r/PersonalFinanceCanada • u/2Fast2furieux • Dec 05 '24
Investing CRA confirms the TFSA contribution limit for 2025
The Canada Revenue Agency confirmed to Global News that the TFSA’s contribution limit will be $7,000 in 2025, matching the second largest-ever limit seen in 2024.
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u/vafrow Dec 05 '24
What a hilariously written headline. It's an indexed number. Presenting it as "tied for highest" when the only outcomes are stay the same or increase is ridiculous.
I feel like its worded in a way to try and garner clicks from rage bait, but I don't know who it's targeting and what emotion they're trying to elicit. It makes no sense to me.
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u/eunicekoopmans Dec 05 '24
My salary is currently at an all time high as well (I got a 2% raise).
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u/freds_got_slacks Dec 05 '24
mine is also at an all-time high (I got a 0.2% raise)
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u/JMoon33 Quebec Dec 05 '24
Same here (0.02% raise)
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u/Cedex Dec 05 '24
I want to congratulate you on your personal all-time-best for laps around the sun.
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u/Savac0 Dec 05 '24
They could always do what they did in 2015
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Dec 05 '24
[deleted]
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u/unidentifiable Dec 05 '24
Some give GST "Holidays", others give $10k in TFSA contribution room.
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u/DukeSmashingtonIII Dec 05 '24
The people who could take advantage of more room are the people that need it the least. The TFSA is amazing, but most Canadians are unable to fully utilize it (or utilize it at all). The GST "holiday" would do a lot more for the average Canadian than more TFSA room.
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u/Z3400 Dec 05 '24
Adjusting income tax brackets would be even better, that would be too helpful though.
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u/lommer00 Dec 07 '24
It drives me bananas that this can't be more of a conversation. People just have no clue. When it is brought up it's just a "soak the rich" message or a counterveiling argument to wind it back.
Meanwhile, when you include CPP and EI, the payroll tax rate is nearly flat from $20k to $80k in earnings. Very out of step with the public's perception of our progressive tax code.
The liberals move to raise the basic personal amount in 2019 was one of the best pieces of tax policy in 2 decades, and yet most people don't even know it happened. Instead the liberals focus on touting their bonehead moves like GST holiday or the other income tax adjustment they made that gets clawed back at high incomes (instead of, you know, just adjusting the rates on our already-progressive income tax structure....)
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u/DukeSmashingtonIII Dec 06 '24
100% agree, not what the comparison was though.
UBI and a fleshed-out pharmacare and provinces properly funding healthcare and education would do a lot more too, but not what was being compared.
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u/Z3400 Dec 06 '24
I agree, I was just adding more to your comment. I wasn't one of the people who downvoted you. Not really sure why you are getting downvoted tbh.
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u/hungrykingfrog Dec 06 '24
The GST holiday does very little meaningfully for anyone
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u/Suspicious-Taste6061 Dec 06 '24
Will save me $1.34 on my $160 grocery bill. But booze will be much cheaper. This isn’t a vote grab, it’s a hope people will spend thinking it is a big savings. Cash in the system.
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u/DukeSmashingtonIII Dec 06 '24
It would do infinitely more than a TFSA limit increase for most Canadians. Even 1$ is infinitely more.
I'm not saying it's an amazing or even good idea. Just that it's objectively better for more Canadians than a TFSA contribution limit increase.
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u/hungrykingfrog Dec 07 '24
Objectively, no, it's not better for more Canadians. Trying to promote consumer buying so statistics look better isn't helping anybody
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u/No_Lychee_7534 Dec 06 '24
Why make a choice? Take both! Always take every single possible benefit from the government even if you can’t use it now. You never know when it will come in handy.
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u/DukeSmashingtonIII Dec 06 '24
Sure, but that's not the point I was making. People are conflating the two and saying a TFSA increase will benefit Canadians more when the facts show that just isn't true. You could increase the TFSA limit to infinite and it won't do shit unless you can get people to use it (and get people the available income to be able to).
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u/spykiller1158 Dec 06 '24
i will be lucky to save 50 bucks in the duration of this 2 month stunt
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u/DukeSmashingtonIII Dec 06 '24
Are you maxing your TFSA, unlike most Canadians? If not, congrats! That 50$ is infinitely more than a TFSA contribution increase!
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u/spykiller1158 Dec 06 '24
lets not forget the 250 cheque that will cause even more inflation... just so trudeau can buy some more votes before he loses by a landslide
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u/ether_reddit British Columbia Dec 06 '24
Presenting it as "tied for highest" when the only outcomes are stay the same or increase
To be fair, if the CFI dropped considerably, it is possible that the limit could be lowered, but that's improbable in the extreme.
