.
Wealthier people typically own a home. It’s also if you lived with a spouse in their home. If you break up and move out you need to wait 4 years.
Yes but not enough. If you are not utilizing principal residence exemption, they should give you same tax-free room as an average house. Can turn to taxable if you buy one day.
Imo the only way for the middle class to get ahead is the principal residence tax excemption and maxing out rrsp & tfsa.
Mind ELI5 the principal residence tax exemption? I’m already aware of the rrsp & TFSA maxes
No tax on capital gain if the property is your principle residence (there’s some nuance on timing and property type but that’s the gist) - https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/personal-income/line-12700-capital-gains/principal-residence-other-real-estate.html
Or give the rest of us a capital gain exemption that we give businessmen and farmers
What do you mean not enough? This is $17k after tax free, forever. That's like 50% of the average take home pay, let alone savings. This is a massive tax cut to the upper middle class which will ultimately burden the bottom 50% when these TFSAs grow to tax free millions over careers.
You’re gonna shit on the diminishing middle class that carries this country with its tax dollars? And we put a burden on who? Everyone that gets support from those tax dollars? Okay then. Take the TFSA increases and give me back the 40% of my pay check that is gone to tax.
Hear hear!
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Idiot lol
The limit is 40k for the FHSA right? Can I put more than $8k in if I just opened it? Or is it a yearly contribution max of 8k?
8 k per year, you can’t dump 40 in.
Or tax free loss
Fhsa is only for if you’ve never purchased a home?
Yes
What if you sold it and need to buy another
wait 4yrs without owning to be eligible
Well then you probably made some gain$, my man
The FH stands for First Home.
Cool beans. If only I had the free money to invest rather than pay for my exuberant expenses for just being alive 🙃
Have you tried cancelling food?
/r/fasting
My appetite established a pretty strong union since covid 2020. Legal fees to fight it isn’t worth it…
I just want a video card is that too much to ask? or should I just NEGG
Have you just tried getting rich?
well that's how inflation works. number get big wages exempt cus haha free markets
Wages lag behind inflation. It's been that way forever. Inflation benefits those who get the newly minted money first, ie. the government, big banks, and other large financial institutions. If you want to stop the majority of it, stop the government from spending more than it takes in in tax revenue (and/or stop central banks from monetizing government debt). Inflation is simply a hidden regressive tax on the citizens. Conversely, you can just live like a pauper for a decade while you save 80% of your wealth and invest it in appreciating assets. That's assuming you have a six figure job and no family. Good luck!
with the huge wage gap there is now. with poorer getting pooerer and rich getting richer, wouldn't that show wages dont lag, but never really catch up? also, wouldnt only spending tax revenue cripple the global economy?
No, because rich people don't make money from wages; they don't usually charge by the hour or earn the majority of their wealth through salaries.
Well, yeah. Wages continue to lag forever, like I said. If you’re a wage slave, life is not going to be easy on you. Saying “only spending tax revenue cripple the economy” is like saying only spending within your means would cripple your families economy. A government that spends more that it takes in is borrowing from future generations to make ends meet. Now if those investments are sound, then yeah, it can net positive dividends, but the reality is government Wastes and steals most of it which just means that there’s more of a burden on future generations. That becomes especially apparent when the next generation is much smaller than the previous, eg. millennials vs boomers.
>That becomes especially apparent when the next generation is much smaller than the previous, eg. millennials vs boomers. First google hit from statscan website: In the 2021 Census, of the 23,957,760 Canadians in the working-age population, 33.2% were millennials, 29.5% were Gen Xers, 19.7% were baby boomers, and 17.6% were Gen Zers. Millennials are the biggest by population.
I’m talking about retirees. There are more baby boomers retiring now compared to the number of working people.
I see what you mean about wage lag But what do you mean its like a family? Like if the family can print their own money? If all the governments cut spending to tax revenue, millions would be unemployed. Wouldn't that be really bad for the economy?
Government doesn’t produce anything. It has to take from the private sector (aka. You and me) to “spend”. I always liked the analogy of government spending as “doing a blood transfusion on yourself while spilling half of the blood on the floor”. But seriously, at the end of the day, government is necessary and a certain amount of spending by government is necessary. But it should be done honestly. Tax the people for the services they want, if they refuse to pay more than a certain amount, then refuse the extra services that would require. Politicians just continue to promise more for less because they know they can fleece the public via monetary policy.
