For Immediate Release
December 11, 2015
Despite TFSA limit reduction, Canadians have lots of tax-free saving room
ABBOTSFORD, B.C. — The federal Liberals made good on one of their campaign promises this week, clawing back the tax-free savings account (TFSA) contribution limit to $5500 annually. The reduction rolls back the $10,000 limit put in place by the previous federal government.
For most Canadians, the change is unlikely to garner much attention.
“Many people are not taking advantage—or full advantage—of their TFSA,” says Jim Petroski, an investment advisor with the Envision Financial division of First West Credit Union.
Petroski says the lower annual limit won’t make much of a difference to the average Canadian.
“At least 75 per cent of those who have TFSAs aren’t contributing the maximum they’re allowed,” he says. “They may not understand how to use the TFSA for the most benefit to their financial picture.”
Added to the lack of understanding, there’s much to suggest that a TFSA may not even be on many Canadians’ radar. It has been well documented in recent years that Canadians have been inclined to spend rather than save or invest, meaning that most likely have plenty of TFSA lifetime contribution room.
“TFSA contribution room carries over year to year, so the rollback to a $5500 annual limit won’t mean much for individuals who have several thousand dollars worth of contribution room,” he says.
The good news is that the bump the Conservatives made from $5,500 to $10,000 for the 2015 tax year will hold. That means people don’t need to rush to make their $10,000 contribution for 2015 as that room will carry forward into future years, if unused.
“Many Canadians have room in both their TFSA and their RRSP, but these are just two of the many investment options available,” Petroski says. “If someone does find they’ve met their contribution limit, it may be the right time to re-visit their financial plan and goals with an investment specialist.”
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 40 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, visit www.envisionfinancial.ca.
Manager, Public Relations & Communications
First West Credit Union