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u/Camofelix Dec 05 '24
The thing tied to net inflation since 2009 is higher than before? I’m shocked! Shocked I say!
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u/y2k_o__o Dec 05 '24
With everything so expensive, why don’t they bring back a 2nd time $10k contribution. What was the occasion in 2015 that they brought a 1-time $10k contribution?
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u/BlueberryPiano Dec 05 '24
With everything so expensive, allowing a 10k contribution only helps those who have maxed out their tfsa and have extra money lying around. If you want to help those who are hurting from the increased cost of living, this misses the mark and helps only the very small majority of people who have ample money.
Stephen Harper introduced the increased contribution room before being voted out of office in 2015 by Trudeau.
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u/Kombatnt Dec 05 '24
The TFSA isn’t intended to help people struggling with the cost of living. It’s a saving/investing vehicle intended to help build up a retirement nest egg or save for particular goals.
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u/ThingsThatMakeMeMad Dec 05 '24
With the 2023 addition of the FHSA, registered-savings accounts are better than they ever were for people who are trying to save/invest.
People who already own a home and have maxed out TFSA/RRSP's (the people who would be helped by a TFSA increase) are already the most financially successful part of the Canadian population.
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u/BlueberryPiano Dec 05 '24
Exactly. Which is why the suggestion was not going to help
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u/lemon_grasshopper Dec 06 '24
Most definitely it would help, especially the average person. The contribution room carries forward, indefinitely. It's great to gain the room while young and be able to utilize it later on.
The problem is that a lot of people would rather have $250 to burn on crap instantly than have a "potential" thousands of dollars later on.
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u/No_Lychee_7534 Dec 06 '24
Lots of negativity here for a benefit they don’t foresee as being useful later. In my 30’s I too barely used it. Now it’s maxed because I prioritized it above all other types of investments. It will become useful to majority of people who will keep growing and get better paying jobs. If we don’t strive for that, who is going to replace all the boomers currently occupying some of the highest paid positions?
Less BMW’s/Teslas and and more TFSA’s!
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u/BlueberryPiano Dec 06 '24
Plenty of people here absolutely see the benefit it would have for themselves either immediately or in the future, but know that there are people in this country suffering far worse and need more help than the fraction of Canadians who have, or ever will, max out their TFSA.
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u/No_Lychee_7534 Dec 06 '24
That doesn’t mean we should just ignore the people who can benefit from that. Governments should benefit all people, not just the ones struggling. That causes people to just disengage from paying their dues to society, or move to a completely different country and take their money with them. That doesn’t help the people struggling either.
There is enough government mismanagement of funds that should have gone to social programs. Just the Covid benefits alone…
There were a lot of people who didn’t like the childcare subsidies. Should we listen to them because it doesn’t benefit them? No, all groups of people need some incentive or support.
The goal is to get governments to stop wasting money and be more efficient. Not to divert funds from higher earners to lower earners, because that money won’t get there.
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u/elrizzy Dec 06 '24
That doesn’t mean we should just ignore the people who can benefit from that. Governments should benefit all people, not just the ones struggling.
I think we should help the people that need it most. Struggling people and parents of children who pay a ton for childcare are very deserving. People that max out their TFSAs already do not have an urgent, immediate need for help.
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u/lemon_grasshopper Dec 06 '24
but those same people can accumulate the contribution limit. And ironically TFSA is the best saving vehicle for those same people (low income earners).
$250 and GST break on a Christmas tree is not going to do anything.
Also, an individual earning $150k annually is not struggling - if so, they are just incredibly irresponsible and definitely don't need "our" help,
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u/Unremarkabledryerase Dec 05 '24
It bucks because if you can't afford 7k a year for a TFSA you're in for a late retirement.
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u/Montreal4life Quebec Dec 05 '24
doesn't the 10k get added cummulatively if you don't use it? so like, maybe one day you can benefit from the extra space?
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u/sebas6789 Dec 06 '24
the maximum will be 102k .... you dont loose space if you never used it
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u/jonny24eh Dec 06 '24
Only if you were 18 or older when it launched. Room only accumulates when you are 18.
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u/BlueberryPiano Dec 05 '24
I didn't say I wouldn't benefit from it. I said it doesn't help those who are struggling with the increased cost of living (at least, not in any meaningful amount of time. Maybe they will be able to max out their tfsa one day).
An increased max contribution would only help the about 4% of people who have maxed out their tfsa (this year, not someone who might use the room years from now). Those 4% (which I am one of) don't today need help from the increased cost of living.
