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Federal Budget with a Twist Please

From 2008 when the Tories introduced the TFSA, and investing in Canada have not been the same since.

Wow, now given most of the budget was kind of blah, but there were a few things that affected me personally:

  • RESPs are now 35 years in life, which is good to hear (I think). Does this mean my kids can lounge around the house claiming they are getting ready for University?
  • More money for the Canadian Student Grant system, which is good, if my kids can get the money, I hope.
  • They are paying down the National Debt which is not just for me, but still a good thing to do.

The TFSA A Real Interesting Twist on Things

This was the big funky twist that I didn’t see coming, and neither did most other financial pundits, but it looks and sounds like an interesting idea. Here in a nutshell is what this little financial jewel is :

Tax-Free Savings Account (TFSA)

Canadians need all the help they can get to save money.

The TFSA will allow Canadians to watch their savings grow tax-free throughout their lifetimes.

Canadians can contribute up to $5,000 every year to their TFSA and carry forward unused room to future years. There is no lifetime limit and no tax on investment income earned, including capital gains.

The TFSA can be used any way you like—for example, to buy a new car, pay for an emergency, finance a child’s wedding or bankroll a dream family vacation.

So do you put your money in your RRSP first until it is full and then you put your left over moneys in your TFSA, or vice versa? Interesting question, any theories out there? Who will be the first financial institution to have a TFSA account? Self Directed, of course! Do you put money in your TFSA instead of paying down  your Mortgage?


Not likely, if the Liberals, BQ or NDP brought down the government on the basis of this budget, I think they’d look pretty darn foolish (but then again, we are talking about politicians too).

Feel Free to Comment

  1. Does anyone have any theories about the interest deductibility of money borrowed to contribute to a TFSA? Right now, interest on money borrowed to contribute to an RRSP is not tax deductible, but interest on money borrowed for non RRSP investing generally is tax deductible. Any predictions which way this would go?

  2. Nancy,

    I was of the understanding that you could hold anything in this financial vehicle that could be held in a RRSP. Therefore, this is more that just a savings account which makes 4%ish this is another way to avoid the tax man. If you doubled your money in the stock market in one year you can pull that money out. TAX FREE!!!

    I think this is awesome for people to make a bundle of money and not pay tax. I am looking forward to the debate about how to best use this new tool.

  3. nancy (aka money coach)

    personally, I’d be hard pressed to leave $5K a year in a savings account. Even Citizens Bank of Canada/ PC/ ICICI / ING etc would only earn me max 4.5% or so. I can’t bear more than $1.5K in a savings account before I move it over and invest in something, except when I’ve saved for a large ticket item. Not entirely convinced if this initiative will turn us all into savers…

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