Are you going to top up your TFSA before the changes? | 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

sp_Feed Topic RSS sp_TopicIcon
Are you going to top up your TFSA before the changes?
October 21, 2015
8:51 am
Save2Retire@55
Member
Members
Forum Posts: 577
Member Since:
January 3, 2013
sp_UserOfflineSmall Offline

I was thinking that I should probably make my 10K contribution for this year ASAP before they cut it back to $5500. Any thoughts? Inputs? Thanks

October 21, 2015
8:57 am
kanaka
Member
Members
Forum Posts: 1232
Member Since:
December 23, 2011
sp_UserOfflineSmall Offline

Here is your answer.....don't sweat it. Not retroactive.

http://www.moneysense.ca/save/.....-trims-it/

The question is, will Trudeau really do it? 67% don't want it changed. What will the new max be 10k, 5.5k, 8k? Write your Liberal MP. Not a good change for retirees.

October 21, 2015
9:52 am
Yatti420
Canada
Member
Members
Forum Posts: 323
Member Since:
July 10, 2011
sp_UserOfflineSmall Offline

I'm playing catch-up but either way they will be breaking out the crowbars to get my TFSA.. I don't plan on giving it up without a fight!

October 21, 2015
2:29 pm
Loonie
Member
Members
Forum Posts: 5415
Member Since:
October 21, 2013
sp_UserOfflineSmall Offline

I think the question is really around 2016 contribution room and going forward.
Trudeau did say clearly in the past that he would repeal the recent increase in contribution room. There is no reason to think he won't do it, as people knew this when they elected him and it was part of his campaign.

He has also said he thought 5000/yr was a good number, but sounded less committed to that exact figure.

No reason to think he would do anything retroactive.

What I am unclear about it what happens if his first budget isn't until 2016? Would he be able to make it retroactive to Jan 1? There have been retroactive budgetary measures in the past, but it would be a bureaucratic nightmare to do this with TFSA - remember what happened when people accidentally overcontributed a few years ago because they didn't realize you couldn't take money out and put it back in the same year? They had to allow it in the end.

I think we have to stay tuned, for now, but no harm in topping up through 2015 as far as I can see. I don't see why anyone wouldn't do that as soon as they have the money to do so.

October 21, 2015
3:10 pm
kanaka
Member
Members
Forum Posts: 1232
Member Since:
December 23, 2011
sp_UserOfflineSmall Offline

What I am saying the "change" would happen likely in 2016. So for 2015 and previous is still intact contribution wise. I pulled funds out last month to re-contribute in 2016 to avoid transfer fees. I would assume those "re-contribute" funds have no impact on the upcoming change.

Another question is.....can we contribute 10k in 2016? Will the cabinet have time to make the change affective in 2016 or 2017?

What will they get to in priority......pot or TFSA?

October 21, 2015
3:17 pm
Loonie
Member
Members
Forum Posts: 5415
Member Since:
October 21, 2013
sp_UserOfflineSmall Offline

Getting back to the question at hand...

TFSA would be a budgetary measure. He can't do much of anything without passing a budget. First, he may have to repeal the bill that prohibited deficit budgeting, if it passed - I lost track of that one. Then he will need to pass his budget. However, it does take time to prepare a budget. There was speculation on the news yesterday that it could be January.

I'm taking bets on how long it will take for him to declare that the books are in much worse shape than the last govt allowed. Every incoming govt does this because every outgoing one tries to make things look as rosy as possible. The only question is HOW MUCH worse. sf-wink

Seriously though, it's best to wait and see for 2016. If January rolls around and there has not been a budget, then I see no reason not to go ahead. I'm confident it will be in the first budget, because it will save the govt a lot of money. It's possible they would make some provision for people who had contributed in early January before a budget had been presented, such as allowing the overcontribution to be put forward, as a 2017 contribution.

October 21, 2015
3:28 pm
kanaka
Member
Members
Forum Posts: 1232
Member Since:
December 23, 2011
sp_UserOfflineSmall Offline

Loonie said

Getting back to the question at hand...

TFSA would be a budgetary measure. He can't do much of anything without passing a budget. First, he may have to repeal the bill that prohibited deficit budgeting, if it passed - I lost track of that one. Then he will need to pass his budget. However, it does take time to prepare a budget. There was speculation on the news yesterday that it could be January.

I'm taking bets on how long it will take for him to declare that the books are in much worse shape than the last govt allowed. Every incoming govt does this because every outgoing one tries to make things look as rosy as possible. The only question is HOW MUCH worse. sf-wink

Ha Ha...I just had to say it!!

I agree "how much worse". They will want us to be glad they were voted in to clean up the mess. Same story, different year.

October 21, 2015
7:21 pm
Bill
Member
Members
Forum Posts: 1415
Member Since:
September 11, 2013
sp_UserOfflineSmall Offline

No point speculating, they can do anything in a budget - e.g. maybe they'll say there's a total limit of $10K for 2015 & 2016 combined, who knows? I expect the government will give some clear direction as to the limits prior to Jan 1/16 because they know many folks top up at the first opportunity. Best thing to do is ignore proposals, promises, etc, and adhere to the limit in effect according to the tax law on the day you contribute, unless the government advises otherwise. The investment industry wants as much of your money as possible so until there's clarity of course it will encourage folks to continue to put in $10K, the current legal limit.