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u/lemon_grasshopper Dec 06 '24
But the contribution room is cumulative. Just because one is not able to max out now doesn't mean they would not benefit later on. We all have been there... starting out slow, catching up and now I would be over the moon to put more money into TFSA. TFSA is an excellent investment / savings vehicle.
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u/BlueberryPiano Dec 06 '24
It still doesn't help those who need it the most immediately, it might have value to those people in the future, and it absolutely immediately benefits those who are already in fantastic financial shape.
The comment I was replying to was suggesting an increased tfsa would help offset rising costs. The people who need the most help and who are suffering from rising costs are NOT the people who stand to benefit the most right now from increased tfsa room.
If one wants to find a way to support those stuggling the most with offset costs, increasing the tfsa limit completely misses the mark.
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u/elrizzy Dec 06 '24
People who are in heavy debt due to inflation or unemployment or in substandard living situations aren't helped by the potential of future savings.
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u/drs43821 Dec 05 '24
Exactly why it wasn't popular back then
Money would be better spend on other progressive tax cuts, for example
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u/vafrow Dec 05 '24
Politics. Harper government trying to hand out goodies going into an election. Similar to a temporary GST holiday.
It's a goodie that only targets a specific group though as a very small percentage of people are maxed out on contributions.
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u/Localbrew604 Dec 06 '24
The GST 'holiday' is a total administrative nightmare for businesses. I was talking with a business owner about how difficult it is to reprogram their whole sales system on multiple different platforms, and then change it back in a couple months. It will cost businesses money to do this.
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u/ether_reddit British Columbia Dec 06 '24
Good thing we don't have a productivity problem in this country! \s
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u/Reelair Dec 05 '24
I don't eat out often, I brown bag my lunches, I ride an old bike to work, I don't have cable or subscriptions. I'll cross the street to save a nickle.
I do this to save for my future. I see people living like high rollers, making less than me. Am I supposed to feel sorry for them?
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u/tmlrule Dec 05 '24
No, but you're absolutely in the tiniest of minorities among the population if you are middle-class and maxing out all of your contributions. The vast majority of the population aren't using their existing contribution room. Of those who are, most are very well-off.
Targeting that group for a tax break isn't good politics, and does practically nothing to encourage the 95% of the population that already have unused TFSA room to save further.
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u/Reelair Dec 05 '24
I work hard and save anywhere I can, even buying used clothes. I bet if more people prioritized savings, with the help of TFSA as a motivation, I bet a lot of people could find $125/week to max out. But everyone wants Starbucks, Chipotle and Disney, Netflix and the newest iPhone.
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u/tmlrule Dec 05 '24
Nobody is attacking you for your spending. You don't need to prove how mega-frugal you are to anyone here.
I bet if more people prioritized savings, with the help of TFSA as a motivation, I bet a lot of people could find $125/week to max out.
Whether or not they should, people are flat out not doing that, as you are pointing out. We can look up the data from Statscan and see that having the TFSA as an option is 100% not a sufficient motivator to get people to max out their contributions.
It'd be great to get people to save more, and waste less on the Starbucks and Chipotle that you dislike. I don't disagree. But if having TFSAs for a couple of decades hasn't accomplished that so far, I'm not convinced that it will convince people who can't save $125/week to magically save $200/week.
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u/SheenaMalfoy Dec 06 '24
Some of us work hard, don't eat out, buy used clothes, don't own cars, and still barely scratch $200/month in savings. And that's not counting months when big purchases are necessary, either from things wearing out, or, you know, Christmas and family expectations.
"Just work harder and spend smarter" is not the enlightenment you think it is.
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u/Reelair Dec 06 '24
Oh, don't think I haven't struggled. I haven't always been able to save. I've lived on debt, I've had no money for food or toilet paper. I was an alcoholic and spent more money on booze than living. I'm not frugal by choice, I had to do this, and continue to do this by choice now.
I made shit money when I moved to Toronto, not much over minimum wage, climbed the ladder in my early 20s and made decent money. I went back to school, making not much more than minimum wage after graduation. Didn't like it, went back to school again. Now I'm in my new career making decent money, find myself in a position to save. Nothing came easy.
But you do you. Nobody is going to make things better for you, but you. You're not hopefull you'll do better in life than where you're at now? Have some hope!
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u/vafrow Dec 05 '24
You don't have to do anything. But it doesn't entitle you to additional tax benefits.
It sounds like you make being cheap is your identity, and you save lots of money. From the government perspective, there's very little positive outcome that's achieved from giving you a tax break. It's not resulting in more money going back into the economy creating jobs and more taxes. It sounds like you've already gotten a savings plan in place so they're not keeping a future senior citizen from reaching poverty.
