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TFSA 2015-2016 update
December 7, 2015
9:02 pm
kanaka
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December 7, 2015
10:07 pm
Norman1
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This is from the Notice of Ways and Means Motion that was tabled yesterday (December 7) to amend the Income Tax Act:

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.

December 8, 2015
9:55 am
james1900
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For those people like me, while paying a mortgage and raising kids, I really do not have $10,000 laying around to invest in TFSA.

December 8, 2015
10:26 am
kanaka
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james1900 said

For those people like me, while paying a mortgage and raising kids, I really do not have $10,000 laying around to invest in TFSA.

Eventually one day, you will get there. Hopefully you will see an income tax reduction.

For some seniors Trudeau's promises are a huge loss times 2.
1. 4500 less TFSA.
2. No reduction of income tax

December 8, 2015
11:04 am
AltaRed
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For now. For very low income seniors, JT promised a boost in GIS payments during the election.

We will see if he follows through on that promise in the Spring budget. Given the way the deficit is heading, he may have to break a number of promises. So far, he is spending like a drunken sailor.

December 8, 2015
11:15 am
kanaka
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AltaRed said

For now. For very low income seniors, JT promised a boost in GIS payments during the election.

We will see if he follows through on that promise in the Spring budget. Given the way the deficit is heading, he may have to break a number of promises. So far, he is spending like a drunken sailor.

Lol.....not drunken.......perhaps smoking some BC MJ.

December 8, 2015
3:40 pm
Loonie
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I suspect that, even for "middle class" seniors, which appears to now be defined as people with taxable incomes approx. 45,000 - 90,000, the recent new measures may be approximately a wash over time.
Such individuals gain on the tax rate reduction of 1.5% but lose on the tax-free $4500 cumulative - which they can almost certainly afford to contribute to if a 2-person household and both have this income, as can many single persons.
The closer you are to the lower end of this bracket, the sooner the break even point will come.
Of course, if we should get to a negative interest environment, all will be moot for many seniors. Little to no fixed income returns mean that both TFSA and Income Tax become less and less relevant.

December 11, 2015
11:05 am
Yatti420
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TFSA wise and low income this isn't so much to worry about.. We still have a TFSA program.. That's the best thing we could ask for..

Some say the new "cuts" will be a wash.. That will probably be the case for Justin's middle class..

What about low-income who will no doubt be paying more taxes go forward.. Low income earners are getting shafted with everything coming!

December 11, 2015
3:13 pm
Loonie
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There is no talk yet, as far as I know, about making the lower income people pay more.
In fact, I heard in the media that Libs want to increase GIS for seniors.

However, there is more than once way to skin a cat. CPI does not reflect the priority expenditures of low income persons, so any income pinned to CPI will not keep up with real costs. Last night's TV news suggested a 4.5% increase in the cost of food, which we all must buy and is a disproportionate burden on low income people, especially where minimum wage does not keep pace. This was blamed on the faltering Cdn$ (which in turn is related to our reliance on oil to run our economy and failure to diversify).

In addition, I fully expect the next budget, as well as provincial and municipal budgets, will do some tweaking so that, while the official tax rate may not go up for the lower income groups per se, there will be other costs that everyone must pay, regardless of income. A simple graduated tax would be more transparent than all the finagling. Politicians often promise a simplified tax system but in the end they never deliver it because they prefer to do the tweaking, hoping we won't notice effective increases.

I thought it was a problem that none of the political parties were talking about lower income earners in the last campaign. It was as if they'd vanished or been disenfranchised. All the parties were targeting the "middle class".

December 11, 2015
5:04 pm
kanaka
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Loonie said

There is no talk yet, as far as I know, about making the lower income people pay more.
In fact, I heard in the media that Libs want to increase GIS for seniors.