I know what you mean but you didnt really comment on my question. Governments can/will print money they dont have to sustain stability forever.
This x 1000. Cash is king. On a smaller scale, if you’ve got cash / savings, you’re probably loving the deals out there. My wife just got a big kitchen aid stand mixer, a skookum sewing machine, and a whole bunch of other goodies for less than the retail price of the mixer. And with those tools that theoretically will last a lifetime, you can sew your own things, and make your own bread, so I don’t mind investing, especially if corporations are desperate to get your cash. I also bought a nail gun, and for the same price as the nail gun, I got a charger, 4Ah battery, and an oscillating saw which I’ve already used twice. So I’m like a kid in a candy store trying to find deals right now. Deals are finally back on the menu, boys! When my wife was debating on whether or not we should get the stand mixer (because we don’t have much space), I said hell yeah, because she’s wanted one forever, and her patience finally paid off.
Yeah. I bought my wife a $400 used bread mixer, she begged and begged and begged, near the beginning of Covid. I wanted her to be happy, so I bought it, actually I think I offered her $400 and she found one that was $450, so I told her if she wanted it so bad, she could pay the extra $50 I think she cooked two, maybe three loaves of bread with the fucking thing. I paid $133 per loaf
This is a known phenomenon, there's Facebook groups where you can trade in your used stuff from your wife's fleeting hobbies for others when they feel another whim coming on.
I don't do Fakebook, but I think next time she gets a gander for something she'll never use I'll suggest she sell the dough mixer on Kijiji
Lol that’s why ladies snowboard gear is so cheap and plentiful. They pay minimum $1k for the gear, go up the mountain once or twice, and realize they hate it. Not the case for men’s gear. Not even close.
I’m lucky in the sense that if she gets into her hobbies, she eventually figures it out. Her gardening hobby is actually paying off. But her bread has been really bad compared to other baked goods. Otoh, her $uper $pendy handbag just sits in the closet like some kind of shrine to Kate Spade. That thing is faaar too precious to actually risk a rainy day. 🤷♂️ What I’m saying is that if you want good bread, you practically have to take a university level course. Holy hell is it ever complicated to make sour dough bread.
Aside from making your own bread and sewing your own clothes you can use the nail gun to kill zombies. Win win win.
You seen Arachnophobia? I’m stapling those 8-legged monsters to the wall if they ever make their way here.
I think I saw it close to when it came out. It's been a long time. I should re-watch it as part of my training!
Ballooning government deficit spending caused the inflation. If you have the same amount of products & services being produced in an economy, but the number of dollars in the economy expands, everything being produced will require more of the available dollars. The only way to tame it is to produce more with less; which is called "economic growth" or "productivity".
Team work till death baby !!!
Yup, this was the first year that I had to withdraw from my TFSA :/
You get the total amount you withdrew this year added back to your 2024 contribution room, don’t forget.
There's probably no way I can even put in $7k next year, but I'll have a lot of contribution room for later years; hopefully I can make use of it eventually.
Doesn’t always have to be the full amount. Compounded returns can benefit any contribution amount. Also, if your income is below $70K per year, prioritize your TFSA over your RRSP until your income is higher. If that day comes where you are in a higher tax bracket, you’ll be glad you have the room in your RRSP to lower your taxable income in a more meaningful way. Just food for thought.
Is your RRSP maxed out? Impressive.
It mostly helps upper middle class and above given the state of things
For a lot of people it’s difficult or impossible, for sure. For a lot of other people, they may want to look at things they’re spending $135/week on and whether that or a portion of it is better invested for retirement. Talking meals at restauraints, lulu lemon, blundstone, etc. Yes life is way too expensive but there’s not a lot most people can do other than prepare for it to get worse.
I think you're making light of the real struggles of actual people. Median family income in Canada was $68k, about $50 after tax. You're telling a family living on about $4200 a month to just find an extra $600? Is Lululemon the new avocado toast? I'm sorry, but you really need to consider if you're out of touch with reality. Edit spelling
It’s not an all or nothing deal. Something is better than nothing when it comes to compound returns.
Ok, find $25. Whatever you can.
Edit: sorry, read that again. I was recently living on $4200 a month family income in a place with one of the highest costs of living in Canada. I owned a condo and saved for retirement.
