The epiphany

Just a few days remain to contribute to your retirement plan in order to deduct it from the 2020 tax bill. Wow. Up to $27,230, plus any amount missed in the past. And money’s not required, of course. Assets already owned can be shifted over and counted as a contribution. (Watch for tax that might be triggered.) Or you can borrow the cash from the bank or CU and use the refund to pay down the loan. It’s an easy way to buck up net worth.

But, wait. We have a problem.

The slimy little pathogen has hugely increased personal savings (thanks to Trudeau Covid cash and WFH), but it’s also dashed confidence. RRSP contributions, says a new bank survey, will be far lower this year – meaning a lot of people will pay more tax. And here’s all the evidence you need that most people have never (and will never) read this pathetic blog: half the nation has no idea what can go into an RRSP (like exchange-traded funds). When it comes to women, only 40% get it.

Yup. Our enemy is financial illiteracy. It’s why most people are perfectly okay over-paying for a house with 20x leverage using a loan with a 100% chance of resetting at a higher rate, but they have no liquid assets. Or not enough for the future. It’s weird, cultural, dangerous and apparently sexist.

You have seven more sleeps to fix this. Given what Chrystia the Impaler is likely to do in her maiden budget next month (or soon thereafter) tax avoidance is a big deal. And maxing your RRSP is one of the best strategies possible since it allows tax to be shifted, and reduced. So do it.

Now, there’s also another method of revenge. That’s the tax-free account. And blog dog Nick just had a TFSA epiphany…

A non-financial world friend of mine said his accountant let him know about a loophole in the rules. The idea is that if you hit a grand slam in your TFSA, withdraw the profits, you have then just created new contribution room for yourself over and above the annual contribution limits. Example: I contribute $10k today. Somehow it becomes $100k by December. I then withdraw all of it before the calendar turns over to 2022, and then on Jan 1 I’ve created $100k of contribution room, plus the new annual contribution amount. Sounds too good to be true, right? But it seems like this might actually be allowed.

Being someone who has worked in the industry for years, I feel like I would have known if this was possible. I just assumed any added-back contribution room from withdrawals would be equal to whatever your lifetime contribution amount is, plus any new annual amounts. I never thought you’d be able to “earn” more room because you did extraordinarily well in the markets. Hoping you can clear this up in your classic Garth way in a future blog post.

Oh, Nick. You’re so cute and naïve. This is why the TFSA is the gift that just keeps on giving.

Your pal is correct. In theory there’s no limit to the amount that can be put into a tax-free account. Yes, the annual contribution limits are carved in stone – so everybody in 2021, for example, gets to dump six grand into their plan (though most will not). But assets which have been sitting in a TFSA and grown in value can be removed, opening up new contribution room. That is not a taxable event, so the TFSA did its job in allowing that expansion and ensuring you get to keep 100% of it.

(Of course assets that lose value in a TFSA drag you down. And the losses are not deductible from gains, as in a non-registered account. So stop reading r/wallstreetbets.)

Here’s exactly what the CRA allows you to put into the tax-free account: (a) the annual contribution room created automatically each January 1st, plus (b) any unused room from previous years, plus (c) an amount equal to whatever was taken out of the TFSA in the past. Thus there’s no upper limit to what a TFSA can hold. If you’re a genius at growing assets inside the plan, they can be removed, used to buy a Porsche or a golden retriever, then the tax-free account room filled up with new cash.

Also recall that when you retire a fat TFSA stuffed with growthy things can provide steady cash flow which will not be reported to the CRA. No impact on government pogey like CPP, GIS or OAS. This is in stark contrast to the RRSP (which must eventually become a RRIF), since every dollar flowing from there is added to annual taxable income. Sadly that could push your marginal rate higher.

What to do?

Fill your RRSP this week. Find the room on your NOA. Use the refund for the TFSA. Buy growth ETFs. No GICs. No HISAs. No advice from [email protected] And do it PDQ.

OK?

About the picture: Ranger, Grim, Chase, and Tracker were stars of last year’s K9 squad calendar, created by the Waterloo Police Service. Notable fund-raising dog-cop calendars are put out by several forces now, including the OPP in Ontario, Winnipeg and the granddaddy of canine beefcake publishers, the Vancouver Police.

128 comments ↓

#1 Rick Fast on 02.22.21 at 1:40 pm

GTA housing bubble will crash by 50% in second half of the year! KABOOM

#2 TurnerNation on 02.22.21 at 1:47 pm

#158 Penny Henny on 02.21.21 at 10:52 pm
Two’s fine. I created this name back when HarperNation and LeafsNation still was a thing, Then we got FordNation. FlamesNation?
….

All the info in my posts is from the Mainstream sources. It’s all I got.
(The links come from a handful of aggregator sites, not much to check up on)
Looking for TRENDS. Especially the financial ones. Human impact cannot be ignored because guess what. The Internet of Things is us. People. There’s tons of money in herding us like cattle, controlling our Breeding, Feeding and Travel/Movements.

I mentioned the wearable tracking/shock collars for employees back in JULY when it came out – https://www.greaterfool.ca/2020/07/06/blather/#comment-722967
Last week, Ontario Govt is making workers wear this same brand. For their health. Air Canada, Liuna Labour union use the same This is not going away; A.I. control is here to stay.

— A bit of hyperbole sometimes kicks the mind out of the daily humdrum of living in State of Emergency- which my Premier has declared well into the future.

Fact: in my prefecture the Health Authorities have declared it Too Dangerous for me to eat inside in public. Never before in human history, have we been in this much danger they say.
It’s been this way, fully for a **year** now. Tell me this is not an economic warzone?

The big dogs like Sail, Crowded, Yellow Tractor, crossbordershopper, AceG, even Nonplused and Dolce kick out the perscription to the brain freeze. Faron lately makes some points with his optionsl commentary.
………………

Oh boy here it is. Always our Travel shutting down. From March 2020 they told us #stayhome right? That said I heard the United 777 was 26 years old

– The Guardian
Boeing 777s grounded by airlines after FAA issues emergency order
-The Washington Post
United Airlines to ground some Boeing 777 planes amid FAA investigation of Saturday’s Denver engine failure incident


Travellers complain of unanswered calls, long wait times to book quarantine hotels (ctvnews.ca)
“”It’s not even possible to comply with these new restrictions as is because you cannot get through on the phone line,” he said, adding he’s been on the phone close to 10 hours in total. He’s said he’s also been in touch with his MP for help. “They have told me if she doesn’t book before she travels, she will be denied boarding and if by some way she can board her flight and she has not booked a hotel before arriving, she will be fined up to $3,000 per day under the Quarantine Act.””

#3 BlogDog123 on 02.22.21 at 1:53 pm

yeah, those bank GICs in your TFSAs are no good, but so many people do it… I’ve seen it and cannot seem to convince people to use it for ETFs in a self directed account…

Growthy ETFs go in there, think long term growth…

#4 Sail Away on 02.22.21 at 1:59 pm

Canadians are so lucky.

Our family would probably be twice as wealthy if dual US/Cdn citizens didn’t lose any and all TFSA benefit. The house would be wall-to-wall tourist art. Wouldn’t have even needed an offshore corporation.

Oh well… we may be treated unfairly, but can at least maintain a high level of decorum and culture.

#5 Flop... on 02.22.21 at 1:59 pm

“Fill your RRSP this week. Find the room on your NOA. Use the refund for the TFSA. Buy growth ETFs. No GICs. No HISAs. No advice from [email protected] And do it PDQ.”

///////////////////////////////////////

O.k I’ll take the test, training wheels are coming off.

Fill out your Registered Retirement Savings Plan this week. Find the room on your Notice Of Assessment. Use the refund for the Tax Free Savings Account.Buy growth Exchange Traded Funds. No Guaranteed Investment Certificates. No High Interest Savings Accounts. No advice from The Nice Lady @ The Bank.

