April 21 Federal Budget | Page 4 | Tax Free Savings Accounts | Discussion forum

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April 21 Federal Budget
April 24, 2015
8:41 am
Ed
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In a tweet yesterday from @ScotiabankHelps, followers were informed that "the CRA is immediately administering the TFSA measure on the basis of the proposed $10K contribution limit."

April 24, 2015
12:47 pm
kanaka
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I think this link should make most, confident to invest the additional $4500.

http://news.gc.ca/web/article-.....medium=eml

April 24, 2015
7:34 pm
Loonie
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kanaka said

I think this link should make most confident to invest the additional $4500.

http://news.gc.ca/web/article-.....medium=eml

Thanks for the info, kanaka. At least they are assuming the responsibility for the directive.
I note that the decision to pre-empt the parliamentary process was made by cabinet ministers in an election year.

http://www.theglobeandmail.com.....e24101537/

April 24, 2015
8:23 pm
Norman1
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They are not assuming any responsibility at all. There is also no preemption either.

CRA has traditionally administered proposed tax system changes when they are proposed in a budget and not waited until the actual bill is passed by Parliament months later. That is not new.

The proposed TFSA limit increase is proposed to be effective January 1, 2015 (of this year). Even overcontributions, up to $4,500, made before the budget would be okayed upon the passing of the legislation.

Now, one has always been free to overcontribute to a TFSA. I don't think financial institutions can stop overcontributions. They don't know what one's remaining TFSA contribution limit is. To keep people within their limits, there's a 1% per month penalty on TFSA overcontributions that CRA will levy.

It seems that all CRA is doing is temporarily not enforcing the 1% per month penalty.

There's still a bit of risk. The Advisor.ca article The Family Tax Cut could disappear gives some background and describes a rare instance of a proposed tax change that did not end up passing in Parliament:

...

Still, it’s rare for a provisionally implemented tax change not to be passed. In 1979, then-prime minister Joe Clark raised the gas tax. As soon as the tax was announced, pump prices rose. Clark’s minority government was defeated four days later—and the law hadn’t passed. The tax rate reverted to its pre-budget level and the government had to reimburse the people who’d already paid it, says another Parliamentary expert. It decided to lower the gas tax for the same length of time that it had been raised.

Under that logic, families who benefitted from family income splitting in 2014 could have to pay back their tax savings, says the expert. CRA didn’t confirm whether that would be the case.

Until there’s a law to back it up, family income splitting exists in a grey zone. In fact, CRA is delaying tax reassessments for anyone who neglected to apply income splitting to their 2014 return.
....

The amount at risk is the 1% per month overcontribution penalty on $4,500 for the nine months of April to December. That's 9 x 1% x $4,500 = $405.

April 25, 2015
6:00 am
Bill
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Loonie, you say that cabinet ministers have pre-empted the parliamentary process. Wrong. As the Globe article indicates, this "view appears to be on solid procedural ground, according to the House of Commons rule book. It notes that it is “the long-standing practice of Canadian governments to put tax-measures into effect” as soon as the notice is tabled, “even though it may be months, if not years, before the implementing legislation is actually passed by Parliament.”" Just because many Canadians or some politicians don't know that this is usual procedure, has been forever, doesn't make it true.

April 25, 2015
12:51 pm
Loonie
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Bill said

Loonie, you say that cabinet ministers have pre-empted the parliamentary process. Wrong. As the Globe article indicates, this "view appears to be on solid procedural ground, according to the House of Commons rule book. It notes that it is “the long-standing practice of Canadian governments to put tax-measures into effect” as soon as the notice is tabled, “even though it may be months, if not years, before the implementing legislation is actually passed by Parliament.”" Just because many Canadians or some politicians don't know that this is usual procedure, has been forever, doesn't make it true.

Just because it's the usual procedure, this doesn't make it right.

Obviously not everyone agrees that this is a valid procedure, no matter how often it may have been done or how customary it is. It's not rocket science to conclude that if a bill has not been passed, it is not yet the law. And this is not a partisan issue. It would be true no matter who was in power.

Perhaps it's time the procedure book was revised, although this is unlikely because this procedure will always favour the party in power, by definition - which is probably how it got started. It would take a Supreme Court ruling to do anything about it. Appealing to the Speaker is unlikely to bring results.

So, I will revise my stance. The cabinet ministers, in cooperation with the procedure book, have, or appear to have (in the case of the latter) pre-empted the parliamentary process.

I don't think anyone will ever lose 1% / month over this, but I will wait until the budget is passed.
I still have a soft spot for the democratic process.

April 27, 2015
8:54 am
kanaka
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Based on this.....I would be confident to top up.... http://www.cra-arc.gc.ca/tx/rg.....s-eng.html

If there are any ramifications there after......it may affect your future contribution limits......but no pentalties.

April 27, 2015
5:24 pm
JustMe
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The is an asterisk: *The proposed measure increasing this limit is subject to parliamentary approval.
If you are so desperate to get those extra $75 tax free - go ahead. I still prefer to have peaceful sleep and not to think will I have to withdraw, fill up the forms, fight CRA, etc. But, different folks different strokes.

