April 7, 2015

The IIAC Supports Doubling the Limit for TFSAs

According to numerous media accounts breaking this morning, Finance Minister Joe Oliver is hinting that his upcoming budget will double the limit for tax-free savings accounts (TFSAs). 

In fact, BNN has confirmed the contents of a letter written by the finance minister where he says the TFSA changes are going to happen.

If true, the move would be applauded by the IIAC. 

In a recent Financial Post guest column, IIAC President and CEO Ian Russell outlined why:  “The TFSA isn’t just a popular savings instrument among Canadians, especially for many middle-income Canadians facing retirement. It is also an economic tool, generating economic growth, jobs – and ultimately government revenues. Anyone examining the “costs” of TFSAs must also look at the benefits”.

FP guest column TFSAsAccording to Russell, TFSA critics are overlooking the benefits of this popular savings tool.

“These accounts shelter returns from after-tax income, assisting Canadians in supplementing RRSP savings for retirement and other purposes. They provide flexibility, permitting an annual contribution of up to $5,500, and withdrawal at any time, with the ability to restore balances in subsequent years. The Americans don’t have anything like the TFSA. Even Roth IRA plans, while similar in structure, contain far more restrictions and corresponding hesitation to use Roth accounts to save.

“Canadians quickly latched onto TFSAs, with the number of accounts nearly tripling in the past five years to reach 13 million. Financial assets in TFSA accounts increased nearly seven-fold in the same period, from $18 million to $131 million, and average account size has increased from $3,751 in 2009 to $9,118 in 2012.”

The full article, which includes Russell’s argument that recent analyses underpinning the estimates of tax revenue losses from TFSAs are “completely missing the point”, is available here.  A follow-up interview on BNN can be found here.

Media interested in interviewing Ian Russell before or after the budget should contact:

Michael Gotzamanis
Manager of Communications
416.687.5475 (office)