And do it Pretty Damn Quick…

M46BC

#6 Alex on 02.22.21 at 2:02 pm

#3 BlogDog123 on 02.22.21 at 1:53 pm
yeah, those bank GICs in your TFSAs are no good, but so many people do it… I’ve seen it and cannot seem to convince people to use it for ETFs in a self directed account…

Growthy ETFs go in there, think long term growth…

—————————–

Don’t forget about the people that don’t even do GIC’s and just leave it sitting in HISA earning .05%. There are a couple decent banks that still offer 1.5% like eqbank but most people don’t wanna be bothered.

#7 Phylis on 02.22.21 at 2:10 pm

Shouldn’t this become a part of the rebalancing activity?

#8 will on 02.22.21 at 2:11 pm

yup. just got back from the tax preparer a while ago. made the big transfer to the rrsp. done. will take care of the tfsa over the next few weeks.

#9 Millennial 1%er on 02.22.21 at 2:12 pm

please don’t touch the TFSAs or RRSPs christia…. they’re my last hope for living a comfortable & financially free life

#10 Faron on 02.22.21 at 2:17 pm

I have two questions for Garth or whomever regarding where to put new TFSA or RRSP funds:

What to do with the fixed income portion as rates rocket? More preferreds? Shorter maturities?

What are your thoughts on REITs as rates go up? RE tends to have a strong negative correlation with rates, but there’s also probably some recovery to come there too.

And comment:

Bond volatility continues to rocket upward indicating implied fear in the bond market. The yield on the 10 year is back where it was on Feb 24th last year and closing on a full 100bp rise since the August low. NASDAQ is not happy with the rising rate situation. Mortgage rates rising in 3…2…1…

#11 TurnerNation on 02.22.21 at 2:27 pm

So what’s the Long Game? Wink wink nothing to see here it’s not like our ruling elites have a global plan.
This global WW3 is for our minds:

“But that radical change in people’s lives is the other great scientific achievement of COVID-19, one that may have given government important clues on how to modify citizens’ behaviour for other big global issues – such as climate change, for instance.
https://www.toronto.com/opinion-story/10335558–the-nudge-unit-ottawa-s-behavioural-science-team-investigates-how-canadians-feel-about-vaccines-public-health-and-who-to-trust/

…..which is why on another, less-pathetic blog somebody commented this — war back in March:

““March 24, 2020
We’re in an experiment. We’re now getting a glimpse of what a high tech, low carbon, limited mobility civilization looks like. The technocrats must be loving this – they’re going to have so much data to analyze after the experiment is over. Other major interest groups will use this experiment to further their agendas””

————–

Yikes. The control over our Breeding. You’ve come a long way, Baby?
-The New York Times @nytimes Yesterday
Venezuelan women have lost access to contraception, and control of their lives
The New York Times’s Andes Bureau Chief on the disappearance of affordable birth control in Venezuela, and how it’s pushing many women into unplanned pregnancies at a time when they can barely feed the children they already have.

……..
Doomers you are on the wrong side of science. A year into this Economic Shutdown and loss of all individual rights:

Study: Fan Attendance at NFL & NCAA Football Games Did Not Increase Coronavirus (medrxiv.org)
https://www.medrxiv.org/content/10.1101/2021.02.15.21251745v1
Importance In 2020 and early 2021, the National Football League (NFL) and National Collegiate Athletic Association (NCAA) had opted to host games in stadiums across the country. The in-person attendance of games has varied with time and from county to county. There is currently no evidence on whether limited in-person attendance of games has caused a substantial increase in coronavirus disease 2019 (COVID-19) cases.

https://ipolitics.ca/2021/02/20/health-officials-cant-provide-data-pointing-to-hotel-quarantine-decision/
Public health officials testifying at the House of Commons health committee couldn’t point to the data used to determine how hotel quarantines will curb the spread of COVID-19 and its variants.
Rempel Garner was inquiring about the process that led to the federal government’s new requirement for travellers flying into Canada to pay to quarantine at a hotel for three nights as they await COVID-19 test results — and how this measure would be more effective than a rapid-testing pilot project being employed at Alberta’s borders.

#12 Roial1 on 02.22.21 at 2:31 pm

Garth, I am P.Oed, thanks to your advice.
I have a small RIFF that I used as an investment vehicle.
The problem??? I cant get it used up. Every year my investment advisor takes the required amount out, and IT BLOODY GROWS!

This is your fault.
You got us into investing and now we can’t stop.

TFSA filled up with growth funds and stocks

Started investing after age 57 with an apartment building(8 units) and worked it for 10 yrs. Sold it at 67.
and at YOUR advice got in with the same advisor that brought you out west here to do your talks.
Now, at 77
Have NOT been able to catch up in our spending with the growth.

I always planned to die with a maxed out credit card and 0 in the bank. NOW I CAN”T! its all your fault!

Oh ya Millennials, Did it all in the last 20 years so it is NEVER TOO LATE.

#13 Habitt on 02.22.21 at 2:39 pm

Oh that’s good for some. Perhaps the government should have closed that gapping hole. Maybe not. System is in place for folks with money. All good eh.

#14 Rook on 02.22.21 at 2:45 pm

Gotta say, this has been a good year for my RRSP. $15,000 in so far, with another $10,000 to go in before the end of the month. CERB payments went right in there, too.

I should probably tax shift it, since I was without work from Jan – June in 2020, but the rest of the year went gangbusters. If my math is accurate, that’s ~8200 that will come back to me, and I can dump it into my tfsa.

It seems like small potatoes, but it’s the most I’ve ever been able to dump in a single year. So, it’s good for me.

#15 Sail Away on 02.22.21 at 2:45 pm

A little tip for precocious RRSP contributors, or those who have employer matches or pension contribution that reduces your room:

Always make your final contribution after January 1. This allows you to completely max out to the previous year’s limit without going over, since anything over and above can be applied to the new year.

Much simpler than overcontributing and having to deal with the paperwork. Speaking from experience.

#16 Phil on 02.22.21 at 2:50 pm

I live in the Niagara Region. We are still locked down
in the “gray zone” even though our “case rate ” is way lower than all the surrounding areas . Just one of many head scratching decisions by our governments.
This may sound a little “Turner Nation” but I am starting to believe something bigger is going on.
Just listened to a presser with Adam Skelly, the Toronto BBQ guy.
https://www.rebelnews.com/
He seems like sincere young man who was roughly treated by the authorities; illegally he says.
He now has a legal team who are suing the various levels of governments.
He is not alone, the law suits are flying thick and fast and to add another level of uncertainty Chrystia is going to bring down a budget. Recession/depression; who knows?
Invest? sorry Garth, not now!

#17 ElGatoNerodeYVR on 02.22.21 at 2:52 pm

RRSP,TFSA ..bah ,that is sooo like last century. Just do a gofundme for an early retirement, that is how the kids do it ,and “the rich” ya know, the 40% who pay net tax will fund it.
As for education, how dare you suggest that important teaching time be taken from serious matters like gender studies and French ( yeah ,I’ll go there ,’cause it is a made up distraction ahem problem, in the real world outside of Quebec it really belongs with the dinosaurs, it is a non factor) to teach our children how to properly manage their money and invest , if they learn that than what would we need government assistance for ?
Governments around the world have figured out this whole control piece and playing the long game , don’t teach people to be financially independent and they will rely on government, they know that green energy is not enough to maintain current life quality so push for it and in return our standard of living will go down to the global average; EV anything doesn’t have the range to go far in backcountry so people will not risk it hence you eliminate those pesky outdoorsy types and protect the environment ..and so on it goes ,something that Turner Nation missed, you are welcome :-)

#18 jess on 02.22.21 at 2:54 pm

Michael Greenberg, writing for The New York Review of Books, called form of housing discrimination—“bluelining.”
https://www.theatlantic.com/ideas/archive/2020/01/american-housing-has-gone-insane/605005/
Why Manhattan’s Skyscrapers Are Empty
Approximately half of the luxury-condo units that have come onto the market in the past five years are still unsold.(nyt)
January 16, 2020
Derek Thompson
Staff writer at The Atlantic
The Downside to Life in a Supertall Tower: Leaks, Creaks, Breaks
432 Park, one of the wealthiest addresses in the world, faces some significant design problems, and other luxury high-rises may share its fate.
https://www.bdcnetwork.com/half-manhattan%E2%80%99s-new-residential-skyscrapers-are-empty

https://www.nytimes.com/2021/02/03/realestate/luxury-high-rise-432-park.html

The Mortgage Bankers Association is forecasting a decline in the number of refinancings in 2021.
https://www.mba.org/news-research-and-resources/research-and-economics/forecasts-and-commentary
https://www.mba.org/2020-press-releases/october/mba-forecast-purchase-originations-to-increase-85-to-record-154-trillion-in-2021

frothy valuations?IPOs by home loan providers
https://www.reuters.com/article/us-usa-mortgages-ipo-analysis/analysis-mortgage-vendor-ipo-woes-reflect-u-s-housing-market-peak-idUSKBN2AM17K

#19 Dogman01 on 02.22.21 at 2:56 pm

“Your silence gives consent.”

