Quote:
Originally Posted by GGG
This is bad policy. This policy will affect 0 investments and is really just a future tax cut that will also increase OAS and GIS costs. It has no cost for the government today and imposes future costs on government. You notice this isn’t being proposed on RRSPs where the tax impact is felt today.
Most people are running an internationally diverse portfolio with varying amounts of home country bias. So this just encourages investors to split their American investments to their RRSP and their Canadian investments to their TFSA. This is already the most tax efficient method for investment as the TFSA as the TFSA is taxed on American dividends while the RRSP is not.
So this is a veiled way to increase tax breaks for Me while wrapping it in the Canadian Flag.
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I guess I question the ability of most Canadians to actively manage their portfolios and the split between TFSA and RRSP investments, but you could be correct that it may not actually encourage further investment. On the surface, I think an additional $5k invested is good for the individual (if they can afford it) - I also think that it might encourage people to invest more than they were originally if this top up did not exist, but I don't think that can be proven until we see something like this in practice.