April 21 Federal Budget | Page 4 | Tax Free Savings Accounts | Discussion forum

I think this link should make most, confident to invest the additional $4500.

http://news.gc.ca/web/article-.....medium=eml

They are not assuming any responsibility at all. There is also no preemption either.

CRA has traditionally administered proposed tax system changes when they are proposed in a budget and not waited until the actual bill is passed by Parliament months later. That is not new.

The proposed TFSA limit increase is proposed to be effective January 1, 2015 (of this year). Even overcontributions, up to $4,500, made before the budget would be okayed upon the passing of the legislation.

Now, one has always been free to overcontribute to a TFSA. I don't think financial institutions can stop overcontributions. They don't know what one's remaining TFSA contribution limit is. To keep people within their limits, there's a 1% per month penalty on TFSA overcontributions that CRA will levy.

It seems that all CRA is doing is temporarily not enforcing the 1% per month penalty.

There's still a bit of risk. The Advisor.ca article The Family Tax Cut could disappear gives some background and describes a rare instance of a proposed tax change that did not end up passing in Parliament:

...

Still, it’s rare for a provisionally implemented tax change not to be passed. In 1979, then-prime minister Joe Clark raised the gas tax. As soon as the tax was announced, pump prices rose. Clark’s minority government was defeated four days later—and the law hadn’t passed. The tax rate reverted to its pre-budget level and the government had to reimburse the people who’d already paid it, says another Parliamentary expert. It decided to lower the gas tax for the same length of time that it had been raised.

Under that logic, families who benefitted from family income splitting in 2014 could have to pay back their tax savings, says the expert. CRA didn’t confirm whether that would be the case.

Until there’s a law to back it up, family income splitting exists in a grey zone. In fact, CRA is delaying tax reassessments for anyone who neglected to apply income splitting to their 2014 return.
....

The amount at risk is the 1% per month overcontribution penalty on $4,500 for the nine months of April to December. That's 9 x 1% x $4,500 = $405.

Bill said

Loonie, you say that cabinet ministers have pre-empted the parliamentary process. Wrong. As the Globe article indicates, this "view appears to be on solid procedural ground, according to the House of Commons rule book. It notes that it is “the long-standing practice of Canadian governments to put tax-measures into effect” as soon as the notice is tabled, “even though it may be months, if not years, before the implementing legislation is actually passed by Parliament.”" Just because many Canadians or some politicians don't know that this is usual procedure, has been forever, doesn't make it true.

Just because it's the usual procedure, this doesn't make it right.

Obviously not everyone agrees that this is a valid procedure, no matter how often it may have been done or how customary it is. It's not rocket science to conclude that if a bill has not been passed, it is not yet the law. And this is not a partisan issue. It would be true no matter who was in power.

Perhaps it's time the procedure book was revised, although this is unlikely because this procedure will always favour the party in power, by definition - which is probably how it got started. It would take a Supreme Court ruling to do anything about it. Appealing to the Speaker is unlikely to bring results.

So, I will revise my stance. The cabinet ministers, in cooperation with the procedure book, have, or appear to have (in the case of the latter) pre-empted the parliamentary process.

I don't think anyone will ever lose 1% / month over this, but I will wait until the budget is passed.
I still have a soft spot for the democratic process.

Disclaimer: I am NOT desperate!!!!!!

I just find the whole process of a real confirmed date lacking, of when we can do a deposit. The postings on the government websites still have "reason of doubt to proceed" clauses.

When exactly the budget will pass or receive Royal Assent? Anybody knows?

If it will happen before July 2015, I will wait another 2 months with my TFSA top-up.

Winnie said

When exactly the budget will pass or receive Royal Assent? Anybody knows?

If it will happen before July 2015, I will wait another 2 months with my TFSA top-up.

It's still early. It takes a few months. I don't think the bill to implement the budget has been tabled yet. Exact time depends on whether or not there are amendments needed.

To give one an idea of the time involved, this is the timeline for Bill C-31 (Economic Action Plan 2014 Act, No. 1), the first bill to implement some of the changes for Budget 2014:

House of Commons
2014-02-11 Budget tabled
2014-03-28 First reading of Bill C-31
2014-04-08 Second Reading and Referral to Committee
2014-06-12 Third Reading

Senate
2014-06-12 First Reading
2014-06-16 Second Reading
2014-06-18 Third Reading (passed without amendments)

Royal Assent
2014-06-19

On the Government's web page http://www.cra-arc.gc.ca/tx/nd.....u-eng.html which was updated on May 5, 2015, the note given is:

"Important notice

Under proposed legislation, the annual TFSA dollar limit for 2015 is increasing from $5,500 to $10,000.

The proposed measure increasing this limit is subject to parliamentary approval. Consistent with its standard practice, the CRA is administering this measure on the basis of the Budget announcement. Financial institutions may immediately allow existing and new account holders to contribute up to the proposed maximum."

So the TFSA limit is not yet a sure thing (though given the gov't majority, it is likely to pass).

Caveat emptor!

Bill C-59, Economic Action Plan 2015 Act, No. 1, was tabled in the House of Commons on Thursday, May 7.

Among the amendments to the Income Tax Act in the bill is the amendment to increase the TFSA annual limit to $10,000.

Full text and current status of the bill are available at LEGISinfo: C-59 An Act to implement certain provisions of the budget tabled in Parliament on April 21, 2015 and other measures.