New Government Savings Program. - Calgarypuck Forums - The Unofficial Calgary Flames Fan Community

fredr123 · 02-26-2008, 04:00 PM

http://www.cbc.ca/news/background/bu...gs-account.pdf

Tax Free Savings Account (TSFA) announced today by the Conservative government. "An RRSP is intended primarily for retirement. A TFSA is like an RRSP for everything else in your life."

4X4 · 02-26-2008, 04:05 PM

So if I open one on the day they're introduced, I can wait 20 years and then suddenly deposit $100,000?

albertGQ · 02-26-2008, 04:08 PM

Wouldn't it have been less confusing if they just raised the personal exemption amount by another $5,000? Or am I totally interpreting this wrong?

Reaper · 02-26-2008, 04:08 PM

Quote:

Originally Posted by 4X4

So if I open one on the day they're introduced, I can wait 20 years and then suddenly deposit $100,000?

The pdf says that you can save $5,000 per year so I would imagine that amount is based on deposits in a calendar year. However, it also says you can carry unused amounts forward to future years. It sounds like a nice way for the government to accomodate money laundering to me.

4X4 · 02-26-2008, 04:10 PM

Quote:

Originally Posted by Reaper

The pdf says that you can save $5,000 per year so I would imagine that amount is based on deposits in a calendar year.

But it also says that unused contribution space is carried over. Also, after withdrawing, you're allowed to re-contribute the amount withdrawn, as well as the max for that year.

ah123 · 02-26-2008, 04:10 PM

Quote:

Originally Posted by albertGQ

Wouldn't it have been less confusing if they just raised the personal exemption amount by another $5,000? Or am I totally interpreting this wrong?

The way I read it is that you can invest $5000 and by designating the account as a TFSA, you don't have to pay any taxes on the gains/interest earned (so I can buy $5000 worth of GICs or mutual funds and the money I made is not taxable)

fredr123 · 02-26-2008, 04:12 PM

Quote:

Originally Posted by Reaper

The pdf says that you can save $5,000 per year so I would imagine that amount is based on deposits in a calendar year. However, it also says you can carry unused amounts forward to future years. It sounds like a nice way for the government to accomodate money laundering to me.

Interestingly, it says you can bank your deposit limit each year and rollover whatever you don't use for future years. That was nice.

I think the idea is to give Canadians an incentive to save more dough. Simply raising the personal exemption by $5,000 wouldn't necessarily result in people socking away the difference.

I'm eagerly anticipating MoneyGuy and slava's takes on this and other announcements today.

albertGQ · 02-26-2008, 04:13 PM

Okay, I read the PDF file. It makes sense. Contributions to this TFSA is not tax deductable, but the investment grows tax-free and withdraws are not added to your taxable income.

photon · 02-26-2008, 04:14 PM

I would have preferred to somehow have capital gains not hit when taking money from one investment and putting it into another outside of an RRSP.. this lets me do that, but $5000 a year isn't very much.

albertGQ · 02-26-2008, 04:16 PM

Quote:

Originally Posted by photon

$5000 a year isn't very much.

It is to me! I want to max my annual RSP contribution limit and my TFSA. That is going to be difficult year in and year out...........at least for me it is.

Isbrant · 02-26-2008, 04:19 PM

Would you be able to get a loan to put into your TFSA and get a tax deduction for the carrying charges on the loan?

Bring_Back_Shantz · 02-26-2008, 04:19 PM

So basically it's a way to save taxes on capital gains is that correct?

The way I understand it is it is kind of the opposite of an RRSP.
With an RRSP the money you put in isn't taxed, but when you take it out it is.

With this it looks like you're putting in after tax dollars, but whatever you earn is all yours and isn't taxed when you take it out.
That's pretty cool I guess.

photon · 02-26-2008, 04:33 PM

Quote:

Originally Posted by albertGQ

It is to me! I want to max my annual RSP contribution limit and my TFSA. That is going to be difficult year in and year out...........at least for me it is.

In the long term I guess it is ok, but I'm just thinking from current investments point of view, at only $5000 a year it's going to take a while to get everything in there.

They should make in retroatctive so that you start out with the space as if it had started long ago.. If I could roll $85,000 into this right now I'd be pumped.

You Need a Thneed · 02-26-2008, 04:37 PM

So, if my wife doesn't have any income (she takes care of the baby), I should do all of our savings together in a TFSA in her name?

photon · 02-26-2008, 04:39 PM

I don't think it matters since there's no immediate tax implications from this, it's after-tax income right?

photon · 02-26-2008, 04:39 PM

Says starting in 2009

Claeren · 02-26-2008, 04:53 PM

If it does what it is supposed to do, and improve the national average savings rate, that is great. It will be interesting to see if the masses/middle class and below use it, or just the people who were already saving...

But if it works - combined with ongoing surpluses, tax reduction and debt reduction (absolute and as a percentage of GDP) - we are very much the envy of the first world, no? Along with a now healthy pension fund and a relatively (comparative terms) robust young population and we are well positioned for the next 30 years at least.

Claeren.

Flames89 · 02-26-2008, 04:57 PM

If there ever was a venue to put some more "high-risk" assets in ...

No Capital Gains?!

Sounds like a great idea to spur savings from the population ...

FLAMESRULE · 02-27-2008, 07:59 AM

I agree, this is a great idea. I read in teh globe yesterday that credit card debt was up big time in the US. Implementing a plan to help Canadians save and make some decent gains without capital gains is a good thing.

Now they just need to work on getting double taxed through capital gains when you sell a recreational/second property.

Slava · 02-27-2008, 08:59 AM

The details of the account are severly lacking at this point. I don't see a reason that you couldn't borrow and invest into the account...but the deductions are going to be very small. Based on prime today you could write off a whopping $287/year! (For your initial $5k)

I do like the idea. I understand why they didn't, but I do wish it was more than $5,000 per year. If they went higher it would virtually replace the RSP in some respects.

As far as what kind of investment to hold here there are really two trains of thought. it would be a great account to take some big risks if they pay off because the amounts can be withdrawn without tax on any of it. The other prudent thing to do though could be to invest in interest bearing investments here....capital gains are already tax favourable.

Basically what this account amounts to is a total of $235k for every Canadian to invest with tax sheltered growth in their adult life. (Assuming that this goes from ages 18-65...though it could go to age 71 or beyond). There are some huge limitations to that amount, but the idea is interesting.

(I would hate to be a discount brokerage when this bad boy hits the market!!! Enjoy all of the accounts for people to trade $5k at a time though!)