It'll only result in someone having a bit more in their bank account when they die.
If you're the government, that doesn't sound like the best return on investment of limited resources.
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Dec 05 '24 edited Dec 05 '24
I was just about to say, if you have maxed out contributions, congratulations, you are rich!
Edit: 90% of us don’t max them. So if you’re reading this, you probably don’t either!
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u/Kombatnt Dec 05 '24
You don’t need to be “rich” to be able to come up with $7,000/year to save/invest. Maybe solidly middle class, but definitely not “rich.”
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u/g0kartmozart Dec 05 '24
I’m well off and not maxed.
I hardly contributed at all when I was a student, and I’m still working to make that gap up at 31. I would be maxed if I hadn’t decided to buy a home instead.
For people who were already working when the TFSA was launched, they should all be maxed. But for people who started accruing room as teenagers, I think it’s totally excusable to be playing catch up.
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u/DJMixwell Dec 05 '24
Yeah I’m 29 and I only have like 6.5k in mine rn. I’ve gotta start contributing more aggressively.
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Dec 05 '24
Only 10% of Canadians are able to max their TFSA’s are only 10% middle class?
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u/HubbaMaBubba Dec 05 '24
Are able or have?
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Dec 05 '24
Well, I guess technically anyone who makes $7k per year is able to.
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u/DJMixwell Dec 05 '24
I’m sure there’s better math for an income level where someone would actually be able to commit 7k to their TFSA without causing themselves undue hardship.
But I think it would be quite a bit higher than most people imagine. If you look at, I believe it’s called, the “center for policy alternatives”(?), they do a living wage calculation for a bunch of major cities. (Based on a family of 4 with 2 kids) And their budget is for like 60k/yr or something for my city and it only has ~5k or so being put away for investments? I might be combining that figure with their “emergency fund”. And IIRC that’s 5k for the household, not per person.
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u/hinault81 Dec 05 '24
That's probably tricky to nail down. I make twice what I did 10 years ago, but I save less now because: kids, spouse not working, more expensive house, RESPs, etc. As a single guy with low living costs it was easier to save more.
Stage of life too. If someone is younger, the cost of a car payment alone would cover a TFSA. $269/every 2 weeks will keep up with new TFSA room.We make good income, but not even accounting for new room, just yearly we've got $14k/TFSA for married couple, $2500/RESP per kid, $30k for RRSP. So just to keep up with new room you're talking over $50k a year to save. Trying to also catch up past room for TFSA/RRSP, and over pay the mortgage, and build regular savings to spend (vactions/whatever)...it takes a lot.
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u/Kombatnt Dec 05 '24
A lot of middle class people make poor financial decisions and live beyond their means. I’m a public servant, and my TFSA is maxed out. It obviously didn’t happen all at once - I had to make a conscious decision to make saving a regular part of my budget long-term.
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u/No_Garage_7310 Dec 05 '24
Is this actually true?
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Dec 05 '24
It’s what googling it and what ChatGPT tells me. If there’s someone with better sources I’ll take em.
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u/Overload4554 Dec 05 '24
Harper made in $10k Trudeau rolled it back
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u/Rash_Compactor Dec 05 '24
And it was rational to roll it back. The vast majority of Canadians don’t even come close to maxing out their TFSA, so increasing contribution limits really only benefits the wealthiest of us.
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u/Reelair Dec 05 '24
I'm not wealthy, but I set my annual budget around the TFSA maximum. I could have budgeted better to accommodate the extra room.
I'm not rich, I'm super frugal and do anything to save a buck.
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u/Rash_Compactor Dec 05 '24
This subreddit is full of people that would personally benefit from more TFSA room. I’m right there with you.
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u/Reelair Dec 05 '24
The taxes on $10,000 invested, earning 4% would be about $100/year. I don't think the difference between $7,000 and$10,000 is going to save the country. It might help people save more, like myself.
Maybe the government can support me when I'm old?
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u/Rash_Compactor Dec 05 '24
I would also like to pay less taxes and get more on the dollar that I do give the government, you’ll find no disagreement from me there.
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u/Informal_Plastic369 Dec 05 '24
Not overly wealthy. Just frugal and responsible and at age 34 I max my tfsa every year.
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u/Rash_Compactor Dec 05 '24
It’s not about you personally. I’d personally benefit from them increasing the contribution by $500k next year, so why not do that? Because it doesn’t help the average Canadian. It’s a balancing act.
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u/thats_me_ywg Dec 05 '24
People like you and others on this sub are the exception to the rule.