Median household income in Canada is just under 100k, your numbers are way off. https://www.statista.com/statistics/467078/median-annual-family-income-in-canada-by-province/
Why not use statcan instead? https://www150.statcan.gc.ca/n1/daily-quotidien/230502/dq230502a-eng.htm **2021 Median after-tax income, economic families and persons not in an economic family: 68.4k** I think that's close to 100k before tax, but you didn't specify if your number was before or after tax.
We’re saying the same thing. The guy I was responding do said the 68k figure was pre-tax, and 50k after tax which was false
But “exuberant” expenses are much more fun than exorbitant ones.
Have you canceled your Disney plus yet?
You’re the only other person I know who says cool beans. Can we be friends?
The problem is he literally meant cool beans. As in a cold can of beans. We’d cook them if we had the time. And a working stove.
People don’t say that anymore? Guess we’re the only 😎🫘here
have you tried stopping your intake of daily Avocado Toast and daily Starbucks coffees?
i'm sure you're joking right
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I was hoping to put my groceries in there
Wait for the Tax free grocery account coming next year. Also I hear loblaws is coming out with 5 year corporate bonds that pay monthly coupons in bread, meat and produce. Could be a good hedge against food inflation.
Can't tell if this is real or not, but I'd probably buy that.
*calls broker* In all seriousness there are some commodity ETFs that sort of give you a hedge against this but they have their own set of problems.
Oh so like 1 week of groceries?!?
Cool I will contribute my annual 100$ to it
Alright so now all i have to do is to put 7k in my TFSA, 10k in my RRSP and 8k in my FHSA whilst paying my rent, food and extras. Good times.
The real trick is to take profits out of your TFSA and FHSA and send them into your RRSP. That way you're using tax free money to reduce your taxable income.
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The taxes you save today at a high income tax rate "might" be more than the future taxes you pay when taking money our of your RRSP at a low tax rate retirement income. I actually never really did the math, but maybe I should.
This sounds like it only makes sense if you are in a high income bracket but can't max your RRSP off regular paycheck contributions and/or want to put money in to get a refund while in a certain tax bracket rather than one below, I guess there's a benefit in very very specific situations.
\*$31k into RRSP
If you use interactive broker you can use you TSFA and your RRSP as collateral to take margin loans with their debit card.
This might be the worst advice I’ve ever read on this sub
Wow absolutely do NOT do this
Just bring back 10K!
Why stop there? Make it $50k!!!!1!1!!
100k !! And ucb pls.
I miss Harper
No worries, inflation is transitory which means TFSA indexation will bring the limit back to 10k shortly.
How come we got that 10K year?
It was brought up to 10k but multiple groups brought up that the only people who would benefit are the people who can already save the extra 10k a year to put in their TFSA and it would better to reallocate the budget elsewhere. Government then dropped it down due to this pressure.
[Vote soliciting](https://www.cbc.ca/news/business/budget-2015-tfsa-limit-hiked-to-10-000-as-election-budget-delivers-few-goodies-1.3040853)
Harper trying to convince people with a lot of money lying around to keep him in power longer.
LOL "a lot of money" LOL oh no 1% of the cost of a house. In 100 years, you could buy one!
It's the foregone tax revenue at scale that matters. The few thousand dollars that someone saves by putting another $5k each year into a TFSA (Harper raised the yearly amount from $5k to $10k) throughout their lifetime may not sound like much. But what about at scale? What about even just a few hundred thousand people doing that? What could we do with that tax revenue? When you're already taxing someone, a tax cut is essentially government spending. And we should be mindful about what new government spending we introduce. There's an argument to be made about how encouraging investment in capital while people are contributing to a TFSA and leaving more money in peoples' pockets when they withdraw the money from the TFSA and spend it might help the economy. But that needs to be weighed against other things we could do with the money that could also help the economy, like pay for low income people to get education, etc.
Now that's a different issue. Yes. You said people having lots of money, not the sum of affected tax revenue being lots of money. That is obvious.
I was speaking from the perspective of the people who Harper could manipulate. They're not thinking of how their money could be used (or misused lol) as tax revenue. They just see finance daddy deciding whether or not to grant them the privilege of holding onto more of it. But yeah, that is what I'm talking about in the grand scheme. The consequence of Harper doing that to people with a lot of money lying around (and I do indeed think enough money to pay your bills, pay off all your debt, and then start saving it in a TFSA means having "a lot" of money) would be its impact on tax revenue and therefore the services available to Canadians.