— Plato

Uighurs: ‘Credible case’ China carrying out genocide – https://www.bbc.com/news/uk-55973215
V
ote today in Canadian Parliament on declaring it a Genocide: https://nationalpost.com/news/politics/we-must-act-calls-grow-louder-for-liberals-to-label-chinas-treatment-of-uyghurs-a-genocide

Let’s see how Trudeau is influence by our trade “partner” holding our citizens hostage. He was quick to declare “GENOCIDE” by Canadians, what about state sponsored concentration Camps, Sterilizations and disappearances.

Little Lord Fauntleroy will be seen for who he is today.

#20 ElGatoNerodeYVR on 02.22.21 at 3:00 pm

#10 Faron on 02.22.21 at 2:17 pm
I have two questions for Garth or whomever regarding where to put new TFSA or RRSP funds:

What to do with the fixed income portion as rates rocket? More preferreds? Shorter maturities?
=========%
I am not a financial advisor by any means ,just a random guy on the Internet so do your own diligence. I prefer to buy quality companies with a decent dividend ,a few strong personal opinion picks : CIM, SPG, T,REI.UN ,BSO.UN .I also own a few T series funds ( T8 = 8% distribution, to not be confused with yield or dividends).
Might be worth talking to a fee based advisor if your portfolio is not at the level where you can get someone like Garth to manage it for you.

#21 Dogman01 on 02.22.21 at 3:00 pm

“Our enemy is financial illiteracy. It’s why most people are perfectly okay over-paying for a house with 20x leverage using a loan with a 100% chance of resetting at a higher rate, but they have no liquid assets. Or not enough for the future. It’s weird, cultural, dangerous and apparently sexist.”

“We have landed in this strange place, where women are exactly the same as men and also magically better” – Douglas Murray | Wokeness: the new Western morality

#22 Marco on 02.22.21 at 3:05 pm

So…I am still a little confused on the TFSA withdrawal\contribution room thing.
So if to date you always maxed out your TFSA you would have $75500.00 saved in it so far…but lets just say it grew to $100000. I can withdrawal the growth portion $24500.00 and then in 2022 I can put $30500.00 back, as the $24500.00+$6000.00…right?
If I am reading it properly.

But how is this advantageous? Other than if you need the money…I am not gaining anymore room additional contribution room, just catching back up on my savings and simply placing back what I already had saved…or am I not understanding it properly?

Is there not a way I could place more money than the allowable yearly contribution limit? What am I missing?

#23 LP on 02.22.21 at 3:05 pm

When it comes to women, only 40% get it.

*******************************

That’s a weird statistic to throw in there. Are we to infer that 100% of men get it? Just wondering.

F73ON

As stated, the overall rate is 50%. – Garth

#24 Happy prairie guy on 02.22.21 at 3:25 pm

“RRSP contributions, says a new bank survey, will be far lower this year – meaning a lot of people will pay more tax.”

Let them, we need to reduce this ridiculous government debt. This is my last year of paying lower taxes as not only will the tax rate be going up but by turning 71 in June I must wrap up my RRSP’s and start taking minimum from RRIF’s next year even though I don’t need the money.

M70MB

#25 JSS on 02.22.21 at 3:29 pm

“…No advice from [email protected] And do it PDQ.”

if anyone is wondering, PDQ stands for “People Dedicated to Quality”. Looked it up on google

#26 Burke Mountain Greenhorn on 02.22.21 at 3:31 pm

“ Chrystia the Impaler” makes me laugh every time I read it.

#27 ElGatoNerodeYVR on 02.22.21 at 3:44 pm

#22 Marco on 02.22.21 at 3:05 pm
So…I am still a little confused on the TFSA withdrawal\contribution room thing.
==========
Nah,you got it right. The thing is life happens and sometimes you need money now ,so you can take it out of TFSA and basically put back the same amount shall you have it later on. With RRSP you can’t .
As an example on the theme of this blog: So you can take out 100k to use as down-payment on that condo your SO wants then when you sell it and rent you can put the 100K back and enjoy tax free money.

#28 IHCTD9 on 02.22.21 at 3:48 pm

#12 Roial1 on 02.22.21 at 2:31 pm

I always planned to die with a maxed out credit card and 0 in the bank. NOW I CAN”T! its all your fault!
——-

Buy a shitty old bulldozer and restore it.

You’ll be broke in no time.

#29 Ambi and Vasu on 02.22.21 at 3:53 pm

#12 Roial1 on 02.22.21 at 2:31 pm
I always planned to die with a maxed out credit card and 0 in the bank. NOW I CAN”T!

Sir,
Yes, you can!!!!

Please give charity and balance the account every year. There are millions of deserving souls who would be happy with your kind act!!!!!!

#30 millmech on 02.22.21 at 4:12 pm

#10 Faron
Borrowers are completely convinced that the Government will not let mortgage rates rise, they have no idea how fast rates could rise. The first step up in borrowing rates will seem like a one off, but when the second and third happen and the possibility of more than a 25 basis point jump will start the panic. Why do you see the banks pushing mortgages so much now, I believe they are expecting a faster return to normal rates and people in variable will lock into low fixed rates. The problem is if the customer sees that rates keep rising and decides to break the fixed and lock into (possibly much)higher rate the bank will be more than happy to do that. The IRD on 700k-1000k mortgages could be painful, but people will panic and take the banks advice, also having a mortgage at lower than market rate that is assumable is a good bit of bait to dangle in front of a prospective buyer.
I have been watching the 10 and 30 years ascent out of the gutters, good to see this occurring.
Once the yields hit 3% there will be a big change as people will start to rotate from equities and move into bonds as a safe bet. Tech is heavily dependent on cheap financing so watch that sector have a bit of a reset.

#31 Mehling on 02.22.21 at 4:12 pm

Hi Garth, if one were to retire early, are there any scenarios where it would make sense to melt down a RRSP?

Or would you always recommend letting the RRSP compound.

For instance, if one has divided income from a non registered account.

Thank you.

#32 Joe on 02.22.21 at 4:28 pm

Hey Garth. I have been reading your blog for just over a year now (before the pandemic started) and have found many great insights. I am a Canadian citizen (that has always lived in Canada), working in US but now WFH has me working in Canada full time while the borders are shutdown. My work offers a 401k plan that I have been contributing into since day one and I have only, in the last year, started to shift my contributions from a pre taxed 401k and put it into a ROTH 401k account. My employer matching is 8% and that is automatically put into a pre taxed account so I am really contributing to both Pre tax and ROTH in my 401k account.