October 21, 2015
7:24 pm
Rick
Member
Members
Forum Posts: 824
Member Since:
February 17, 2013
sp_UserOfflineSmall Offline

If you remember back when Harper increased the limit to 10K, the rule was "retroactive to Jan 1, 2015". When it was first announced, CRA recognized the pending amendment before it actually became law. I, for one, jumped into the deep end and topped ours up as soon as it was announced. The question is, will he announce it before the budget?, in which case CRA will probably recognize the pending rules to be effective as soon as it is announced, just like the increase. The tricky part will be if he announces after Jan 1 and a lot of people have already contributed the current 10K max. Personally, 10K was a bit much of a contribution for two to handle every year. Do-able but difficult. I would be ecstatic if he compromised and made it 7500.

October 21, 2015
7:37 pm
kanaka
Member
Members
Forum Posts: 1232
Member Since:
December 23, 2011
sp_UserOfflineSmall Offline

Rick said

If you remember back when Harper increased the limit to 10K, the rule was "retroactive to Jan 1, 2015". When it was first announced, CRA recognized the pending amendment before it actually became law. I, for one, jumped into the deep end and topped ours up as soon as it was announced. The question is, will he announce it before the budget?, in which case CRA will probably recognize the pending rules to be effective as soon as it is announced, just like the increase. The tricky part will be if he announces after Jan 1 and a lot of people have already contributed the current 10K max. Personally, 10K was a bit much of a contribution for two to handle every year. Do-able but difficult. I would be ecstatic if he compromised and made it 7500.

Rick. For retirees that want to wind down RRSP/RRIF it is perfect!! So 10k per year ....part from RRSP and part from forced savings is attainable. And you don't want to do too much more than 8k-10k RRSP withdrawal anyways.

No doubt he will make his "mark" but 7.5 or 8k would not be more livable...but 10k would be a good consideration for over 65 as I am not sure how the income tax deduction will help us.

October 21, 2015
7:42 pm
Norman1
Member
Members
Forum Posts: 2492
Member Since:
April 6, 2013
sp_UserOfflineSmall Offline

kanaka said

What I am saying the "change" would happen likely in 2016. So for 2015 and previous is still intact contribution wise. I pulled funds out last month to re-contribute in 2016 to avoid transfer fees. I would assume those "re-contribute" funds have no impact on the upcoming change.

Another question is.....can we contribute 10k in 2016? Will the cabinet have time to make the change affective in 2016 or 2017?

What will they get to in priority......pot or TFSA?

I don't think there is a rush. I think the new Liberal government could amend the Income Tax Act anytime in 2016 so that the TFSA contribution room becomes the following:

2015 = $10,000
2016 = $10,000
2017 = $1,000
2018 = $5,500
2019 = $5,500
....

October 21, 2015
7:45 pm
kanaka
Member
Members
Forum Posts: 1232
Member Since:
December 23, 2011
sp_UserOfflineSmall Offline

Hi, I think the government is pretty reasonable and will consider that a lot of us have made financial plans using TFSA and hopefully your 2017 projection wont happen. sf-smile

October 21, 2015
8:50 pm
Loonie
Member
Members
Forum Posts: 5415
Member Since:
October 21, 2013
sp_UserOfflineSmall Offline

I am amazed at the amount of speculation here about something we can't possibly know, namely the details of the pull-back on contribution limits.

It won't happen with 2015 limits.
It might happen with 2016 limits.
It will almost certainly happen with 2017 limits.
It could take many forms, including reintroducing inflation adjustments, which were removed this year.
That's what we know.

For those who may feel hard-done-by in terms of reduced contribution limits, don't forget that Trudeau also promised to reduced income taxes for the "middle class", whatever he considers that to be. He said it would be "up to" $670 per person, which is certainly more than you would get as return on the extra $5000 TFSA contribution by any reasonable standard.http://www.theglobeandmail.com.....e26893861/
Yes, it's cumulative, but everything changes from one year or administration to the next anyway.

So, top up your contributions through 2015, sit tight, and all shall be revealed in due course. I suspect that even the people who are developing this policy don't yet know exactly what it will look like.

To be extra-cautious, the might not be the best year to do the December manoeuvre, where you remove it form one institution before the end of the year and deposit it in another in January in order to avoid transfer fees. There is a very slight possibility that recontributions could be adversely affected. However, I personally don't think that will be an issue as it would be a headache for the govt and expensive to police, not to mention very unpopular.

October 24, 2015
12:38 pm
xxxx
Member
Banned
Forum Posts: 338
Member Since:
June 29, 2013
sp_UserOfflineSmall Offline

I would think the Liberal govt will have to trim back the TFSA contribution fairly quickly - for 2016, because it is embarking on deficit spending - so they do need to not give up tax revenues where possible. Tax cuts for the middle class and tax increases for the over $200K will also likely be implemented fairly quickly for 2016.
It will be interesting to see how quickly they announce the 2016 TFSA limit once they are sworn in and take over in November.

Please write your comments in the forum.