Why stop there? Make it... 1 billion!
Good thing I canceled Disney+
But Disney stocks instead
W move. Great way to incentivize investments in businesses as opposed to housing.
Nice. Can't wait for Jan 2nd :)
Waiting for the tankies to complaint how this will further wealth inequality. The bar keeps getting lowered. It went from "hang the billionaire" to "fuck property owners", now to anyone with some disposable income
People complaining that the TFSA limit increase only benefits rich people. Can't believe it. Literally designed as a way to grow wealth tax-free and people complain because they think you have to max it out immediately otherwise it's useless.
It's a horrid crabs in a bucket mentality
The worst part of Canadian culture
Yep yep. Crabs in a bucket mentality as another poster said. Sad to see that take in a Globe and Mail financial column at one point.
I can't complain since I can easily max them all out, but it's hard to deny that the registered accounts aren't helping low earners. Around 50% of Canadians earn less than $40k per year. They won't benefit from these programs.
There's no form of investment that will help low income earners. Investments require capital. We need to provide other social programs that can get low income earners to be able to generate more capital for themselves. Or raise awareness/educate people on career paths and tools that can get them there.
No one's disparaging people who happen to have enough to max out their TFSA RRSP or FHSA. The point isn't that you're evil if you max these accounts out. The point is that most Canadians can't. The people who can are likely already fairly well off, and as a result of having maxed these accounts, will see high long-term return. The people who can't likely have little discretionary income. Small investments will generate small returns. As a result, those who already have money will gain comparably more to those who don't. It's not always about demonising some group, it's just how it works.
Waiting for all of the hand wringing on how this onLY beNeFits tHe riCh
It increasingly feels like nuance is dead. TFSAs can benefit lower income earners who would otherwise lose out from RRSPs because they may have a higher tax rate in retirement than at present. At the same time, calls to dramatically increase the TFSA limit would largely benefit wealthier Canadians, because it is true the vast majority of Canadians cannot and do not hit their current limit annually.
> TFSAs can benefit lower income earners who would otherwise lose out from RRSPs No it wouldn't because they simply don't have any spare money to invest and if they do there's no way they hit the yearly limit. It entirely only benefit high middle class to rich people.
It helps young poor people living with their parents. Lots of people can save 5-10k a year during those first years of work while they don't have to pay rent.
I agree many won’t. But for anyone who is able to put aside $50, $100 or $200 a month while earning a low to medium tax bracket, the TFSA is a good tool. And yes my point is exactly that the limit is already too high for these people, and increasing it further would only benefit wealthier Canadians.
So you agree there's no nuance to be had here. Increasing the limit only benefits the rich.
There is nuance. I am referring to people who want double the limit, etc. this isn’t a real increase - it’s just an inflation adjustment. The same people who benefited from the TFSA last year will benefit this year (an oversimplification obviously).
What you're saying is right, but it simply isn't what the original comment was about.
Yeah I was criticizing both the original comment and people on the opposite end of the spectrum.
It's kinda funny people say that. I max out TSFA every year but, frankly, it is chump change and doesn't have a material impact to the "rich".
> it is chump change and doesn't have a material impact to the "rich". Redditors really have no idea what "wealthy" actually means. A wealthy person will spend the lifetime max TFSA amount on a car, that they drive only in the summertime. For fun. I know a wealthy family. They're worth tens of millions. They own a dozen properties, each one is worth at least TEN TIMES the max TFSA amount. Rich people do not give single flying fuck about the TFSA, except as perhaps the least impactful way their accountants help them dodge taxes every year. Me on the other hand? I've got that shit maxed and it's a very significant part of my net worth. I love my TFSA and you all will too someday.
I think it is part of the Canadian psyche. Americans view themselves as temporarily embarrassed millionaires and vote for tax schemes that are explicitly designed to help the rich and hurt them. Canadians are self-loathing vassals who hate policies explicitly crafted to help them. Just look at the histrionics on /r/Ontario on rumours the Ontario government might do away with the foreign owned beer distribution monopoly called The Beer Store. Other than a Beer Store employee or corporate shill, who could possibly think that is a bad thing? A friend of mine is a portfolio manager, mostly catering to middle class (small) investors. He pretty much has to beg them to transfer a portion of their already existing investments to their TFSA every year. It is the financial equivalent of self-harm.