My understanding is that the ROTH account is the TFSA equivalent, but I am not sure how this will all be looked at as income once retirement comes down the road (30 years). As my income grows in the ROTH, when it comes time to take out, will Canada tax me on the earning that the US sees as tax free growth? Should I be taking the tax hit now while my salary is still relatively low in my working life (100k USD) and growing that ROTH or taking the tax shelter of the Pre Tax 401k? Is there a better way I should be handling my money right now? My ROTH account is tied into the same stocks that are preforming very well right now as my 401k so its hard to see which is the better option. Any advice would be appreciated…

PS: Trying to buy a house in Windsor is bonkers as the overbid and carelessness of other buyers is insane. Hopefully by Q3/Q4 your post from the other day is spot on and I come across one at a better price. Fingers crossed.

#33 King Dork on 02.22.21 at 4:28 pm

I’m confused. Why does Nick think this is a “loophole?” Sure, you can take your $100K out and put it back later, but what’s the point? This doesn’t somehow earn you more over the long run. (Actually, you earn less since your $100K is no longer growing until you replace it.)

#34 CERB for Life on 02.22.21 at 4:29 pm

Ahhh just screw it. I am just gonna keep sitting on the beach collecting my CERB and what ever other free money the dufous Liberals will keep giving out. Hey Bartender . . . another round of margaritas for all the folks here

#35 Piano_Man87 on 02.22.21 at 4:34 pm

I topped up my company RRSP this weekend.

The financial planner, who was from a big 5 bank, who took my contribution, along with my form to immediately transfer out all the funds into the RRSP I manage, wanted me to put my money into their pension fund. Said their returns were great. He showed me. They were good. I asked if their performance figures were publicly available. He said yes, and gave me the website address on his business card. It looked decent, stretching back 10-20 years, so I said I would go home and do some research and decide if I wanted to do that. He said it was not a mutual fund. Good MER. Much like me doing my own ETF’s. I said I would take a look. No harm in doing some analysis.

Went to the link at home, and there were only 2 years of performance available. The stuff going back 10-20 years was not there. It was available on his sales platform app in his office though.

Sneaky..

#36 Habitt on 02.22.21 at 4:38 pm

Dogman01 DM knows thanks for the quote. Bang on

#37 yorkville renter on 02.22.21 at 4:49 pm

That’s not a loophole… and this person works in Finance? Sheesh.

#38 Smartalox on 02.22.21 at 4:56 pm

@ Marco#22:

You take the $ out of your TFSA before the last day of the year (i.e.: 2020)

You plow that amount into your RRSP on the first day of 2021 (or within the first 60 days of 2021).

You use your RRSP contribution to reduce the amount of income tax that you owe for 2020.

You get a fat refund, and use it to plump up your TFSA, and then make additional contributions to fill the rest of your TFSA contribution room.

Lather, rinse, repeat.

#39 Faron on 02.22.21 at 5:01 pm

#10 Classical Liberal Millennial on 02.16.21 at 3:03 pm

Looking back at this, I sincerely hope you didn’t buy the bag here with EARK. If so, lesson learned, right? Keep plugging away, hopefully with a bit more balance going forward.

#40 Drew on 02.22.21 at 5:13 pm

As long as so many people believe saving $6k for a TFSA or RSP contributions is only for “the rich” they will continue to be under-utilized or possibly reduced one day, by meddling finance ministers

#41 cramar on 02.22.21 at 5:25 pm

Going to be tough going back to an office when 72% spend some of their time working from their bed. In fact 10% spend all their time working from the comfort of their bed. WFH has become WFB (Working From Bed)!

What Really Happens If You Work From Bed For A Year?
https://www.menshealth.com.au/what-really-happens-if-you-work-from-bed-for-a-year

And millennials think they’re pretty smart. Hah! If sitting for extended periods is bad for health, WFB is deadly. R-E-A-L-L-Y stupid!

#42 Danger Dan on 02.22.21 at 5:30 pm

Lamentably, my mum is one of the 60% that doesn’t get it. And she was an accountant.

The problem is her view of equity markets has forever been tainted by the men she has known who have blown their savings chasing get-rich-quick schemes.

As a result, all equities trading became associated with losing your shirt “playing the markets”, as if though it was just another silly game of risk that men play, like poker or blackjack.

If I show her the chart of the S&P 500 index, she will regale me with the story of an uncle who thought investing in Nortel was a sure thing. Thirty years in the telecom industry and he still ended up on that sinking ship.

What am I supposed to say to this? Maybe women would be less stubborn if they didn’t have to suffer men taking so many ill-conceived gambles.

#43 Penny Henny on 02.22.21 at 5:40 pm

#22 Marco on 02.22.21 at 3:05 pm
So…I am still a little confused on the TFSA withdrawal\contribution room thing.
So if to date you always maxed out your TFSA you would have $75500.00 saved in it so far…but lets just say it grew to $100000. I can withdrawal the growth portion $24500.00 and then in 2022 I can put $30500.00 back, as the $24500.00+$6000.00…right?
If I am reading it properly.

But how is this advantageous? Other than if you need the money…I am not gaining anymore room additional contribution room, just catching back up on my savings and simply placing back what I already had saved…or am I not understanding it properly?

Is there not a way I could place more money than the allowable yearly contribution limit? What am I missing?
////////////

You’re not missing anything.
Money just going from your right pocket to your left pocket and back again.

#44 Grumpyauldscott on 02.22.21 at 5:40 pm

I’m with Marco on the TFSA trick.
Seems like a zero sum game to me.
And, yes, Smartalox you could use the TFSA withdrawal to make an RRSP contribution the following year but the TFSA withdrawal you use never counted as income to begin with so it does not increase the RRSP contribution room you would have had anyway.
In the long run if you just left the windfall in the TFSA the eventual growth would be the same as what would happen within the RRSP but the withdrawal from the TFSA (at some future point) would be tax free.
Do a case “A” case “B” comparison on any spread sheet including some reasonable assumptions and I think you will see what I mean.
The potential for a significant tax free windfall within the TFSA is also vulnerable to CRA scrutiny. If it is the result of an extraordinary gain from reasonable investments then you get to keep it. If, on the other hand, you are really smart at investing and use complex option strategies (or something similar) to create extraordinary gains within your TFSA then the CRA can deem you are subject to tax on the gains as income. There is case law on this.
The TFSA is too good, I doubt it will survive.
Pity.

#45 Sail Away on 02.22.21 at 5:45 pm

#32 Joe on 02.22.21 at 4:28 pm

Re: Roth IRA

———

Here, let me Google that for you:

“Unique to the US-Canada tax treaty is a provision that ensures that the U.S. tax exemption on interest accruals and distributions from a Roth IRA are preserved even after a U.S. person has moved to Canada.”

#46 Sail Away on 02.22.21 at 5:50 pm

and…

“Under paragraph 1 of Article XVIII of the US-Canada Tax Treaty, distributions from a “pension” to a resident of Canada generally continue to be exempt from Canadian tax to the extent they would have been exempt from U.S. tax if paid to a resident of the United States. The article provides that the term “pensions” generally includes a Roth IRA.

In addition, under the treaty, residents of Canada generally may make an election under to defer any taxation in Canada with respect to income accrued in a Roth IRA but not distributed by the Roth IRA, until such time as and to the extent that a distribution is made from the Roth IRA. Because distributions will be exempt from Canadian tax to the extent they would have been exempt from U.S. tax if paid to a resident of the United States, the effect of these rules is that, in most cases, no portion of the Roth IRA will be subject to taxation in Canada. Importantly, the election must be made by April 30 with the Canadian Tax Authorities after the year the person becomes a resident of Canada.”

https://expattaxprofessionals.com/blog/article/roth-ira-taxation-for-expats-in-canada#:~:text=Unique%20to%20the%20US%2DCanada,person%20has%20moved%20to%20Canada.

#47 John on 02.22.21 at 5:52 pm

@Smartalox #38, can you run the numbers on that for me? On the face of it, it doesn’t seem advantageous.

