2017 TFSA contribution limit | Tax Free Savings Accounts | Discussion forum

Please consider registering
guest

sp_LogInOut Log In sp_Registration Register

Register | Lost password?
Advanced Search

— Forum Scope —




— Match —





— Forum Options —





Minimum search word length is 3 characters - maximum search word length is 84 characters

No permission to create posts
sp_Feed Topic RSS sp_TopicIcon
2017 TFSA contribution limit
December 17, 2016
11:08 am
Rick
Member
Members
Forum Posts: 972
Member Since:
February 17, 2013
sp_UserOfflineSmall Offline

Not that we couldn't figure it out for ourselves, but CRA has officially announced the TFSA contribution limit for 2017 is set at $5500.00. Bout time.
http://www.cra-arc.gc.ca/tx/rg.....s-eng.html

Interesting article:
http://business.financialpost......ank-for-it

December 17, 2016
1:29 pm
Winnie
Ontario
Member
Members
Forum Posts: 286
Member Since:
December 7, 2011
sp_UserOfflineSmall Offline

But, for everyday common "Individuals and families" CRA did not posted yet that "great" TFSA contribution limit for 2017:

http://www.cra-arc.gc.ca/tx/nd.....n-eng.html

December 17, 2016
1:41 pm
Rick
Member
Members
Forum Posts: 972
Member Since:
February 17, 2013
sp_UserOfflineSmall Offline

Winnie said

But, for everyday common "Individuals and families" CRA did not posted yet that "great" TFSA contribution limit for 2017:

http://www.cra-arc.gc.ca/tx/nd.....n-eng.html

Yes...the first link in my post has the "official" limit at the bottom of the page. Your link is from the "How to calculate your contribution room" page. I imagine that will eventually be updated as well. Hopefully before 2017.

February 10, 2017
11:21 am
Saver-Mom
Member
Members
Forum Posts: 280
Member Since:
December 12, 2015
sp_UserOfflineSmall Offline

Is it legal to lend money to a family member for them to deposit into their TFSA and then split the interest generated when they close the account and return the principal to you?

February 10, 2017
12:30 pm
le150
Member
Members
Forum Posts: 11
Member Since:
November 22, 2013
sp_UserOfflineSmall Offline

Absolutely

February 10, 2017
2:46 pm
Top It Up
Member
Members (temp break)
Forum Posts: 1363
Member Since:
December 17, 2016
sp_UserOfflineSmall Offline

Saver-Mom said
Is it legal to lend money to a family member for them to deposit into their TFSA and then split the interest generated when they close the account and return the principal to you?  

It's a tax-free investment . what you do with the money doesn't concern the government . their only concern is how much you deposit and how much you withdraw, each year.

February 10, 2017
6:10 pm
SavingIsGood
Member
Banned
Forum Posts: 215
Member Since:
February 18, 2016
sp_UserOfflineSmall Offline

This is your money. You can do with them whatever you want. If you have 5 kids, all over 18, Canadian residents (not even citizens), open 5 TFSA and dump there $27,500. As long as kids do not complain and do not sue you, interest is yours. Or you can split with them.
WHO is going to know? Pretty-face Justin??? Ha, ha, good one...

February 10, 2017
7:43 pm
Bill
Member
Members
Forum Posts: 1980
Member Since:
September 11, 2013
sp_UserOfflineSmall Offline

If you put your money into someone else's TFSA that's a gift to them, it's a deposit made by them, and it (and any money it earns) is now legally theirs. And of course, two people can agree to do whatever they like with that money when it comes out, so if they want to give you some of their interest that's fine. TFSAs have no tax consequences, assuming no-one puts more into their TFSA than they're limited to.

February 11, 2017
8:58 am
Norman1
Member
Members
Forum Posts: 3398
Member Since:
April 6, 2013
sp_UserOfflineSmall Offline

Technically, one cannot directly contribute money into someone else's TFSA.

Someone had asked CRA about that. CRA answered that doing so would contravene this condition of a TFSA in Income Tax Act 146.2(2)(c) and the arrangement would cease to be a TFSA:

(c) the arrangement prohibits anyone other than the holder from making contributions under the arrangement;

Not a big deal. One just needs to gift or lend the money to the family member first to contribute to his/her TFSA.sf-laugh

If the family member is a spouse, attribution rules can apply. I put the details in new topic Spousal attribution and TFSA contributions.

February 11, 2017
9:43 am
Top It Up
Member
Members (temp break)
Forum Posts: 1363
Member Since:
December 17, 2016
sp_UserOfflineSmall Offline

Norman1 said

Technically, one cannot directly contribute money into someone else's TFSA. 

Never one to break the rules, BUT realistically, how the hell would the CRA ever chase that "breach" of the rules down?

February 11, 2017
11:14 am
Norman1
Member
Members
Forum Posts: 3398
Member Since:
April 6, 2013
sp_UserOfflineSmall Offline

Norman1 said

Technically, one cannot directly contribute money into someone else's TFSA. 

Top It Up said

Never one to break the rules, BUT realistically, how the hell would the CRA ever chase that "breach" of the rules down?

CRA probably doesn't need to. The financial institution, as trustee of the TFSA, would enforce that condition of TFSA trust.

The restriction seems to be about who can contribute to the TFSA and not about the source of the money the TFSA holder is contributing.

February 11, 2017
11:22 am
Top It Up
Member
Members (temp break)
Forum Posts: 1363
Member Since:
December 17, 2016
sp_UserOfflineSmall Offline

Since you can hold a TFSA account at multiple institutions, it's the CRA keeping the aggregate tally, not the institutions.