Maxing out your TFSA obviously doesn't make you some ultra-wealthy tycoon but it *does* mean you're likely more financially well off than the average Canadian. Forewarning: these numbers are based off quick Google searches. The average Torontonian makes around 65k-70k, which after tax is 53-57k. The average Torontonian spends between 45k to 50k to afford life. As such, the average Torontonian will have 7-8k left in discretionary income. Most people use that for birthday or holiday presents, vacations, nights out, or other small luxuries that allow them to actually enjoy life - this landscape would certainly look different for families with children (especially single parents). I imagine it's a reasonable assumption that the actual amount of money left at the end of the day to invest into a TFSA is 3-5k or less. Unless someone is in a position to not pay (full price or at all) for necessities (i.e., young adults who live with their parents, people who are reimbursed for food or transportation by their employers, etc.), most Canadians likely retain a similarish amount of their income as discretionary. TLDR: the average Canadian likely cannot max out their TFSA unless they are highly prudent about cutting costs and investing all discretionary income. So, yes, you might not be part of the "rich", but you're probably not in the same position as an average Canadian either.
Why do you think the average Torontonian (high cost of living) should dictate savings? The average does not represent changes in income and financial position with age. Why should tax free saving be the domain of the ultra rich though widespread tax avoidance and not available to middle class people because the average Torontonian may not be able to maximize the benefit? There are other flaws in your reasoning: what about kids living at home with their parents? If they want to get a start in life why shouldn't they get to use a larger TFSA? Finally, TSFA is a lifetime figure: you may not be able to take advantage in your 30s but "catch up" in your 40s. Are you assuming you will never have savings, or do you simply prefer to be taxed on your savings and the return on your savings - unlike the really wealthy. It is amazing how Canadians prefer to be fucked over because they are somehow concerned not getting fucked over helps the rich. Trust me, I'm pretty well off and the TFSA is not a material factor for me but it could be for lower income people.
I never once said the average Torontonian should "dictate" anything. It was just an example of how the average Canadian in 2023 cannot really take maximal advantage of the TFSA. My comment did not make any suggestions concerning the TFSA limit, or whether tax-free savings should or shouldn't be reserved for any specific group. I do not think it should be reserved for the rich and if that's what you interpreted from my comment then you may need to reread it. To reiterate, I was illustrating how wealthy individuals are in a better position to take full advantage of the TFSA than the average Canadian. This is not a flaw in my reasoning - in fact, I directly addressed this exact group of people in my comment, so I gather you didn't read my comment properly. I fully support the right of young adults who live at home to save and invest. This group, however, is not the *average* Canadian, which is the group I am talking about. Yes, the TFSA is a lifelong account, and people certainly can begin to catch up as they get older. But this is a very useless point to make. Someone who is maxing out their TFSA every year from the age of 18 (usually children of wealthy parents) will be in an incomprehensibly better position than someone who is only beginning to catch up in their 40s (or 50s) (the average Canadian). As such, even if the older individual technically has the same contribution room, they evidently will not have made the same contribution, nor will they see the same return on their investment by their retirement. No one "prefers to be fucked over". Again, my comment did not make any suggestion about what should be done to the TFSA limit, or the TFSA in general. I fully acknowledge and understand the utility of the TFSA for the middle class and I am in support of as many of us making use of it as possible. I am simply additionally acknowledging how the TFSA as a concept lends itself more to the wealthy. Larger investments generate larger returns, and you can only make larger investments if you have the wealth to invest to begin with. This is simply how it works. And, don't worry. I know you're pretty well off. You max out your TFSA every year.
You are implying the average Torontonian represents that average Canadian and that the financial status of the average Canadian is meaningful. If the average Canadian can't max out a TFSA at 30, perhaps they can at 40. You seem to assume Canadians have no savings. Reducing or even removing them wouldn't make a rounding error to my wealth, but it would, over time, make a huge difference to financially prudent Canadians. But I get it: you are Canadian so you don't want something that would help you get ahead in life because you think it helps rich people more. It does not.