#48 Ustabe on 02.22.21 at 5:53 pm

#31 Mehling on 02.22.21 at 4:12 pm

Hi Garth, if one were to retire early, are there any scenarios where it would make sense to melt down a RRSP?…

Thank you

While in the process of selling a business in Alberta and before any cash flowed from that I ceased all operations/contracts/jobs/etc and lived on my RRSP over the two years that it took the sale to complete.

That may or may not be a sound thing to do but I paid minimal taxes, got to practice retirement and had plenty of time to castigate various tax accountants, lawyers and CRA employees.

Mind you the RRSP was on the smaller side as I spent my working life investing in various businesses, restaurants and rental housing. Your situation may or may not benefit but a sit down with a tax accountant could.

#49 Classical Liberal Millennial on 02.22.21 at 5:54 pm

#39
Faron, I did buy about 25-30 shares so yeah, needless to say I will holding that for a while! Not that it’s a large sum of money in the long run, but it seems like of all the weeks in the past year to try my hand at more active investing, I picked the wrong one.

The rest of my funds are in XGRO (not XEQT). However, I’m still debating whether I should just put that portion back into WS Invest for the robot to allocate until I learn more. Again, the total between the two is a small amount compared to most portfolios, and I’m only depositing $50/week, but I still want to be smart with it.

Thanks for checking in!

#50 Joe Schmoe on 02.22.21 at 5:55 pm

I’m banking the extra RRSP room I have until next year…my guesses the tax break moving forward will be MUCH bigger…

Did all the TFSA/RESP and more non registered this year.

#51 Fake Name on 02.22.21 at 5:57 pm

I’m not worried.
I know that higher borrowing costs disproportionately impact women and poc. I trust that our government will intervene to prevent interest rates rising, or introduce policy mandating an interest rate differential based upon societal privilege (ie. borrowing costs increase only for old white men and stay low for everyone else)

#52 John Smith on 02.22.21 at 6:02 pm

DELETED

#53 Canada on 02.22.21 at 6:15 pm

Heard today Canadians have been going to Florida to get the vaccine ?

What an embarrassment Canada has become

HOW does trudeau still have a job ?

#54 Cici on 02.22.21 at 6:20 pm

When it comes to women, only 40% get it.

———————————————————

I’m in that top 40%… finally reached a milestone! Oh wait, I have Garth to credit for that.

Thanks for saving me from brain-dead GICs Garth… and for the many laughs.

#55 Ustabe on 02.22.21 at 6:29 pm

#40 Canada on 02.22.21 at 6:15 pm

Heard today Canadians have been going to Florida to get the vaccine ?

What an embarrassment Canada has become

HOW does trudeau still have a job ?

Back in the 80’s government-owned Connaught Labs was producing vaccines here in Canada and decision-making was in the public realm. But Connaught was partially privatized and then finally allowed to be sold to the French company Merieux (now part of Sanofi) by the Conservative government of Brian Mulroney.

Further cuts to funding of research and development during the Harper decade cause even more foreign takeover of our countries capability.

Sanofi and GSK still make vaccines in Toronto and Ste-Foy, but decisions about what vaccines to produce are not in Canadian hands. Thanks to con governments.

Both SARS and the H21N1 pandemic should have prodded government to act but none did. This was all well before Trudeau’s time but now it falls into his lap, on his watch. Through no fault of his own.

Could Trudeau and the liberals do things better? Sure but this entire mess starts with Conservative governments.

You could always move to Texas, they are right on top of things there I understand.

#56 Jason on 02.22.21 at 6:32 pm

Garth, why was the TFSA designed with a contribution limit rather than a tax-free withdrawal limit?

Withdrawing a TFSA contribution would be tax-free (you’ve presumably already paid tax on the contribution). Each year you get to make an additional $6k (or whatever) tax-free withdrawal.

A tax-free withdrawal limit:

– removes the casino-like aspect of the account. Big winners don’t get to live free on tax-free gains for the rest of their lives. Big losers get to try again. The $6k in GME stock you purchased in January might be worthless in 2022 but at least you get to try again;

– lets the Government put an upper limit on the cost of every increase to the TFSA limit. Eg: $6k times the capital gains rate times the expected marginal tax rate times the number of people getting the benefit; and

– absolves the CRA of the need to police “active” tax-free savings accounts.

It seems like a no-brainer. Why wasn’t it done this way?

#57 Faron on 02.22.21 at 6:32 pm

#49 Classical Liberal Millennial on 02.22.21 at 5:54 pm

#39

Sounds like you have my hand in stock picking! I’ve always joked that the day I buy TSLA will be the day it craters. I’ve FOMOed my way into a few losses. ARKK’s price jump on the 15th guarantees that you were among thousands of people who leapt on board on the 16th, so don’t feel bad.

#58 domain on 02.22.21 at 6:34 pm

It really is hard to picture the Liberals under Freeland not changing the TFSA in a way that upsets most posters here based on Garth’s recent affluence study.

Why? Because if you are part of the 2% (the last of the middle class with disposable income) then you are likely ripe for harvest in her eyes.

Just like the changes to small businesses, who our last finance minister labelled tax cheats, the people with enough money to fill up those TFSAs are a silent slice of voters.

Chrystia and Justin can tag-team your finances all day long, and your cries will fall on the deaf and dumb ears of the 80% of voters who will be easily herded under the clarion call of “Fair Share!”. Your 2% votes just don’t matter.

I don’t like it either, being a taxpayer with assets and a high income. I just don’t see how they don’t attack something like the TFSA when it is viewed as a luxury for so many in the [email protected]

If I wasn’t so lazy, I would have pulled the cord on mine and the Mrs. TFSA at the end of December and just waited in the shadows to see if they raided the TFSA.

But here we sit, potentially about to become victims again…

#59 steve on 02.22.21 at 6:35 pm

Appreciate you keeping Cowtown Cowboys post from this morning up, unedited.

Every once and a while I start to actually feel a slight bit of compassion for Albertamerica.

Then I read a post like his, and that quickly goes away.

Proud Cowboy he is.

#60 Ponzius Pilatus on 02.22.21 at 6:36 pm

Re:Picture
Outrageous!
Suspend the officers who let an underaged dog behind the wheel.
Also, alarm signals are not toys.

#61 crowdedelevatorfartz on 02.22.21 at 6:39 pm

@#53 Canaduh
“HOW does trudeau still have a job ?”

++++

The people that vote for him are stupid?

#62 Nonplused on 02.22.21 at 6:40 pm

I don’t understand this withdrawing from your TFSA only to fill it up again. Don’t you just end up right where you started? And if you use the money to buy a Porsche or go even sexier and renovate the kitchen, doesn’t that imply you don’t have the money to fill the TFSA back up? Otherwise why not just use that cash? Otherwise it seems like a shell game to me.

#63 Neal Van De Spiegle on 02.22.21 at 6:41 pm

Use the TFSA in conjunction with RRSP funds to hold arms length mortgages. You can focus up to 30% annual growth into the TFSA. Quickest way to reach a million dollar TFSA!

#64 miller on 02.22.21 at 6:42 pm

Coming from a pretty financially illiterate family, stocks and bonds and tfsa accounts seemed like a yawn fest and not a part of my life for far too long. Now I’m on the road to a new financial revelation, thank Dog! I still feel at a huge disadvantage. I’m leery of financial advisors, nice bank ladies and banks that aren’t brick and mortar. Even blogs like this one I take with a grain of salt, as if there’s anything I learnt from growing up, it was that (most) everyone is out to take your money. But I’ve been lurking a long time in the comments here, and so feel comfortable enough to ask.. where does one go to become financially literate. Hoping it’s not too late for me. But I also ask because i have a aon who is super smart and hardworking who is currently piling up money in his savings account and would like to start investing, but is wary of the unknowns.

You say you take my words with ‘a grain of salt’ then ask for advice? Start with humility. You;d be surprised where a good MSU can get you. – Garth

#65 Faron on 02.22.21 at 6:45 pm

Another gamma squeeze coming down the pipe for GME and AMC.

