Boost To Tax-Free Savings Account Can Benefit Modest Income Earners

Today, the federal government unveiled its 2015 budget and announced an increase to the annual contribution limit for tax-free savings accounts (TFSA) to $10,000. The increase to the contribution limit for tax-free savings is welcome news to many financial experts.

“Helping Canadians pay less tax and encouraging savings is always a good thing,” says Jim Petroski, a certified financial planner and investment expert at Envision Financial, a division of First West Credit Union.

Petroski notes, however, that a higher TFSA contribution limit is likely to have a modest effect for those in lower income tax brackets.

“These individuals or families are probably already spending most of their income on essentials like housing, clothing and food,” Petroski says. “Still, I have met many people with modest incomes that still manage to save money each month. For these folks, the TFSA may be the best way to save because it doesn’t have the tax implications and potential claw backs that other savings vehicles have once these people reach retirement.”

The boost to the TFSA could also help first-time homebuyers. Petroski has advised many young, engaged couples who are right out of university, starting a new, higher paying job, still living with parents, but saving to buy a house.

“This is a scenario that’s becoming more common,” says Petroski. “The TFSA, combined with an RSP first-time homebuyer overlay can play an important part in the savings strategy, which could generate a solid down payment in just three years.”

Despite the benefits of the increase, Canadians still need to be thoughtful when investing money in a TFSA, says Petroski.

“It’s vital to have a clear understanding of your income tax scenario before forging ahead with any investments. Sitting down with your local investment expert to create a personal investment plan tailored to fit your life and goals is the best first step.”



About Envision Financial
Envision Financial is a premier provider of banking, investment and insurance services for residents and businesses throughout the Fraser Valley, Lower Mainland and Kitimat regions. As a division of First West Credit Union, B.C.’s third-largest credit union with 54 branches and 42 insurance offices throughout the province, Envision Financial brings innovative products, an extensive branch network and local decision making to the banking experience. For more information on Envision Financial,

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