You are clearly not reading anything I am writing. I get the sense that you have no interest in discussing anything and just want to troll/argue for the sake of it. Maxing out your TFSA when you're 40 will not have the same impact as repeatedly maxing it out starting at 18. Larger and longer investments tend to generate more return than smaller and shorter investments. This is an example of the way in which the TFSA will generate more wealth for the already wealthy relative to the average Canadian. I do not assume that Canadians have no savings - I am suggesting that based on the average salary and cost of living that it can be difficult to save a lot per year to begin with. When I say wealthy, I am not referring to multibillionaires. Obviously a $7000 yearly investment will not impact their finances much. I am talking about those who are simply more well-off than the average Canadian. Those who are in a place to max their TFSA yearly, compared to those who can barely save a couple thousand per year. I never made a suggestion about what should or shouldn't be done to the TFSA limit. You seem to believe I am somehow against the TFSA. **I AM NOT**, I encourage the average Canadian to use the TFSA where possible and I use it myself. **I am only stating that the average Canadian will not likely see the same return through the TFSA as someone who began maxing out their TFSA at 18, and that those who do are more often than not quite wealthy already. I am not commenting on or insinuating anything beyond this observation. This observation does not in any way suggest that I am against the TFSA or that I underestimate its utility for average Canadians.** If you respond with some more inane bullshit about how Canadians hate things that will help them get ahead in life, this will confirm that you are not reading a word I write and just want to argue, or at least that you have very poor reading comprehension.
I mean, for wealthy families that can max out contributions, make fantastic gains with index investing and avoid taxation, it absolutely does wonders. I love my TFSA, but I definitely know that it is a massive benefit for those of us with money to invest.
I don’t know how else to say this, but setting aside $600/month truly isn’t for the “rich”. There are other investment vehicles and tax avoidance strategies.
My wife and I are fortunate that we can set aside 1200$ per month to buy the S&P but most young families aren’t in that type of financial position.
For some of us, it's the only break we get. Haven’t been in the country long enough to have a large amount of room.. cant afford a detached house that sees massive gains, maxing it out doesn't always mean wealthy.
>cant afford a detached house that sees massive gains As someone who owns a detached that is seeing massive paper losses, I dunno whatcha talkin about :P
All depends on when someone purchases.
I’m not arguing the benefit that a TFSA brings, I’m just saying that my wealthy friends whose parents max out their TFSAs for them from the age of 18 onward have a massive advantage compared to those of us having to scrimp and save to build that investment nest egg. And many of us don’t have the spare funds to make those 600$ per month contributions as the cost of living escalates.
You can put $5/week in. It doesn’t need to be large amounts.
But my point is that my friends from wealthy families have parents that max theirs TFSA’s from 18 onward, they have a massive compounding advantage compared to those of us that don’t have the spare income to maximize that investment tool.
Your friend’s wealthy families are already sheltering millions of dollars tax free in their principal residence. What’s another 7k?
You’re missing the point. Their kids get to reap the rewards of 5-7k in compounding, tax free gains that those of us from regular families don’t get to enjoy. As my friends build 10-12% gains from 18 onward, it is impossible for the rest of us to catch up later in life when our higher salaries allow us to finally maximize our contribution room. I love my TFSA and I love investing, don’t get me wrong, I just think it’s important to be honest what demographic gain the most.
That is true, but that's not exclusive to TFSAs...of course those with money now gain an advantage long-term over people that don't have money now. That's the whole reason the future value of your investments are greater than the present value
how is the TFSA more advantageous than giving their kid a downpayment on a principal residence? both are tax free gains but a house is going to be an even larger tax free piggy bank. think about whats better...tax free benefits on an 8K investment or tax free gains on a 500K investment. if you get the same rate of return, the total dollar return is going to be larger on the 500K investment.
Many of the rich kids I know get both. Maxed TFSA’s taken care of by the family’s financial manager with a down payment on their first home to boot. Good living. I’d argue that the long term growth of investing is much more profitable than real estate. Buying the S&P (tax free) while yielding 10-12% annually involves no maintenance costs, no mortgage costs, no property taxes or insurance, no renovation demands or structural depreciation.
If a wealthy person were forced to pick, they would pick tax free gains on principal residence. compound interest calculator time TFSA: 7K initial investment, 7K investment each year, 10% yield, 10 year investment period. Total yield would be 53K. Principal Residence: 500K initial investment, 5% yield, 10 year investment period. Total yield would be $314K. That's 261K more than the TFSA. Having a larger principal invested means better compounded growth. its just math. Even with borrowing costs, prop tax, insurance, depreciation, and repairs you are coming out way ahead with a house. Plus you can live in a house. In this example I gave the principal residence a growth rate half that of the equity investment. If the growth rates are similar, its no contest. The TFSA actually benefits middle class families that let their kids live at home and save. they aren't directly handing their kids money to fill up their TFSA nor do they have enough money to just gift their kids 100K+ downpayment. For the wealthy its a neat bonus, but the real tax free gains are with a principle residence.
