This is a letter to the editor.
Critics of the recent $4,500 increase in the contribution limit for TFSAs claim it only benefits the wealthy. What they are overlooking is that the TFSA is the only tax-advantaged vehicle available to many Canadians for accumulating retirement savings.
There are a large number of single-income families in Canada. For the parent who stays at home, there is no other tax-advantaged vehicle available to fund a retirement income. Those parents don’t get a government or corporate pension and won’t be receiving CPP benefits because they weren’t eligible to contribute. They are also not allowed to fund a RRSP because allowed contributions are based on earned income.
Where do stay-at-home parents get money to contribute to a TFSA? Some receive money from their working spouses, some inherit money from family, some receive divorce settlements and some have a share in the proceeds on the sale of their homes.
There are many tax-advantaged avenues available for members of the workforce to save for the future. For stay-at-home parents, the TFSA is the only one. The $10,000 annual contribution limit should be left in place.
As for the wealthy, the tax savings on the income earned on an extra $4,500 TFSA contribution won’t be enough to buy new tires for their Porsches.
Geoff Whitlam is president of Mackie Research Capital Corporation.
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