TFSAs set to become bigger piece of client pie
While the Tories’ plan does little for most Canadians according to SFU finance professor, high net worth clients could be in for a windfall.
The Tories promised in their 2011 election campaign that they would double the annual contribution limit for TFSAs. With the 2015 budget the final one before the expected election in the fall, speculation grows that the TFSA increase will be part of the budget when it’s finally delivered sometime in April or possibly later.
Simon Fraser finance professor Dr. Rhys Kesselman believes only the wealthy will benefit from any increase in the maximum TFSA contribution. Most Canadians already are unable to make the $5,500 maximum contribution; $10,000 or whatever the new limit would be becomes even more unattainable.
Worse than that, a doubling of the TFSA contribution could result in $15 billion in lost tax revenue annually, says Dr. Kesselman.
However, those advisors with high net worth clients and/or extraordinary savers should welcome the possible change because it gives them an extra opportunity to generate tax-free income and capital gains, accelerating their retirement readiness and savings.
Say what you will about the Tories but they do know how to stir things up when it comes to taxation.