I know fundamentals matter over the long run, but right now equities are being moved by options trading and for many, that motion has zilch to do with the underlying value of the company. Has this always been the case?

Seems to be an outgrowth of index ETFs. The options positioning on the ETFs are wagging the dog. For something like SPY, that means 500 of the largest corps out there are being wagged by derivatives through the implicit leverage of derivatives. Yikes!

I’d like to think this doesn’t matter for long-term investors, but high volatility does matter because it shakes out the fearful. Garth, have you been having to take greater pains to talk clients out of their money trees? What do you do if this continues?

#66 Joe on 02.22.21 at 6:49 pm

#46 Sail Away on 02.22.21 at 5:50 pm

Appreciate the help and the link. Unfortunately, I am not a US epact so that does not apply to me and until the border was closed was traveling into the US for work, so this issue didnt exist. Now WFH in Canada, the Canadian gov is cracking down on getting their pound of flesh before the US because it was work done in Canada. I believe just a bit further down in the article applies to me. It states:

“The treaty provides that if an individual who is a resident of Canada makes contributions to a Roth IRA while a resident of Canada, the Roth IRA will cease to be considered a “pension” for treaty purposes at that time with respect to contributions and earnings from such time, and earnings from such time will be subject to tax in Canada in the year of accrual. As such, the Roth IRA will in effect be split into a “frozen” pension that continues to benefit from the exemptions on distributions and accruals and a savings account that does not benefit from the exemptions.”

#67 Sail Away on 02.22.21 at 6:54 pm

#55 Ustabe on 02.22.21 at 6:29 pm

Re: Vaccines

You could always move to Texas, they are right on top of things there I understand.

———–

Correct.

Texas has a population of 29 million and has vaxxed 4.7 million to date with full vaccination expected by May 2021.

Canada has vaxxed 1.4 million to date with full vaccination expected by September 2021… no, sometime 2022… no, that’s when Novavax will start producing… or?

#68 Stone on 02.22.21 at 6:54 pm

Being someone who has worked in the industry for years, I feel like I would have known if this was possible.

———

You’re fired.

#69 Brandon on 02.22.21 at 6:58 pm

Garth, does it make sense for my wife to use her RRSP room? She earns 45k and I earn a lot more. Our TFSAs are maxed. My RRSP room is gone now, too (split between RRSP and SRRSP so we have comparable balances)

Right now she’s putting spare money into a non registered account instead of RRSP.

No denying she can invest tax-free inside an RRSP. If her post-work income will be low, or no pension, then this is a valid option. – Garth

#70 Stone on 02.22.21 at 6:58 pm

#64 miller on 02.22.21 at 6:42 pm
Coming from a pretty financially illiterate family, stocks and bonds and tfsa accounts seemed like a yawn fest and not a part of my life for far too long. Now I’m on the road to a new financial revelation, thank Dog! I still feel at a huge disadvantage. I’m leery of financial advisors, nice bank ladies and banks that aren’t brick and mortar. Even blogs like this one I take with a grain of salt, as if there’s anything I learnt from growing up, it was that (most) everyone is out to take your money. But I’ve been lurking a long time in the comments here, and so feel comfortable enough to ask.. where does one go to become financially literate. Hoping it’s not too late for me. But I also ask because i have a aon who is super smart and hardworking who is currently piling up money in his savings account and would like to start investing, but is wary of the unknowns.

You say you take my words with ‘a grain of salt’ then ask for advice? Start with humility. You’d be surprised where a good MSU can get you. – Garth

———

Read the actual blog posts instead of lurking for a long time in the comments section. You might actually learn something.

#71 KLNR on 02.22.21 at 6:59 pm

@#55 Ustabe on 02.22.21 at 6:29 pm
#40 Canada on 02.22.21 at 6:15 pm

Heard today Canadians have been going to Florida to get the vaccine ?

What an embarrassment Canada has become

HOW does trudeau still have a job ?

Back in the 80’s government-owned Connaught Labs was producing vaccines here in Canada and decision-making was in the public realm. But Connaught was partially privatized and then finally allowed to be sold to the French company Merieux (now part of Sanofi) by the Conservative government of Brian Mulroney.

Further cuts to funding of research and development during the Harper decade cause even more foreign takeover of our countries capability.

Sanofi and GSK still make vaccines in Toronto and Ste-Foy, but decisions about what vaccines to produce are not in Canadian hands. Thanks to con governments.

Both SARS and the H21N1 pandemic should have prodded government to act but none did. This was all well before Trudeau’s time but now it falls into his lap, on his watch. Through no fault of his own.

Could Trudeau and the liberals do things better? Sure but this entire mess starts with Conservative governments.

You could always move to Texas, they are right on top of things there I understand.

Sshhhh Ustabe, this doesn’t fit their narrative.

#72 Flop... on 02.22.21 at 7:04 pm

Last week I swore I could I saw a story about that instead of paying your mortgage a lending firm just wants a cut of the equity.

Now I see this.

We got it bad here for the housing, the fever can’t be broken.

Why do they still just have water coming out of the taps?

It’s time for Moonshine to flow in every residence.

Then people will be handing over teeth for a share of your house…

M46BC

—————————————-

Vancouver nonprofit proposes RRSP-, RESP-like registered savings plans for affordable housing.

“In their letter, the two community organizations made two proposals

One is the creation of a Registered Family Home Savings Plan (RFHSP).

An RFHSP could help “lower to middle income level Canadian families…accumulate a fund specifically dedicated to the purchase of an affordable housing where the homebuyer and his/her family will live, thrive, and contribute to the local economy and social fabric”.

Moreover, the savings plan can be “modeled after some or all relevant features (for example, cumulative roll-over of ceiling amount, non-taxability of interest or other earnings, unless withdrawn for another non-housing purpose) of the Registered Retirement Savings Plan”, or RRSP.

The second proposal is also a type of savings plan but designed for new housing co-ops and housing nonprofits.

It is called a Registered Members’ Fund for Affordable Housing. An RMFAH will encourage groups to save for a down payment for their affordable-housing project.

According to the letter, middle-class people organized into housing cooperatives or nonprofit housing societies have the “potential to pool their financial resources into a housing fund that will strengthen their eligibility for government and financial institution financing of their affordable housing project”.

“In addition, to incentivize initiatives such as this, we propose for the government to endow this registered fund features such as a grant contribution as well as tax shelter (similar to the Registered Education Savings Plan),” or RESP, the two community associations wrote to the panel.”

#73 Commodities too.... on 02.22.21 at 7:08 pm

“Chrystia the Impaler” haha good one, she truly is terrifying.

Also buy commodities, there must be a good ETF for general commodities…apparently we could be heading into a commodity supercycle according to “the experts”

#74 Barb on 02.22.21 at 7:17 pm

#32 Joe

“Trying to buy a house in Windsor is bonkers as the overbid and carelessness of other buyers is insane.”

———————————
The North Okanagan (BC) was sunny and 11C today!

#75 Flop... on 02.22.21 at 7:20 pm

This is the other one I was referring to in my previous post.

Sounds like a reverse mortgage reversed and inserted into your tender parts…

M46BC

————————————————-

No-payment mortgage scheme floated in Vancouver.

“Instead of monthly payments, the lender takes a percentage of the home’s appreciation under a aimed at the refinancing of existing home loans, not buyers.

A Vancouver firm is aiming to revamp the residential mortgage landscape in North America, but the high down payment required would make it unworkable for most home buyers, a mortgage expert says.

Fraction Technologies Inc. revealed February 10 it’s raised $289 million in a mix of equity and debt financing from Primetime Partners, Panache Ventures and Impression Ventures among others.

The company has developed a platform whereby customers take out loans with interest rates tied to the appreciation of their home’s value. It is designed primarily at existing homeowners who wish to refinance. 

There would be no monthly mortgage payments as required under conventional mortgage loans.

The $289 million raised by Fraction is supporting those loans. 

“For us it’s really about how can we make a difference in homeowners’ lives. We put the homeowner first, not the banks,” CEO and co-founder Hayden James told BIV.

