Are you going to top up your TFSA before the changes? | Tax Free Savings Accounts | Discussion forum

Here is your answer.....don't sweat it. Not retroactive.

http://www.moneysense.ca/save/.....-trims-it/

The question is, will Trudeau really do it? 67% don't want it changed. What will the new max be 10k, 5.5k, 8k? Write your Liberal MP. Not a good change for retirees.

I think the question is really around 2016 contribution room and going forward.
Trudeau did say clearly in the past that he would repeal the recent increase in contribution room. There is no reason to think he won't do it, as people knew this when they elected him and it was part of his campaign.

He has also said he thought 5000/yr was a good number, but sounded less committed to that exact figure.

No reason to think he would do anything retroactive.

What I am unclear about it what happens if his first budget isn't until 2016? Would he be able to make it retroactive to Jan 1? There have been retroactive budgetary measures in the past, but it would be a bureaucratic nightmare to do this with TFSA - remember what happened when people accidentally overcontributed a few years ago because they didn't realize you couldn't take money out and put it back in the same year? They had to allow it in the end.

I think we have to stay tuned, for now, but no harm in topping up through 2015 as far as I can see. I don't see why anyone wouldn't do that as soon as they have the money to do so.

Getting back to the question at hand...

TFSA would be a budgetary measure. He can't do much of anything without passing a budget. First, he may have to repeal the bill that prohibited deficit budgeting, if it passed - I lost track of that one. Then he will need to pass his budget. However, it does take time to prepare a budget. There was speculation on the news yesterday that it could be January.

I'm taking bets on how long it will take for him to declare that the books are in much worse shape than the last govt allowed. Every incoming govt does this because every outgoing one tries to make things look as rosy as possible. The only question is HOW MUCH worse.

Seriously though, it's best to wait and see for 2016. If January rolls around and there has not been a budget, then I see no reason not to go ahead. I'm confident it will be in the first budget, because it will save the govt a lot of money. It's possible they would make some provision for people who had contributed in early January before a budget had been presented, such as allowing the overcontribution to be put forward, as a 2017 contribution.

No point speculating, they can do anything in a budget - e.g. maybe they'll say there's a total limit of $10K for 2015 & 2016 combined, who knows? I expect the government will give some clear direction as to the limits prior to Jan 1/16 because they know many folks top up at the first opportunity. Best thing to do is ignore proposals, promises, etc, and adhere to the limit in effect according to the tax law on the day you contribute, unless the government advises otherwise. The investment industry wants as much of your money as possible so until there's clarity of course it will encourage folks to continue to put in $10K, the current legal limit.

Rick said

If you remember back when Harper increased the limit to 10K, the rule was "retroactive to Jan 1, 2015". When it was first announced, CRA recognized the pending amendment before it actually became law. I, for one, jumped into the deep end and topped ours up as soon as it was announced. The question is, will he announce it before the budget?, in which case CRA will probably recognize the pending rules to be effective as soon as it is announced, just like the increase. The tricky part will be if he announces after Jan 1 and a lot of people have already contributed the current 10K max. Personally, 10K was a bit much of a contribution for two to handle every year. Do-able but difficult. I would be ecstatic if he compromised and made it 7500.

Rick. For retirees that want to wind down RRSP/RRIF it is perfect!! So 10k per year ....part from RRSP and part from forced savings is attainable. And you don't want to do too much more than 8k-10k RRSP withdrawal anyways.

No doubt he will make his "mark" but 7.5 or 8k would not be more livable...but 10k would be a good consideration for over 65 as I am not sure how the income tax deduction will help us.

Hi, I think the government is pretty reasonable and will consider that a lot of us have made financial plans using TFSA and hopefully your 2017 projection wont happen.