Hub Blogs

Hub Blogs contains fresh contributions written by Financial Independence Hub staff or contributors that have not appeared elsewhere first, or have been modified or customized for the Hub by the original blogger. In contrast, Top Blogs shows links to the best external financial blogs around the world.

Weekly wrap: TFSA fever & the looming election, how robo-advisors affect human advisors, and more

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“Glad I saved up in my super-sized TFSA for these new shoes. These are almost twice as big as my old pair.”

By Jonathan Chevreau

Judging by the post-budget media coverage, Tax-free Savings Accounts or TFSAs are now a household name. Little wonder, with nearly 11 million Canadians enrolled in them. (For any American readers, the TFSA is the equivalent of Roth plans: no tax deduction going in but no tax going out. The TFSA was introduced in Canada in January 2009).

Seeing as the TFSA is shaping up to be a major political issue, this topic won’t be going away any time soon. On Twitter following the budget, I highlighted several note-worthy pieces that touch either on the mechanics of the new $10,000 TFSA limit, the political implications or both.

Yes, Ontario followed up with a budget of its own but by definition that’s a bit “provincial.” You can find all you really need to know by reading Andrew Coyne’s piece in the National Post: Little Difference Between Ontario and Federal budget, until it comes to deficit.

No, the big kahuna was the federal budget and – as part of the Findependence Trifecta I wrote about on Tuesday – the TFSA expansion. As regular Hub readers know, we were quick to make the extra $4,500 contribution and by Friday the papers were reporting finally that CRA had blessed the strategy of topping up the TFSA immediately. For instance, the Globe’s Bill Curry in CRA clarifies time line of new limit. And John Heinzl did a Q&A with CIBC’s Jamie Golombek on some of the mechanics of transferring securities in-kind from taxable accounts to TFSAs

Over at the National Post, columnists did a good job explaining the political battles that are swirling around the TFSA, Continue Reading…

Become financially independent to enjoy life!

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money problemsBy Good Nelly,

Special to the Financial Independence Hub

It is no longer a universal vision to work towards having a better retired life. Instead, everyone is trying to achieve financial security or independence. This means you should have sufficient resources so you can choose whether or not to work on a daily basis; or, you can choose work where you’ll get complete job satisfaction, instead of worrying about the amount of your monthly paycheck. Here’s a discussion about why you need to work towards having financial independence or “findependence,” and how you can achieve it.

Why should you make Findependence your ultimate goal?

Continue Reading…

Experts: go ahead and make that extra $4,500 TFSA contribution now: I just did

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By Jonathan Chevreau,

Financial Independence Hub

At least one of Canada’s big banks is giving clients the go-ahead to top up their Tax-Free Savings Accounts by the extra $4,500 amount specified in Tuesday’s federal budget.

CIBC Wealth’s Jamie Golombek says the Budget included draft legislation that allows for an increased TFSA dollar amount for 2015 to $10,000, up from $5,500, the current 2015 TFSA dollar amount.  But critically, he added:

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CIBC’s Jamie Golombek

“We have received confirmation from the Canada Revenue Agency that, while the legislation is subject to Parliamentary approval, consistent with its general approach for proposed income tax changes, it is administering the measure on the basis that $10,000 is the new TFSA annual contribution limit. Clients may therefore proceed to contribute to their TFSA based on this proposed law.”

On Wednesday, the Hub ran an (since updated) blog that suggested investors contemplating such a purchase hold off a few days, pending comment from the Canada Revenue Agency and Continue Reading…

Thinking of making a $4,500 TFSA contribution right now? Read this first

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By Jonathan Chevreau,

Financial Independence Hub

Preamble: This is an expanded version of a blog originally posted late Wednesday. I’ve retained the original beginning after this preamble, since it concerns action we can now take with our expanded TFSAs. Or can we? As the second half of the revised blog recounts, the newspapers today are full of accounts about super sized TFSAs becoming a real political issue.

According to Tuesday’s federal budget, Canadians can now put an additional $4,500 into their Tax Free Savings Accounts (TFSAs), effective immediately. However, when I made inquiries at my friendly local financial institution, I was dissuaded from this course. You can  try if you want but it’s basically at your own risk until the proposal is formally enshrined in legislation later this summer.

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Jamie Golombek, CIBC Wealth

I checked with CIBC Wealth’s in-house tax guru, Jamie Golombek, who issued the following statement:

“We are awaiting a response from Finance and CRA — here is my official comment: The Budget included draft legislation that allows for an increased TFSA dollar amount for 2015 to a total of $10,000, up from $5500, the current 2015 TFSA dollar amount. On the expectation that this legislation will pass, clients may wish to contribute this additional amount to their TFSAs. In the event the legislation is not ultimately finalized, in my view, it is unlikely that the CRA would penalize taxpayers for acting on draft legislation: however, we expect CRA to comment on this over the next few days.”

Consider transfers in kind and taking a one-time tax hit

I might add that coming up with $4,500 may or may not be an issue right now, depending on whether you expect a tax refund or have to pay taxes for the looming tax filing deadline. Keep in mind that you don’t have to fund TFSAs with new cash: if you have significant non-registered investments you can “transfer them in kind” into the TFSA. Continue Reading…

A visual guide to the Budget

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wealthbarlogoIf you prefer pictures and graphics over text, you may enjoy this visual guide to Tuesday’s federal Budget, prepared by Vancouver-based robo-advisers, Wealthbar.com.

Until we figure out how to embed it here at the Hub, we’ll just send you over to the graphic housed at Wealthbar’s site. Just click on the red link below:

http://blog.wealthbar.com/visual-guide-to-the-2015-canadian-federal-budget/