Instead of monthly rates, the interest rate is payable upon the sale of the home.
If, for instance, a home appreciates an average of 5 per cent over a five-year-term, that then becomes the effective rate.

If a home depreciates in value, Fraction charges a minimum rate of 3.49 per cent.

For homes that appreciate significantly — a trend Vancouverites can attest to — Fraction charges a maximum rate of 7.99 per cent.”

#76 Ponzius Pilatus on 02.22.21 at 7:33 pm

#53 Canada on 02.22.21 at 6:15 pm
Heard today Canadians have been going to Florida to get the vaccine ?

What an embarrassment Canada has become

HOW does trudeau still have a job ?
———————
Sure you heard right?
Many Conversative voters are older folks, prone to hearing loss.
Get a hearing test.
They are free.

#77 Sail Away on 02.22.21 at 7:33 pm

#66 Joe on 02.22.21 at 6:49 pm

Re: Roth

———-

Hm, yes, a bit more complicated.

My experience is that CRA misses almost everything that’s even slightly complicated, so it might be more work trying to explain things to them.

Good luck working it out.

#78 Nonplused on 02.22.21 at 7:35 pm

#9 Millennial 1%er on 02.22.21 at 2:12 pm

“please don’t touch the TFSAs or RRSPs christia…. they’re my last hope for living a comfortable & financially free life”

I think she’s going to, if not this year maybe next. The way RRSP’s are calculated is as a reduction of taxable income, which means that the higher your tax bracket, the more bang for the buck you get. For example if you make $200,000 a year plenty of your income is in the 50% (roughly) bracket so if you put money in an RRSP you might get 50% of the money back. But if you are in a 17% bracket you only get 17% back. I think Trudeau is going to target this “inequitable” situation and convert it to a flat “tax credit” of 17% across the board. So if you are a high income earner go big this year just in case. Maybe she doesn’t do it, but every time she or Trudeau speak the first word out of their mouths is “equity”, and they mean equality of outcome not opportunity.

I could also see Chrystia reducing the contribution limit substantially, using the same logic Trudeau used to slash the TFSA limit. The logic being only the “privileged” can afford to put $27,000 a year in an RRSP and gain even more “privilege” by receiving a 50% tax break. So I expect the contribution limit to be reduced to somewhere around $10,000-$13,000 per year.

So yes I am mind reading here, but based on how they talk and what they did to the TFSA, I could easily see a $10,000 contribution limit and a 17% tax credit, because it is more in line with how the “unprivileged” use the program. Plus it increases tax receipts in the present.

Our only hope for resistance is the banking cartel, who like all the fees RRSP’s generate. But I think Trudeau is confident enough that he will be reelected that he thinks now is the time to move. And the percentage of voters he might lose over the change is small, the 1%ers most of whom don’t vote Liberal anyway.

————————————–

A lot of these programs are really just optics. Let’s take the RESP program for example, which I predict will also go away. So, if I diligently put away $2,000 a year for 18 years the government will match me $500 a year for $9,000 in total. Why not just give a grant of $9,000 to everyone who enters post secondary university? And what about the poor kids whose parents didn’t save squat for them because they couldn’t? They get to utilize student loans to generate that $9,000 the government is basically giving to “the privileged”. After all, if you have enough money to save $4,000 a year (2 kids) in RESP’s, $12,000 in TFSA’s (2 parents), and $54,000 in RRSP’ (2 high income parents), you are “privileged”. That’s $70,000 (minus the RRSP tax break) in disposable income that you have to have after tax to fully enjoy these programs. Totally “inequitable”. Favors the rich.

Disclaimer: I am not in favor of my forecast changes, I am just trying to understand the mind of a man who thinks “equal outcomes” is the goal of government. The original programs were designed to encourage people to save for retirement, save for a rainy day, and save for their kids education, all noble causes IMHO. But Trudeau has noticed that most of his voters can’t really use the programs to their fullest. They are therefor targets.

#79 Ponzius Pilatus on 02.22.21 at 7:37 pm

Apparently, rents in Kelowna are the 6th most expensive in Canada.
Hart to believe.

#80 I've kept these ... on 02.22.21 at 7:38 pm

topped up all my life, and the RHOSP, when it was around. Sure pays off in the end … geterdundawgs …

#81 Captain Uppa on 02.22.21 at 7:42 pm

Garth, your words are wiser than the wisest of words ever spoken … and you look like James Bond when wearing a suits

My wife and I both have DBs. My wife is a teacher in Ontario, to be specific and I am at a large CDN corporation.

Does it make more sense to just go full TFSA? Not at a stage in our lives to max both that and RRSP.

#82 NV landlord no more on 02.22.21 at 7:48 pm

PDQ =
Pretty dam quick

#83 Stoph on 02.22.21 at 7:58 pm

#56 Jason on 02.22.21 at 6:32 pm

—————————————————————-

By giving the TFSA a contribution limit rather than a withdrawal limit, it encourages people to save and invest and become self-sufficient. I wouldn’t worry too much about disproportionate tax-free benefit for the odd person who hits a home run with a YOLO stock bet – most stock bets don’t go too far and most people just use the TFSA as a savings account anyways.

A TFSA with a withdrawal limit seems have one upside ($6k tax free annual withdrawal) with many downsides (capital is tied up and can’t easily be accessed, no income deduction for contribution, you need to withdraw money from the account to actually benefit from it) – it’d be simpler to just to give everyone a tax deduction on investment income.

#84 Sparrow on 02.22.21 at 8:11 pm

My spouse works for the Feds. She has a defined benefit pension and is counting down the days till she can collect it (she has a few years to go). I have no company pension, rather a healthy match from my employer (that is, if travel bounces back). I have a balanced and diversified portfolio 60/40 couch potato. I hung on and didn’t sell a thing in 2020, just rebalanced. Thanks for all of the great advice. Reading the blog is a daily ritual I look forward to. It is a touchstone for me in these turbulent times.

My whole portfolio is in my RRSP. I have a lot of contribution room left, but I’m slowly catching up. So far, I have nothing in our TFSAs. I plan on maxing them. My question is regarding my spouse. Is it better for her to max out her TFSA before contributing to her RRSP seeing that she will have her defined benefit pension? Does maxing out her RRSP (or even contributing to it) make sense?

#85 Flop... on 02.22.21 at 8:21 pm

Prince Harry should have consulted with me.

I could have told him about what happens when you get involved in an interracial marriage and try to live your own life on the other side of the world from your family…

M46BC

#86 Rainman on 02.22.21 at 8:34 pm

Who’s to say they won’t tax a TFSA one day. You say they are thinking of taxing your permanent residence, so sounds like rules can change. no?

Unlikely. But so what? No reason not to take advantage of this gift. – Garth

#87 leebow on 02.22.21 at 8:36 pm

#78 Nonplused

Things are not black and white (as in “rich people do RESPs, poor people do not”). A lot of people can save for their children’s education but choose not to. The education grant is supposed to encourage savings by parents who otherwise wouldn’t do it. RESP is a good program that does not prevent other forms of assistance to children from low income families. Killing it would be a procrustean act.

#88 crowdedelevatorfartz on 02.22.21 at 8:43 pm

@#76 Ponzies Preamble
“Many Conversative voters are older folks, prone to hearing loss.
Get a hearing test.
They are free”

++++

Many Liberal votes are young, inexperienced and prone to naivety.
Get a reality check.
Those are also free.

#89 Nonplused on 02.22.21 at 8:57 pm

#81 Captain Uppa on 02.22.21 at 7:42 pm
Garth, your words are wiser than the wisest of words ever spoken … and you look like James Bond when wearing a suits

My wife and I both have DBs. My wife is a teacher in Ontario, to be specific and I am at a large CDN corporation.

Does it make more sense to just go full TFSA? Not at a stage in our lives to max both that and RRSP.

