I am borrowing an expression that David Lewis made about Canadian Corporations getting far too many tax breaks (his phrase was “Corporate Welfare Bums“), however, I feel it is correct, given the furor in the main stream media about Rich Canadians getting fat off Retirement Welfare (again to paraphrase and add alarmist tenor to the argument).
Typical Rich Fat Cat Canadian™ lying around with his TFSA and his tax loopholes!
This all seems to be a reaction to The Harper Government™ proposing (or maybe only socializing) a doubling of the current TFSA yearly limit to $11K, and thus the fear of “Rich Fat Cat Canadians™” taking advantage of this unfair change to hide income and possibly end up getting paid the Guaranteed Income Supplement if they retire (GIS is really to help those who are retired with lower-income, if you have a higher income it typically is clawed back). This is diabolical, someone who could save $11,000 a year until they retire might appear to be a pauper and attempt to get government hand outs? How dare they exploit this “tax loophole” ! #OMG
Now let’s all calm the heck down given I have just whipped you into a fury of moral indignation about the Rich Fat Cat Canadians™ out there. My guess would be that the government (as part of announcing the doubling of the TFSA limit (possibly)) will simply force folks applying for GIS to report their TFSA holdings, and that will then disqualify them from getting the GIS , but if you believe what is being currently written, it is happening right now, and the Harper Government™ is doing nothing about it! #OMG
This (of course) is not likely the case, but having a higher TFSA limit does make for some very interesting questions about where to put your Retirement funds, especially if you are younger (for someone like me, I have about 10 years before retirement, if they DID double the rate and I DID max out my TFSA‘s I could have about $140K or so (with growth) in my TFSA). I have seen many interesting arguments on both sides, and I am not completely sure which is better, however, I will be proposing tomorrow (teaser) an interesting hybrid solution (that is neither brilliant nor new, just me rehashing old ideas (as usual)).
So all you Rich Fat Cat Canadians™ can thank the Harper Government™ for yet another break being given to you, you oppressors of the proletariat
Full Disclosure: I believe if I use the definition of Rich Fat Cat Canadians™ I must disclose that I am (most likely, depending on the income line used) a member of this club too, and yes this article was written (a little) tongue in cheek.
RICARDO – TFSA isn’t for rich people. You can open one with $50. Its a way to invest in something other than bank investment products without having to have an RRSP or pay tax. It’s fairly simple.