According to surveys by Canada's big banks in and , there is evidence Canadians still aren't saving. Those who are saving, aren't saving enough. The numbers vary according to each bank's statistical methods , but Scotiabank estimates that nearly half of eligible Canadians don't have a tax-free account and nearly 40 per cent aren't saving for retirement at all. Despite championing tax-free savings accounts more than a decade ago, Kesselman has changed his tune.
Since tax breaks have failed to motivate people to save for retirement, he has now reluctantly begun advocating a compulsory savings plan, under which savers are forced to contribute to a pension big enough to support themselves through their retirement. Such schemes will require changes to existing savings plans. But any changes must not be seen as discouraging those who do make the effort to save. One change that is almost certainly coming, he says, is the provision that allows people to accumulate huge tax-free savings accounts, but still be eligible for benefits intended for lower-income seniors.
With assets and income sheltered in a tax-free account, some relatively well-off people will be able to get Old Age Security benefits without paying any tax on those benefits and even collect the guaranteed income supplement intended for low-income seniors. More analysis from Don Pittis. Don Pittis was a forest firefighter, and a ranger in Canada's High Arctic islands. After moving into journalism, he was principal business reporter for Radio Television Hong Kong before the handover to China.
You and your current or former spouse or current or former common-law partner are living separate and apart at the time of the transfer, and you are entitled to receive the amount:.
The amount of the transfer won't reduce the recipient's eligible contribution room ; however, since this transfer is not considered a withdrawal, the transferred amount will not be added back to the transferor's contribution room at the beginning of the following year. There are special situations where earnings received upon the death of the TFSA holder is considered a transfer.
If a qualified donee was named as a beneficiary of the deceased holder's TFSA, the transfer of funds to the qualified donee must generally occur within the month period following the holder's death.
Source: Canada Revenue Website: www. You can hold the same things inside a TFSA that you can in an RRSP: cash, guaranteed investment certificates GICs , term deposits, mutual funds, government and corporate bonds, stocks traded on public exchanges, and shares of some small business corporations. Stocks held outside a tax-free account, for example, qualify for lower tax rates on dividends. If you have losses on stocks, you can deduct those losses against previous capital gains if you hold them outside a registered plan, but not if they are in a tax-free savings account.
If you don't make a contribution in you can carry forward that amount to the next year. This carry-forward feature goes on indefinitely. One popular strategy that has emerged is for seniors, who are required to withdraw a prescribed minimum amount annually from their RRIF at age 72, to recontribute any after-tax withdrawals not needed to fund living expenses back into a TFSA for tax-free retirement accumulation.
Finally, keep in mind that any amounts withdrawn from your TFSA can be recontributed, beginning the following calendar year, without using up TFSA room. Golombek cibc. Sign up to receive the daily top stories from the Financial Post, a division of Postmedia Network Inc.
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