Conservative MP Peter Kent has sponsored an online petition that calls on Bill Morneau to leave the annual TFSA contribution at $10,000 reversing Justin Trudeau’s campaign promise to roll it back to $5,500 where it was in 2014.
Advisors unhappy with the rollback – there are many – might want to sign the petition if they already haven’t to express their displeasure with the federal government’s move to take away one of the best savings vehicles available to the middle class.
Nova Scotia advisor Glen Rankin defended the TFSA in November suggesting that it’s not just a vehicle for the rich; [the rollback] especially does a disservice to seniors who need as much non-taxable income as they can get their hands on.
“If I’m a senior, I’m retired and I’m relying on government benefits, maybe I even qualify for a guaranteed income supplement; or I might have had an inheritance from my parents; or I might have just been very frugal and saved a lot of money. A lot of the people I’m seeing are moving money from existing non-registered into TFSAs,” said Rankin. “It’s not all new money for rich people. It’s middle-income people, many of them seniors, that are moving money from their left hand to their right hand to make it more tax efficient.”
Unfortunately, a mere 32 signatures have come from Rankin’s home province so advisors in Nova Scotia might want to pick up the pace. Ontario’s garnered the most signatures with close to 1,100 or more than half of the total to date. Interestingly, Quebec has less signatures than either Alberta or British Columbia, despite having a population approximately equal to the two western provinces combined.
Speaking of Ontario, IPC Investment Corp. advisor Jason Pereira believes the rollback hurts seniors and low-income Canadians far more than the wealthy and definitely should remain at $10,000.
“The two groups that benefit the most are seniors who have money but are getting clawed back on their OAS because of the income on that and it may sound like $70,000 is enough but it varies from province to province. These people may be losing the benefits without a good reason,” Pereira told WP. “Secondly, lower-income Canadians are better served by a TFSA than an RRSP. If a lower-income Canadian is socking a bunch of money away and they put it all into an RRSP they get next to nothing in tax savings and they’re going to pay more tax later on especially because their OAS is going to get clawed back. I’ve seen that happen many times where people who earn less than $50,000 their entire lives they end up by the time they’re 71 having to take out money and it puts them in a higher tax bracket than they ever been.”
To sign the petition click here