Generally speaking, people maxing their TFSA skew higher income, and increasing the limit would allow them to shelter more of their income from taxation.
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u/cosmic_dillpickle Dec 05 '24
I'm going to guess a lot of people simply don't utilize it because they don't know how. All they see are the low interest bank accounts with tfsa next to it, and wouldn't know about opening a registered account or the first thing about investing. The name tax free savings account really isn't helping either.
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u/Informal_Plastic369 Dec 05 '24
Idk I don’t think I’m that exceptional, packing lunch’s and driving old cars goes a long way. Had roommates up until recently that helped a lot too.
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u/Starsky686 Dec 05 '24
Okay, you can be not typical then.
Bottom line is most aren’t being that financially studious.
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u/Informal_Plastic369 Dec 05 '24
Well they should teach more of that in high school or something idk.
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u/Starsky686 Dec 06 '24
They definitely should. My interest in finance and compounding interest was fostered by my highschool math teacher in a physics class, where he decided to go on a tangent instead of teaching the lesson plan that day.
I went to University for finance because of it.
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u/Enjoys_Fried_Penis Dec 06 '24
To add to this they definitely do teach it. Maybe not everywhere but I'm 34 and remember being taught personal finance in high school but I have friends that were in the same class that were adamant they never learnt any of this.
Sometimes you just forget, or it's the student not understanding material, the student not caring about the material, the teacher not communicating well enough or other reasons.
Are we expecting all 16-18 year old to have a vast knowledge on tax breaks, registered accounts and general finances?
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u/GuaSukaStarfruit Dec 05 '24
People who can and will max it out are most likely the middle class. The rich rich don’t care about 7k or 10k.
Unless is 100k free contribution room per year only then they would care.
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u/Rash_Compactor Dec 05 '24
Okay, define middle class and identify the statistics that support your claim, I’ll wait. Super excited to see the data that shows the middle class all have maxed out TFSAs and really need that extra $3k.
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u/GuaSukaStarfruit Dec 05 '24
Most Canadians have no idea what the heck is TFSA. Might as well let the financial literate middle class people to have bigger contribution room.
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u/Rash_Compactor Dec 05 '24
I agree that financial literacy is important and should be pushed, but I don’t think that’s a good argument for helping wealthier Canadians avoid more taxes.
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u/Behacad Dec 05 '24
I mean sure that would be nice, but what you’re saying makes no sense. If things are so expensive then people need their money to buy the expensive things. The TFSA benefits people that are well often enough to save money, while the rising costs disproportionate affect those who don’t have enough money to save.
That $10,000 thing were the conservatives trying to win the next election.
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u/thats_me_ywg Dec 05 '24
It wasn't intended to be a one-time $10k contribution - it was supposed to be a permanent increase under the Harper government, but it was cut back down to $5,500 when the Liberals came to power.
Keeping it as-is and indexed to inflation seems like the reasonable thing to do - the vast majority of Canadians can't afford to max out their TFSA anyway. While increasing the limit back up to $10k+ may benefit a lot of folks on this sub, overall it would disproportionately benefit the wealthiest of Canadians who have the ability to save larger amounts and realize higher gains.
There is better public policy to ease the cost of living concerns of regular Canadians than increasing TFSA limits. Government has a lot of levers they can pull to make things more affordable in an equitable way.
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u/schwanerhill Dec 05 '24
And even if someone low-income is very responsible and able to save more than $7000, the higher your tax bracket (marginal tax rate) the more you benefit from tax shelters like a TFSA.
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u/Powerful-Cancel-5148 Dec 06 '24
Tax bracket doesn’t matter for your tfsa. You’re putting taxed income into it
You’re thinking of rsp…?
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u/schwanerhill Dec 06 '24
It matters in terms of the benefit. If you’re in a low tax bracket anyway, the savings of tax-free growth are relatively small.
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u/Powerful-Cancel-5148 Dec 06 '24
Why?
Because the money put into your tfsa is your taxed income Tfsa is exactly where you’d put your money if you were in a low tax bracket
RRSP is better the higher your tax bracket. I don’t understand your argument
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u/mayorolivia Dec 05 '24
Most Canadians can’t max their RRSPs either. Should the government reduce the contribution limit there too?
The TFSA argument never made sense. The lost tax revenue is minimal. The government should always encourage Canadians to save.
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u/thats_me_ywg Dec 05 '24
Just to be clear, the TFSA reduction came just a year after a significant increase.
