el_richo

For residents of Canada, why is it flawed? Surely it's something everybody should strive to make use of rather than rely on real estate and the government to carry them off into old age.

Why would you prefer they leveraged the RRSP rather than TFSA?

Steve_

My point is that a lot of people aren't going to think about it further than that. Is everyone really watching court testimony blow-by-blow during the summer? I doubt it. This isn't as big of a scandal as the sponsorship scandal, because the taxpayer isn't out of pocket.

Personally I think any Govt. could end up in this position, the sponsorship scandal though took some serious planning to pull off. This is more a case of, someone screwed up and then they tried to cover up the screw up. Governments do that all the time. In the US it would just be lost in the news cycle by now.

Trudeau comes across as a lightweight and the Tories have been pretty effective in pointing that out. The NDP are the NDP and as per usual have said a lot of silly things, so it basically boils down to whether you're angry enough to vote for the NDP to vote out the Tories.

Personally I think it's either going to be a minority Tory govt. or a minority NDP govt., so either way, we're going to have another election in a couple of years time. Can't see the Liberals wanting to prop up the NDP for very long. And the Tories will implode if they get a minority.

Steve_

Tax-deferred savings plans always make more money than post-tax tax sheltered accounts all else being equal, that's just basic arithmetic. You start off with more money thus the multiplier effect is greater, plus you can manipulate the income tax rate you pay on eventual withdrawal, which is usually a lower band than when you were working. Not to mention the huge tax credit you get for contributions.

I did find it rather amusing from the CRA statistics that the main users of the TFSA seem to be people rolling over their RRIFs into it.

For people on low incomes who are already in a low tax band, I suppose the TFSA makes more sense, but people on low incomes don't tend to save much.

el_richo

Given the option of one or the other, I disagree. RRSPs are good for deferring tax and taking advantage of things like financing a maternity leave, income splitting or possibly going back to school, but not for retirement.

Yes you get a tax deduction for making a contribution but that could easily be wiped away by higher taxes in the future. I think you must have a special reason to take your after-tax money and make it taxable again by placing it in an RRSP. When you can get the same taxless growth inside a tax avoidance vehicle like the TFSA, and pay nothing when it comes out the other end, why wouldn’t you?

Having the ability to use them both together as tax efficiently as possible, I'm still confused why you appear to be against the TFSA

JamesM

I look at the situation in the same eyes as you. Having both vehicles to save is good for me personally and therefore, unfortunately, voting Conservative is an attractive option.

I may be incorrect but Steve perhaps sees this as unfair in a sense that it's a further opportunity for the wealthy to amass more wealth thus widening inequality further between those at the top and those at the bottom.

I agree that it enables people who earn certain amounts to improve their lot but sadly that is the philosophy of the economic system western civilisation models itself on.

The best paid jobs in Toronto are government jobs which also have the gold plated pension schemes and unions. I'm more than happy to see less tax go into these institutions and stay with me where it was earned and belongs.

scrubbedexpat091

^^^

Seems the good jobs are with government in a lot of places these days.

Same in our little city, best jobs are with some form of government of government funded entity, municipal, school district, health authority, federal or provincial.

If you remove those employers, your looking at mostly 10-14/hr jobs with the bulk in retail, fast food, or gas stations.

How times change, up until the early 2000's this town was ripe with good jobs in lumber, mills, rail road and others, now like many places just government employment for anything decent, and a plethora of low wage jobs.

Steve_

Er... they're specifically designed for retirement. Read up on how they work and RRIFs. The idea is once you cease work you earn no money so withdrawals from your pension will be in a lower tax band.

With an RRSP you can actually manipulate how much tax you pay, which you cannot with a TFSA. Plus you have more money because of the multiplier effect from starting off with more money, so it's highly unlikely you would end up in this situation unless you did really something really stupid, like saving up a load of money and then taking it all out very rapidly.

Who in their right mind would want to do that? Why would you want to pay tax twice? You can actually put $2,000 in an RRSP from after tax income but that's designed as a buffer for people who accidentally over contribute. Otherwise you face a penalty.

So what you're saying is that you can't do arithmetic. You start off with more money because of the tax credit. Therefore the multiplier effect is higher because you're multiplying a bigger number. Compound that over years and it is a massively higher number. Moreover the tax credit typically places you in a lower income tax band.

Yes you pay income tax on withdrawal, but once again typically you would be in a lower tax band than when you were earning, so once again you win. Moreover you control the amount you withdraw, so you can manipulate how much tax you pay and which tax band you are in.

I'm not saying you shouldn't use both of them, but tax-deferred savings plans mathematically result in you getting more money than post-tax savings plans, all else being equal.

The same basic concept is used for various things like the SIPP in the UK and the 401(k) in the US. Although in detail there are significant differences.

And moreover, what would you save up in a TFSA for? Education? An RESP usually makes more sense. Help someone who is disabled? RDSP.

TFSA gives you another option but it's clear from the CRA statistics that Harper is not being entirely honest in his characterization of them.

Steve_

No, my point was that Harper is lying about them. The CRA statistics indicate that the largest number of people in the "middle income" tier who are maxing out contributions are people who are 65+, so this is likely not earned income that they are putting into their TFSA, they're rolling over their RRIF into a TFSA. The idea that the average person thinks the TFSA is wonderful and is making great use of it isn't accurate. TFSA: Half Of Canadians Have Tax-Free Savings Accounts, But How Many Are Using Them?

By doing the RRIF rollover, these people can actually make themselves eligible for GIS because money held in a TFSA apparently isn't included in the calculation.

Personally I would have preferred upping the RRSP contribution limit.

el_richo

I hope you don't manage your own money

Steve_

Right back at you.

BristolUK

And so it goes...

In this province there's been a major scandal involving the removal of some people's names from some sort of shindig because it was obviously inappropriate for them to have been involved.

A major player in these dodgy dealings has just been appointed Chief of Staff of his party.

Steve_

So now they're all arguing about Syrian refugees. Mainly one whose family drowned.

So to begin with refugee X said he had been offered Canadian citizenship and an NDP MP said he had tried to get him into the country and now CIC says no they didn't and they received an application for his brother, not him, which they rejected as incomplete.

Accompanied by an army of press descending on his highly distressed sister.

And Mulclair said let in 10,000 refugees, and CIC responded they already agreed to that and have already allowed in a couple of thousand so Trudeau decided to top that by saying 25,000.

All in all, Mulclair and Trudeau seem to be trying to make political hay out of something they aren't really that informed on themselves and the Tories just look bad. As per usual.

Former Lancastrian

Elizabeth May if you want a minimum of 50,000 plus votes just issue a press release stating that you WONT be attending any Toronto Blue Jays home games

Harper, Mulcair and Trudeau each have attended and the Jays lost. With the Jays being in a very close Divisional race with the Yankees and Canada getting behind the Jays its a no brainer for her.

Oink

A baseball team in the American sports league and yet its still insisting the country is not the US light. It must so proud of itself.

Bleepedy Bloops

I don't see any of them speaking with any conviction. They're just parroting the crap they've been fed by their "strategists". I did like May's performance from what little we saw of her; she seemed to have conviction!