Isn't it obvious, that you wouldn't be able to transfer from one individual's account to a different individual's TFSA?

This discussion seems to be trying to make something out of where there is nothing.

As the saying goes ... move along, nothing to see here.

February 11, 2017
12:34 pm
le150
Member
Members
Forum Posts: 11
Member Since:
November 22, 2013
sp_UserOfflineSmall Offline
February 11, 2017
2:40 pm
Saver-Mom
Member
Members
Forum Posts: 280
Member Since:
December 12, 2015
sp_UserOfflineSmall Offline

Interesting article.this is exactly what I meant.I thought lending rather than gifting would get around the attribution rules but I see in the comments section many people would mistrust their children's use of the funds. One of the best comments is by AndrewWoburn: "As a former tax advisor, based on what information is given here, I believe Ann is home free as long as she has no legally enforceable right to the income from the children’s TFSA. If she gives them money freely and they choose to give her money back of their own free will, that is a private matter.
However the moment they have to pay her, that is a different animal and would certainly invite an attack by CRA. Remember the first principle of effective tax enforcement is to hang some hapless miscreant high in the village square to discourage a million others. Ann doesn’t want to become that target.
Anyone who would enter into such an arrangement without an enforceable agreement is a dreamer. Apart from anything else already mentioned in previous comments, the children’s creditors could have rights to their TFSA accounts. To the best of my knowledge, only third party lenders can take security over TFSA assets so Ann cannot protect “her” assets.
In my view, the financial and personal relationship risks totally outweigh the somewhat marginal benefits of this scheme. There are cleaner ways to defer income for retirement such as borrowing to buy high quality REITS and deducting current interest costs."

February 11, 2017
4:37 pm
Norman1
Member
Members
Forum Posts: 3398
Member Since:
April 6, 2013
sp_UserOfflineSmall Offline

There are no income attribution rules to worry about once the children reach 18 years old. The children have TFSA's that are only available to those 18 years or older. So, they are at least 18 years old.

If Ann enters into a legal agreement with the children for the return of the principal and splitting the gains, then it could be seen as a loan or a profit sharing agreement.

Loan interest, regardless of how the borrower gets the money to pay the interest, is for sure taxable to the recipient. Same with the share of the profit from an endeavor.

February 11, 2017
4:53 pm
Saver-Mom
Member
Members
Forum Posts: 280
Member Since:
December 12, 2015
sp_UserOfflineSmall Offline

Good point. Clearly a bad idea for several reasons.

February 11, 2017
6:20 pm
Norman1
Member
Members
Forum Posts: 3398
Member Since:
April 6, 2013
sp_UserOfflineSmall Offline

It can work if the children are of good character.

Have legal agreement for an interest-free loan to protect the principal. Children would be grateful for the extra tax-free money and the additional TFSA room from the gains on the additional invested capital. They are grateful enough to gift back part of the gains.

Gifts are tax-free to the parent. Everyone ends up happy! sf-cool

The arrangement is similar to a "granny mortgage" I read about many years ago. Grandparents provide mortgage financing to children or grandchildren. Legally registered as an interest free mortgage with the usual monthly repayments of principal. Each year, the grateful children gift back to the grandparents the equivalent of a year's interest on a five-year GIC.

Children happy they are paying the lower five-year GIC rate instead of the five-year mortgage rate. Grandparents happy they are getting five-year GIC rate tax free!

February 12, 2017
6:56 am
Bill
Member
Members
Forum Posts: 1980
Member Since:
September 11, 2013
sp_UserOfflineSmall Offline

Norman1, you are painting a very nice picture of family and inter-generational financial relationships, and referring to all these "grateful" young folks. True, but things often happen or change, e.g. new spouses or partners enter the picture, or another sibling being upset they're not getting a similar advantage, and so on. Not to be cynical, but tread very, very carefully in this stuff would be my advice.

And on "granny mortgage", wouldn't CRA take the view the legal agreement is a sham (who gets interest-free mortgages?), the annual "gift" (which happens to approximate what a 5-year GIC pays) is actually interest income of the grandparents, in your example? (Again, how CRA would ever find out is another topic.)

February 12, 2017
5:27 pm
3oakwest
Ontario, Canada
Member
Members
Forum Posts: 151
Member Since:
April 7, 2016
sp_UserOfflineSmall Offline

I thought the Liberals said they would raise the limit by the cost of living increase, or something like that, each year when they dropped the yearly limit from $10000.00 to $5500.00

February 12, 2017
6:45 pm
Norman1
Member
Members
Forum Posts: 3398
Member Since:
April 6, 2013
sp_UserOfflineSmall Offline

threeoakwest said
I thought the Liberals said they would raise the limit by the cost of living increase, or something like that, each year when they dropped the yearly limit from $10000.00 to $5500.00  

The Liberals restored the original limit and the original indexing (that's in increments of $500).

This is the exact calculation in the Income Tax Act, from my previous post:

9. (1) The definition “TFSA dollar limit” in subsection 207.01(1) of the Act is amended by striking out “and” at the end of paragraph (b) and by replacing paragraph (c) with the following:

(c) for 2015, $10,000; and

(d) for each year after 2015, the amount (rounded to the nearest multiple of $500, or if that amount is equidistant from two such consecutive multiples, to the higher multiple) that is equal to $5,000 adjusted for each year after 2009 in the manner set out in section 117.1.

No permission to create posts

Please write your comments in the forum.