April 27, 2015
7:50 pm
Bill
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JustMe, I agree completely, $75 is not worth losing peaceful sleep over (I've got a long list of worries before that one). But note kanaka's April 24 comment above with the link to the CRA News Release. In it CRA directs that "Canadians can immediately start contributing to their TFSA up to the proposed $10,000 annual contribution limit" so you will not have to "fight CRA" in the extremely unlikely event this does not receive Royal Assent. The purpose of the News Release was to provide CRA's clarification and direction to Canadians.

April 27, 2015
8:03 pm
kanaka
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Disclaimer: I am NOT desperate!!!!!!

I just find the whole process of a real confirmed date lacking, of when we can do a deposit. The postings on the government websites still have "reason of doubt to proceed" clauses.

April 28, 2015
6:59 am
Ed
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I have complete faith in our parliamentary system and do not doubt that our government will do the right thing for all Canadians in due course. So, I've completed my current yearly maximum contribution ($10,000.00) and will continue to sleep soundly knowing that all those savings are being put to good use by our countries trustworthy banks.

April 28, 2015
5:15 pm
JustMe
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I like kanaka's disclaimer!

I decided to top up my tfsa. Still at Peoples Trust until I decide otherwise.
But for some reason their response is sooo sloooow. I send them a note to link account and no response at all. I personally do not like that one way communication. ALL people should have mandatory military service and learn that feedback is very important. Whatever... It is JustMe...

April 28, 2015
8:59 pm
Yatti420
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I don't know why people are in a tizzy. It's not like the budget won't pass. The conservatives have a majority.. It would take something catastrophic to reverse the changes coming.

I thought the increase would be for 2016.. It's an early birthday present for Canada :)

April 29, 2015
7:39 am
Winnie
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When exactly the budget will pass or receive Royal Assent? Anybody knows?

If it will happen before July 2015, I will wait another 2 months with my TFSA top-up.

April 29, 2015
7:42 am
Bill
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!00% agree, Yatti420. Note also that the deadline for filing 2014 personal tax returns has been moved back to 3:00 a.m. May 5. Media reports the filing deadline has been extended but is generally not making clear whether paying any additional taxes deadline has also been extended. CRA website makes clear that both returns and any additional taxes re 2014 aren't due until May 5 so we can post-date any taxes owing cheques to that date too. Life just keeps getting better!

April 29, 2015
9:29 am
Norman1
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Winnie said

When exactly the budget will pass or receive Royal Assent? Anybody knows?

If it will happen before July 2015, I will wait another 2 months with my TFSA top-up.

It's still early. It takes a few months. I don't think the bill to implement the budget has been tabled yet. Exact time depends on whether or not there are amendments needed.

To give one an idea of the time involved, this is the timeline for Bill C-31 (Economic Action Plan 2014 Act, No. 1), the first bill to implement some of the changes for Budget 2014:

House of Commons
2014-02-11 Budget tabled
2014-03-28 First reading of Bill C-31
2014-04-08 Second Reading and Referral to Committee
2014-06-12 Third Reading

Senate
2014-06-12 First Reading
2014-06-16 Second Reading
2014-06-18 Third Reading (passed without amendments)

Royal Assent
2014-06-19

April 29, 2015
9:51 am
Norman1
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Bill said
...
CRA website makes clear that both returns and any additional taxes re 2014 aren't due until May 5 so we can post-date any taxes owing cheques to that date too. Life just keeps getting better!

The statement that Bill refers to is at the Important due dates section of CRA page Get ready to file your 2014 income tax return:

Important due dates

May 5

• Income tax returns are due (for all but self-employed workers and their spouses or common-law partners)
• Amounts owing for 2014 are due for all taxpayers who owe

June 15

• Returns due for self-employed workers and their spouses or common-law partners

May 8, 2015
11:08 am
rhvic
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On the Government's web page http://www.cra-arc.gc.ca/tx/nd.....u-eng.html which was updated on May 5, 2015, the note given is:

"Important notice

Under proposed legislation, the annual TFSA dollar limit for 2015 is increasing from $5,500 to $10,000.

The proposed measure increasing this limit is subject to parliamentary approval. Consistent with its standard practice, the CRA is administering this measure on the basis of the Budget announcement. Financial institutions may immediately allow existing and new account holders to contribute up to the proposed maximum."

So the TFSA limit is not yet a sure thing (though given the gov't majority, it is likely to pass).

Caveat emptor!

May 8, 2015
5:03 pm
Bill
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rhvic, this is standard CRA disclaimer that has always appeared for any pending tax legislation CRA is administering, it's just that some folks think it's new and/or that it relates only to current TFSA situation.

May 9, 2015
7:07 pm
Norman1
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Bill C-59, Economic Action Plan 2015 Act, No. 1, was tabled in the House of Commons on Thursday, May 7.

Among the amendments to the Income Tax Act in the bill is the amendment to increase the TFSA annual limit to $10,000.

Full text and current status of the bill are available at LEGISinfo: C-59 An Act to implement certain provisions of the budget tabled in Parliament on April 21, 2015 and other measures.

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