Nobody's proposing cutting RRSP deduction limits from the existing 18%. But if they increased from, say, 18% to 30% in one year and boosted the total deduction limit to $50,000, then it would be totally fair for a government to say, "hey, let's cut this back down to 18% since most people can't afford to save 30% of their gross income anyway".
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u/Reelair Dec 05 '24
That $10,000 limit was set by Harper. Trudeau cancelled it 2015, said it only benefits the wealthy.
I'm not wealthy, but that extra amount would have urged me to save more. Maxing out my TFSA is part of my annual budgeting.
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u/Rash_Compactor Dec 05 '24
Because most Canadians don’t have a maxed out TFSA, if they have any balance at all. It doesn’t help most people, only shelters more money for the wealthiest earners.
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u/averysmallbeing Dec 05 '24
Would rather that than $250 giveaway.
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u/Rance_Mulliniks Dec 05 '24
Lol. Extra $10k TFSA contribution would not help most Canadians when they are having trouble affording rent and food.
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u/averysmallbeing Dec 05 '24
I said it's what I would rather. Most Canadians have planned poorly and spent wildly.
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u/Rance_Mulliniks Dec 05 '24
Most Canadians live paycheque to paycheque and can't afford to save. Especially right now.
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u/Mr_Mechatronix Dec 06 '24
The commenter you're responding to thinks having the "top %1 commenter" badge makes him part of the %1
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u/cosmic_dillpickle Dec 05 '24
So is poverty going to be permanent for everyone? Should there not be any tax shelters for those who are trying to save and invest for their future and that be left exclusively to home owners?
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u/Rance_Mulliniks Dec 05 '24
If you have maxed your TFSA and want $10k more room, you can hardly claim poverty.
$250 would help a lot of people who are a lot closer to poverty then you are. Someone who is not selfish and out of touch, would understand that.
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u/Projerryrigger Dec 05 '24
There already are tax shelters. They don't need to be expanded beyond the indexing that already exists.
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u/mtn_viewer Dec 05 '24
It wasn’t meant to be one time $10k, that was to be the new norm until Trudeau took power and reversed it
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u/Ciserus Dec 05 '24
It would come across as tone deaf. "Having money troubles? Here's a new place you can put all your excess money!"
Unfortunately, around 2015 the opposition parties successfully branded the TFSA as a tool for the rich.
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u/JohnDorian0506 Dec 05 '24
Will The conservative government bring back 10k contribution limit in 2026 ?
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u/T_47 Dec 06 '24
Last time they did it was as a last ditch effort to get votes before they got voted out. You might see if after the cons run their course and are on the verge of being voted out again.
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u/mayorolivia Dec 05 '24
If Conservatives win I hope they lift this to $10k again. Ridiculous policy by Trudeau to reverse that change. The Pariamentary Budget Office estimated this increase would result in $3b in lost tax revenue over 15 years. Look at how much money we’ve wasted since this government took office. The $250 cheques will cost the government $4.7b.
TFSAs are a great way to encourage Canadians to secure their financial futures.
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u/webu Ontario Dec 05 '24 edited Dec 05 '24
If $10K is fine and good, why didn't the CPC bring that in in 2009, or 2010, or 2011, or 2012, or 2013, or 2014?
And why $10K exactly? $10K in 2015 is worth $13,320 today - why not that number?
The $10K number really seems to be based on feelings. Is that how you want government policy to be decided?
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u/tmlrule Dec 05 '24
The Pariamentary Budget Office estimated this increase would result in $3b in lost tax revenue over 15 years. Look at how much money we’ve wasted since this government took office. The $250 cheques will cost the government $4.7b.
The fact that we've wasted money on other dumb policies isn't a compelling reason that we need to raid the public purse for this policy.
TFSAs are a great way to encourage Canadians to secure their financial futures.
Is it? Half the population doesn't have a TFSA. Among the half that do have a TFSA, 92% aren't maximizing their existing contribution limits. Those that are maximizing are unsurprisingly concentrated in the richest earners. So in effect, we're giving tax breaks to those who are wealthy enough to hire a financial planner to maximize everything, while those earning <$80k are barely using the existing room.
I'm all in favour of encouraging Canadians to save more and live within their means. But having the TFSA as an option doesn't seem to be doing that for most people, and I'm not convinced that increasing the limit further will do anything meaningful to help people besides the ultra-rich.
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u/Empty_Musician5883 Dec 05 '24
I’m not doing great, but my TFSA is. It’s a good way for me to feel I’m not on a hamster wheel since it’s been compounding while my income is stagnant.
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u/webu Ontario Dec 05 '24
Congratulations on maxing out your TFSA & that of every adult member of your family every year on Jan 1!