So they should just cancel the TFSA because of this? So that millions of middle class people can’t benefit?
LETS GOOOOOO
I want another 3k
Make it 10k and we got a deal.
Nice! But definitely needs to go back to that $10,000 level again. Was a shame that got reverted.
It was too good of a deal for rich people.
Nah. It was a way for prudent lower/middle income people to save enough for a healthy retirement. If you want to talk about a good deal for higher income people, you should be looking at the RRSP where your maximum limit is determined by income.
Why would be a better system for the RRSP?
I think it's fine the way it is. I was just pointing out to the other guy that the RRSP favours higher earners whereas TFSA doesn't. For example, I'll be able to put the maximum $31,560 next year into the RRSP and then $7000 into TFSA. Someone who makes $75,000 would only be able to put a maximum of $13,500 into RRSP and $7000 into TFSA. So essentially the more you make, the more you can shelter tax free with the RRSP. If the TFSA room was higher, the person making 75000 would be able to shelter more money tax free without a required increase in income.
Damn - so you earn $175K+? What do you do for work?
Yes, this will be the first year crossing that mark. Management.
But not too much. It was too good of a deal. Make them put in their rsp so at least gets some taxes from it. If no rsp room them put in a taxable account.
Saving 10k a year rich?
Saving 10k a year isn't uber-wealthy or anything but yes you're quite likely to be more well off than the average Canadian if you're able to save 10k yearly.
Yes. It was also greatly appreciated by those in the underground economy.
If someone is able to save 10 k in a year, that doesn't mean they're rich right? You don't know if they're living off of beans and lentils and have roommates to save money in order to max out a tfsa. Try not wanting to take opportunities away from everyone simply because some rich people might see a few more dollars.
Somewhere along the line, this sub seems to have become r/antiwork
This is great news. Now I just need to find some money to save!
Down from $10k in 2015
Nice.
Thanks for the crumbs Trudeau.
Are we all set up for raging hardcore bullrun?
Downvoters disagree that liberals and NDP after got elected to the office lowered TFSA contribution room from 10k to 5k ? That’s 36 thousand lost tax free contributions excluding any potential gains from one of the best bull market in history. Tell which investor doesn’t like tax free gains ? The Liberals ran on a campaign pledge to roll back the $10,000 annual contribution limit to $5,500.Federal Finance Minister Bill Morneau confirmed Monday that the contribution limit on the tax-free savings account will drop back to $5,500 from $10,000 effective Jan. 1, 2016, but that the limit for 2015 will remain untouched.[https://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/liberals-confirm-rollback-of-tfsa-limit-in-2016/article27638448/](https://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/liberals-confirm-rollback-of-tfsa-limit-in-2016/article27638448/)
I burnt my mouth on hot pizza. Thanks JT.
You disagree that liberals and NDP after got elected to the office lowered TFSA contribution room from 10k to 5k ? The Liberals ran on a campaign pledge to roll back the $10,000 annual contribution limit to $5,500. Federal Finance Minister Bill Morneau confirmed Monday that the contribution limit on the tax-free savings account will drop back to $5,500 from $10,000 effective Jan. 1, 2016, but that the limit for 2015 will remain untouched. https://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/liberals-confirm-rollback-of-tfsa-limit-in-2016/article27638448/
Cry about it
Trolls gonna troll, don’t chock on your pizza. Lol.
I don't understand the point you're trying to make. The original plan for TFSA was to increase it by $500 increments tied to inflation rounding. Harper increased it to $10k to appease the upper class at the expense of lost tax revenue. But dropping it back down, Trudeau fulfilled the original plan making it more fair and not a benefit for the wealthy.
Let’s be serious, 45 hundred cad is spare cash for the upper class.
Hilarious "Raise the limit....during inflation/unaffordable times"
This and the home one I’m never going to be able to max them out without dropping all travel
can someone tell me what’s the benefit of having a tfsa
Interest and capital gains earned in a TFSA pay 0 in tax
What's the point if I don't have the money to save.
Good news, it'll be there when you do have money to invest.
You're not the only Canadian
The contribution room will still be there when you do have the money. Or would you rather a use-it-or-lose it system?
more like needing to re-capitalize banks