As the Tuesday papers reported, the middle-class tax cut and lower annual TFSA contribution limits kick in as of Jan. 1 2016. As the FP’s Garry Marr wrote Tuesday I suppose we can be grateful the Liberals didn’t cut the TFSA program altogether and it could have been worse: they might have cancelled out the “bonus” $10,000 TFSA room we received in 2015. A truly churlish move might have been to allow only $500 in 2016, although the administration nightmares and hordes of angry voters — 11 million of them have TFSAs and more than half liked the higher limits — would surely have created a backlash.

The other tiny bit of silver lining is that the $5,500 limit is again linked to inflation (the $10,000 limit was not), so we can at least hope that the limit will eventually rise to $6,000 and beyond if inflation rises in earnest. Of course, that will be another problem.

In any case, as the Hub showed on Tuesday, the Working Canadians petition is now live at  https://petitions.parl.gc.ca, after Conservative MP Peter Kent (Thornhill) sponsored Catherine Swift’s petition. It will be up until early April. After just a week, it has just under 3,000 signatures, on top of the 7,000 from the earlier Working Canadian petition. See also my FP piece that day: TFSA cancels out benefits of ‘middle class’ tax cuts, critics warn.

I find it interesting that those of us who support the petition all tend to be 60-plus and still working. That applies to Catherine and Peter, though I’m not sure about Bill Tufts, who also wrote a Hub blog on the topic as it relates to pension parity.

The two-tiered society

I actually had a bad cold all week and had to force myself to continue working. It occurred to me that this was a stark contrast to recent news stories about how many extra sick days public-sector workers take, especially on Mondays and Fridays in the summer.

Couple that phenomenon with the disparity between public-sector and private-sector pensions and it’s clear we have a two-tiered society: those in the public sector who take plenty of paid vacations and sick days and who can retire in their late 50s; and those in the private sector who keep toiling well into their 60s and are reluctant to stop working even when they’re sick. (which is what I am as I write these words: hope it doesn’t show!). Continue Reading…

Here’s my latest blog for the Financial Post, titled Here’s how to find all your tax info in one place.

It features chartered accountant Robin Taub (pictured), who is also a spokesperson for Turbo Tax.

I know that filing personal tax returns seems impossibly far away, considering that winter has yet to begin in earnest. But as Taub points out, there are only three weeks left in 2015 and if you want to minimize tax owing for this calendar year, waiting until 2016 may be too late for certain actions: notably making charitable contributions or making a contribution to an RESP in order to qualify for the accompanying grant.

December 31 is the deadline for those but there’s an earlier practical deadline of December 24th for those who want to engage in a last-minute bout of tax-loss selling or booking offsetting gains. That’s because it takes three days for trades to settle and there aren’t a lot of working days left to trade between Christmas and New Year’s.

But Taub’s number-one tip is that the easiest way to get organized early for the next tax-filing season is to sign up for the Canada Revenue Agency’s My Account for Individuals. The FP blog goes into some detail on that.

TFSA rollbacks will hurt the needy

Also in the FP today is an article by public policy consultant Neil Mohindra entitled TFSA rollbacks will hurt the needy. Continue Reading…

Ottawa is moving to steamroller the old $5,500 TFSA limit back into place by Jan. 1, 2016, less than a week after the federal clerk of petitions posted the government’s version of the Working Canadians’ TFSA petition to keep the annual contribution limit on Tax-free Savings Accounts (TFSAs) at the current $10,000 level.

Details also in my column in Tuesday’s Financial Post or online, headlined TFSA cap cancels out benefits of ‘middle class’ tax cut, critics warn.

The URL for the federal clerk of petitions’ TFSA petition is at https://petitions.parl.gc.ca

The Hub has been following this petition since its creation in the aftermath of the Liberal Government’s electoral victory.

Last Thursday morning, Working Canadians issued an update that was posted at the Hub’s sister site, Findependence.TV, because the Hub itself was down for maintenance that day. It was headlined Majority of Canadians support leaving TFSA limit at $10,000, poll shows.

Updated 3:15 pm.

Working Canadians issued two press releases today. The first was at 5 am under embargo and appeared on the original version of this blog. It is still there at the bottom, but we have added above it one issued mid-afternoon today:

Dear Working Canadians Supporters:

You may have heard that late yesterday afternoon the new federal Finance Minister Bill Morneau said the government was planning to proceed with reducing the Tax Free Savings Account (TFSA) limit from $10,000 to $5,500. As you may know, Working Canadians has waged a very successful campaign over the last few weeks to encourage Canadians to support leaving the TFSA limit at the current level. The support from Canadians of all income levels, of all age groups, and even of those supporting every political party has been overwhelmingly positive. Despite their claims to the contrary, if the government reduces the TFSA limit they will be doing so against the best interests of the vast majority of Canadians.

After we launched the initial Working Canadians electronic petition about a month ago to encourage the government to retain the Tax Free Savings Account (TFSA) limit at $10,000, the federal government very recently created its own online petition process Continue Reading…

Low interest rates are a secular rather than cynical phenomenon, and can be expected to stay with us for the rest of the decade, according to Vanguard global chief economist Joe Davis.

Speaking on a conference call to journalists Wednesday, David said that while the U.S. federal reserve will soon initiate “Lift-off”  on interest rates, this will be followed “by a potential pause around 1%.” He termed this a “dovish tightening” that will remove some of unprecedented accommodation that’s occurred since the global financial crisis.

“In our view, there is a high likelihood of an extended as in interest rates at, say, 1%, that opens the door for balance-sheet normalization and leaves the inflation-adjusted federal funds rate negative through 2017.”

As a result, Vanguard’s outlook for fixed income “remains positive, yet muted … our ‘fair value’ estimate for the benchmark 10-year US Treasury yield still resides at about 2.5%, even with a Fed lift.”

US equity bull market likely to persist for some time

Continue Reading…