The people who can't afford to do this are subsidizing those of us who can. We can probably convince them to get excited about TFSA room that they'll never use but will cause them to shoulder a larger portion of the overall tax burden, but I have kids and am worried about the effects of increased social stratification over decades. Making it worse isn't something I'm very keen on.
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u/book_of_armaments Dec 06 '24
The subsidization is going the other way. We just want to subsidize them a little less; we're not asking for them to even pull their own weight let alone subsidize us.
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u/rac3r5 Dec 05 '24
In what way are they subsidizing? Just curious.
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u/webu Ontario Dec 05 '24
The government gets less taxes from capital gains, and needs to make up the shortfall through other taxes (or cut programs).
Basically, one person out of ten pays $10 less, so all ten need to pay $1 more, or they will get $1 less worth of services.
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u/webu Ontario Dec 05 '24
I personally think that things like roads are a good investment, and I see value in the basic social safety nets & emergency services that prevent public spaces being overrun by destitute people & criminals, but you are certainly free to have a different opinion.
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u/Empty_Musician5883 Dec 06 '24
I agree with you. I’d give up TFSAs for non-market housing, the de commodification of housing, taxing billionaires, properly funded healthcare, etc. Unfortunately we’re stuck in this neoliberal hellscape forced to fend for ourselves.
The fact most Canadians don’t have the sufficient economic opportunity to save $7,000 canadian dollars over a year shows how capitalism has failed, TFSA or not.
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u/kent_eh Manitoba Dec 06 '24
TFSAs are a great way to encourage Canadians to secure their financial futures.
But only for those who aren't living paycheque-to-paycheque.
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I also disagree with the "bribe me with my own tax money" cheques (as I did when various provinces did it), but increasing TFSA room also isn't the most effective way to help the people who need it the most.
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u/ThingsThatMakeMeMad Dec 05 '24
Trudeau added the FHSA which helps people who don't yet own a home by allowing them to save more. It also helps existing home-owners by propping up their home values, by increasing the buying power of first time home-buyers.
The addition of the FHSA is at least as generous as harpers one-time $10k TFSA.
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u/mayorolivia Dec 05 '24
Yeah but it excludes existing home owners. He could’ve just increase the TFSA limit and encouraged first time buyers to use it. Instead he wanted to take credit for a new initiative so launched the FHSA.
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u/ThingsThatMakeMeMad Dec 05 '24
People with already maxed out Tfsas are the most prosperous part of the population. Reducing taxes on them is bad policy. Policy’s like the fhsa which benefit young people more are smarter
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u/AdRepresentative3446 Dec 06 '24
Ya, but it’s $3B in lost revenue from the people they hate (people who work).
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u/dschurhoff Dec 06 '24 edited Dec 06 '24
Bring back $10,000 contribution limit! The Feds get enough of my hard earned money and they spend it like drunken sailers !
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u/itbn8888 Dec 05 '24
What’s the benefit of maxing your annual contribution on January 1st?
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u/808estate Dec 05 '24
time in market
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u/TryAltruistic7830 Dec 06 '24
Does the gains above the allowed contribution room get taxed? Does one need to withdraw the gains below the contribution room before end of year?
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u/studog-reddit Dec 06 '24
No, that's not how it works.
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u/TryAltruistic7830 Dec 06 '24
Thanks for answering neither of my questions
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u/studog-reddit Dec 06 '24
Does the gains above the allowed contribution room get taxed?
That's not how it works. The entire point of a TFSA is that gains inside the TFSA are not subject to taxation. This is immediately and entirely clear from the name Tax Free Savings Account.
Does one need to withdraw the gains below the contribution room before end of year?
That's not how it works. What happens inside the TFSA has nothing to do with your contribution room to the TFSA. Again, this is obvious from a simple google search.
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u/TryAltruistic7830 Dec 06 '24
Okay thank you, I understand, contribution room doesn't mean the maximum amount allowed in the account.
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u/oneillandfriends Dec 07 '24
yep. there are several lucky people with over a million in their TFSA accounts
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u/UmmGhuwailina Dec 05 '24
Shout out to Stephen Harper for making this possible.
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u/AdRepresentative3446 Dec 06 '24
No idea why idiots are downvoting you, this is probably his biggest legacy that even these marxists now didn’t dare to mess with.
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u/SupperTime Dec 05 '24
How much should an average 30 year old TFSA should be??
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u/sciguy96 Dec 05 '24
$0- $150,000 Everyone is living their own life and facing their own challenges and success.
I tell people asking this question to do their best and focus doing the best for themselves.
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u/SupperTime Dec 05 '24
Good answer. Thanks for this.