However, there is more than once way to skin a cat. CPI does not reflect the priority expenditures of low income persons, so any income pinned to CPI will not keep up with real costs. Last night's TV news suggested a 4.5% increase in the cost of food, which we all must buy and is a disproportionate burden on low income people, especially where minimum wage does not keep pace. This was blamed on the faltering Cdn$ (which in turn is related to our reliance on oil to run our economy and failure to diversify).

In addition, I fully expect the next budget, as well as provincial and municipal budgets, will do some tweaking so that, while the official tax rate may not go up for the lower income groups per se, there will be other costs that everyone must pay, regardless of income. A simple graduated tax would be more transparent than all the finagling. Politicians often promise a simplified tax system but in the end they never deliver it because they prefer to do the tweaking, hoping we won't notice effective increases.

I thought it was a problem that none of the political parties were talking about lower income earners in the last campaign. It was as if they'd vanished or been disenfranchised. All the parties were targeting the "middle class".

Ah.....that would be buying votes in volume!

December 11, 2015
7:47 pm
Loonie
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But they didn't do that. Voter turnout, statistically, tends to be lower among low income earners, so I guess the politicians thought it would be more productive to go after the vast "middle class".

December 12, 2015
6:23 am
Bill
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Liberals always target the centre of the spectrum, so their "middle class" focus is consistent. With 2 adult income earners being pretty much universal now among households, it's not hard to get up to $60K or so and into what Justin defines as middle class. And with a 93% or so employment rate in Canada I get the middle class focus.

December 12, 2015
7:44 am
Yatti420
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I'm counting on the Liberals to forget the youth who elected them... If your in Ontario Kathleen Wynne is next to deal with..

December 12, 2015
1:05 pm
Loonie
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It was all of the parties, not just the Liberals, who focused on the "middle class" during the election.

I'm not sure that 2 people earning total 60K is what Trudeau means by middle class though. His recent tax reduction only affects individuals with taxable income over 45K, so that would be 90K altogether if both earning the same.

December 12, 2015
1:42 pm
kanaka
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Oddly enough, didn't anyone notice!!!???

While all the politicians were making their "in general" promises they often lacked definition.

So in the case of the Liberals what was the definition of middle class?

Often the promise or semi commitment doesn't turn out to how each individual sees it........but a definition beforehand would be more concrete and possibly eliminate a possible vote. Why do we vote based on a broad scoped promise?

December 12, 2015
10:16 pm
Loonie
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I noticed. None of them defined it. I suspect the idea was that most people like to think of themselves as "middle class" and therefore would identify with the term and think the promises applied to them.
I know people in the top 5% who think of themselves as "middle" and hard-done-by, no matter what they're paying.

In a sense, Trudeau did define at least the upper end. He essentially named 200,000 as the cap, above which there would be a tax increase.

December 17, 2015
4:01 pm
JustMe
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So, finally, what is the deal?

Can we contribute 10K for 2016 of of Jan 1 or not??????

December 17, 2015
4:24 pm
Bill
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The deal is as the Dec 7 posts above indicate, the 2016 TFSA limit is back to $5500. 2015 stays at $10000.

December 18, 2015
7:10 am
JustMe
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Right, but it is not valid until budget is passed... Last year they proposed 10K and smart people did put 10K into TFSA BEFORE budget is passed.
If you read latest Zoomer magazine they suggest to put 10K as it is still current limit.
This TFSA limit is so F. confusing, I hate the whole system...

December 18, 2015
10:27 am
Bill
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JustMe, it's actually pretty straightforward, CRA does the same pretty much every time: it administers the tax law's effective dates based on proposed legislation, even before Royal Assent. Here's a link stating that:
http://www.cra-arc.gc.ca/gncy/.....4-eng.html

Liberals have a healthy majority, Trudeau allows no dissent, so you can consider the new 2016 limit the law. But there are those who sow confusion, like Zoomer mag or "investment professionals", who for their reasons don't like the new reduced limits and maybe even think they can fight them, so up to you who you want to listen to.

Similarly, putting in $10K last year prior to Royal Assent made sense as Harper's majority was sure to pass it.

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