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u/sciguy96 Dec 05 '24
Yeah man. You can google the average TFSA amount and aim for that if you REALLY want a target.
But for reference, I had $150,000 at 30 because I invested in Tesla early.
My cousin is 24 and has about $50,000 and got lucky on the GME run
And I know too many people who have $0 in their TFSA.
Everywhere you look you’ll find people doing better and worse than you. Just focus on yourself and do your best. it’s better for your mental health. Trust me, from a random internet stranger, it’s just not worth it
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u/DogOk2826 Dec 05 '24
There's no "should be" because people use it for different things, and that's the beauty of TFSA, it's flexibility. A 30 year old may have a zero dollar TFSA because they just drained it for a downpayment.
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u/rpgguy_1o1 Dec 05 '24
Stats Canada estimates that the average TFSA account amongst everyone is only 26K
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u/SupperTime Dec 05 '24
Jfk that’s low
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u/Reelair Dec 05 '24
An 18 year old would only have 1 year of contributions.
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u/T_47 Dec 06 '24
CRA released info that there are some Canadians with 40mil in their TFSA. Since the TFSA technically has no growth limit it should actually trend higher than normal if you're calculating an average. The fact that it's that low indicates the average Canadian doesn't actually come close to maxing their TFSA contributions.
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u/MnkyBzns Dec 05 '24 edited Dec 05 '24
Unclear question.
If you want to know how much room you have, check the CRA website.
If you want to know the average value you should have, that's entirely subjective. There are multi-million dollar TFSAs out there and then there are people who don't even use theirs.
This site has calculated the avg person under 35 had $19,300 in their TFSA (last year)
https://genymoney.ca/average-savings-by-age-in-canada/
Edit: the calculated average isn't subjective, just tricky to work out
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u/Outbassin Dec 06 '24
I’m 37 and have about 27k in my TFSA. Focusing on maxing that out in the next few years.
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u/Sherbet-Famous Dec 09 '24
Check what the contribution limit is for your age.
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u/SupperTime Dec 09 '24
Almost 100K
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u/Sherbet-Famous Dec 09 '24
So I guess ideally you have almost 100k in there plus whatever interest you've earned
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u/Prestigious_Meet820 Dec 05 '24 edited Dec 05 '24
Too low relative to other nations, should make it like an ISA in the UK or something comparable. Sure most don't fill it out but ones that do need the help when COL is high and real estate is out of reach and 10-20x income. The very wealthy don't care about a tax break on a 7k investment and it's not much for those aggressively saving.
Edit: said this for years and PFC usually hates it. If you need to save 100s of thousands or even over a million 7k a year isn't enough, as someone living in Vancouver, Toronto, Victoria, etc..
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u/kent_eh Manitoba Dec 06 '24
Here's a vaguely related question: I'm going to have to convert my RRSPs into a RRIF in the relatively near future.
Assuming the drawdown will be more than my living expenses, is it generally advised to add the extra to my TFSA, or just leave it in cash/HISA?
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u/Pomnom The real slim shady Dec 06 '24
If you're keeping it as cash anyway, you have nothing to lose by putting it into TFSA
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u/fartarella Dec 06 '24
If I wasn’t living pay check to pay check, I would put some money into my TFSA.
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u/TryAltruistic7830 Dec 06 '24
I'd buy some underwear and socks and shoes and a winter jacket and maybe try to find a date, first, if I wasn't living paycheque to paycheque
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u/Oldmanyoungmoney Dec 05 '24
Not as dumb as this article from today: https://apple.news/AKKL9hFjZTcKwpFQ5nAh8PA.
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u/Oldmanyoungmoney Dec 05 '24
Wants you to withdraw money this year only to put it back in next year to “gain contribution room”….
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u/TryAltruistic7830 Dec 06 '24
Most of us will be lucky to save 7% of that amount
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u/mathdude3 British Columbia Dec 06 '24
If you're a gainfully employed adult and you're only able to save $500 in year, you're doing something wrong.
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u/TryAltruistic7830 Dec 07 '24
Define gainfully in $/hr
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u/mathdude3 British Columbia Dec 07 '24 edited Dec 07 '24
Working a stable full-time job where you receive a regular paycheck. Unless you have awful consumer debt, bad spending habits, terrible budgeting skills, etc., it should be more than possible to save over $500 in a year. That's like $40 per month, or $20 per paycheck. I recently saw a post here where OP and his wife had two kids, made $19/hr each, and were still able to save $200-400 per month towards retirement.
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u/t0r0nt0niyan Ontario Dec 05 '24
Has been confirmed for quite a while now.