————————————–

I am no financial advisor, but my understanding is the DB’s cut into your RRSP room. In your wife’s case probably by a lot.

However I like the idea of getting the tax break through an RRSP and then putting the refund into a TFSA. Or for use the following year as an additional RRSP contribution. I don’t speak for Garth so do not interpret my comments as being endorsed by our host. And don’t take my advice either, talk to a financial advisor. There is nobody you can sue here.

My personal go-round is to use RRSP’s to minimize the tax sting, and then put any additional savings into the TFSA up to the maximum I can. I don’t worry too much about the tax rate when I withdraw from my RRSP’s down the road, because I think we are at peak tax as you will note if you have read some of my previous comments. And anyway I will at least be in a lower bracket.

#90 Dan on 02.22.21 at 9:09 pm

Come on Garth! Now that you let the cat out of the bag the gubernment may find a way to close the TFSA loophole. :-(

I have been using this a couple of times so far…

#91 S.Bby on 02.22.21 at 9:13 pm

Thanks for the always good info Garth.

#92 Flop... on 02.22.21 at 9:14 pm

“Nearly 20 Percent of Americans Think Interracial Marriage is ‘Morally Wrong,’ Poll Finds.”

Race can be a funny thing.

Nearly 20% of Americans think Interracial Marriage is morally wrong.

Probably the same 20% think sticking a cork in your cousin is o.k.

I said cork…

M46BC

#93 crowdedelevatorfartz on 02.22.21 at 9:32 pm

@#85 Flop

Oh, I think “Harry and Megs” is doing just fine.
Their “brand value” has skyrocketed and they aren’t under the thumb of “The Firm” accepting an allowance..

https://www.businessinsider.com/how-harry-meghan-can-make-money-build-billion-dollar-brand-2020-1#:~:text=They%20will%20no%20longer%20use,a%20billion%2Ddollar%20global%20brand.

Personally I could care less about the poor tribulations of “The Second in Line” and his photogenic “Clothes Horse”…..but if the vapid, infotainment hungry, internet addicted, legions of followers buy his “brand”…… so be it.

#94 John in Mtl on 02.22.21 at 9:42 pm

#19 Dogman01 on 02.22.21 at 2:56 pm
…Little Lord Fauntleroy will be seen for who he is today.

What I’ve just heard (9:30PM ET) is that the liberal cabinet abstained from voting on the motion. There is your answer.

It is what I expected, a most cowardly behaviour, the lot of them. And they are our “elite”? How low we have sunk!

#95 The Woosh on 02.22.21 at 9:43 pm

#61 crowdedelevatorfartz on 02.22.21 at 6:39 pm
@#53 Canaduh
“HOW does trudeau still have a job ?”

++++

The people that vote for him are stupid?

——————————————

Sure about that? Or is just that the political platforms of the other parties are just so unpalatable. What’s more appealing about the Conservatives, the NPD, the Greens, or the BQ than what the Liberals are doing?

#96 Brad Niche on 02.22.21 at 10:09 pm

I always contribute the amount to my RRSP which keeps me the most tax efficient. There is a balance between contribution amount and return, based on my income, which fluctuates as I am self employed

#97 Stoph on 02.22.21 at 10:10 pm

#84 Sparrow on 02.22.21 at 8:11 pm

—————————————————————–

I’d talk to a fee based advisor and figure out a strategy for your contributions going forward. It’ll cost a couple hundred now, but quite possibly save you thousands later on. Contributing to TFSA vs RRSP is case dependent. In general, you want contribute to RRSP when income is in a higher tax bracket and withdraw when in a lower tax bracket. Withdrawals from the TFSA in retirement don’t affect OAS eligibility, so that’s another point to consider. A spousal RRSP may help save some money if you’ll be in different tax brackets when you retire.

#98 Russ on 02.22.21 at 10:30 pm

NV landlord no more on 02.22.21 at 7:48 pm

PDQ =
Pretty dam quick
=========================

Yup. When a young boomer heard PDQ it better be done pretty damn quick or the Mom unit would be whacking you with a wooden spoon soon enough.

Cheers, R

#99 Smartalox on 02.22.21 at 11:15 pm

@John #47:

The advantage comes from being able to reduce your income tax that’s payable.

Everybody’s situation is different, but I’m lucky enough to have a couple of advantages:
– I have been working continuously for more than 25 years, and for a large number of those years, I was not able to max out my RRSP contributions, so I have a fair amount of unused RRSP contribution room accrued – about $100k that just rolls over every year.

I have also been fortunate enough to build a TFSA that reliably generates a little less than $10k per year over and above my annual contributions.

Yeah, I’m earning well and saving well, but I still think that I am paying too much in income tax.

So, I withdraw $10,000 from my TFSA, and put it into my RRSP. That contribution, in addition to my regular RRSP contributions, reduces my taxable income, and earns me a tax refund – maybe a few thousand dollars – less in taxes that I have to pay each year.

That money goes back into the TFSA, plus additional contributions throughout the year, totalling $16,000. That amount, plus growth, futher expands my TFSA. Maybe next year, I’ll repeat with $25000 instead of 10.

So what? Why not leave the money in the TFSA, enjoy the tax free growth, and avoid paying taxes on my RRSP withdrawals down the road?

Sure, but maybe I prefer to avoid my taxes now. Maybe because I don’t like how the current government spends my tax dollars, and want to give them less; or maybe because I might want to shift contribution room from my RRSP into my TFSA.

This strategy only makes sense while I still have lots of unused RRSP contribution room. Eventually, maybe as I close in on age 60, I’ll stop working, live off CPP and TFSA withdrawals, then top the TFSA back up (plus $6000 contribution) every year with RRSP withdrawals that are low enough to keep taxes owing minimal.

#100 Cowtown Cowboy on 02.22.21 at 11:22 pm

59 steve on 02.22.21 at 6:35 pm
Appreciate you keeping Cowtown Cowboys post from this morning up, unedited.

Every once and a while I start to actually feel a slight bit of compassion for Albertamerica.

Then I read a post like his, and that quickly goes away.

Proud Cowboy he is.

And I appreciate you responding exactly as I knew someone like you would.

#101 Russ on 02.23.21 at 12:29 am

.
Felix got out and caused trouble but was knabbed by the farmer.
He knows how to subdue a cat alright.

https://www.cbc.ca/news/canada/british-columbia/bc-farmer-captures-lynx-chicken-coop-1.5923089

Cheers, R

#102 morrey on 02.23.21 at 2:15 am

My TFSA totally maxed out. Likewise for my partner’s TFSA.

#103 Check That on 02.23.21 at 6:59 am

#13 Habitt on 02.22.21 at 2:39 pm
Oh that’s good for some. Perhaps the government should have closed that gapping hole. Maybe not. System is in place for folks with money. All good eh.

=====================

The spelling is “gaping” hole.

I strongly recommend against typing this in Google to verify and to just take my word for it.

#104 Dogecoin + Catcoin on 02.23.21 at 7:18 am

The real estate moguls are envious at this guy:
https://www.reddit.com/r/toronto/comments/lq3w1t/khaleels_statement_the_guy_building_tiny_shelters/

Toronto is where the rich prosper and the poor die in the cold. Who knows if it’s realtors who are setting fire to the homeless encampments in Moss Park?

#105 Captain Uppa on 02.23.21 at 7:39 am

#89 Nonplused on 02.22.21 at 8:57 pm
#81 Captain Uppa on 02.22.21 at 7:42 pm
Garth, your words are wiser than the wisest of words ever spoken … and you look like James Bond when wearing a suits

My wife and I both have DBs. My wife is a teacher in Ontario, to be specific and I am at a large CDN corporation.

Does it make more sense to just go full TFSA? Not at a stage in our lives to max both that and RRSP.

————————————–

I am no financial advisor, but my understanding is the DB’s cut into your RRSP room. In your wife’s case probably by a lot.

However I like the idea of getting the tax break through an RRSP and then putting the refund into a TFSA. Or for use the following year as an additional RRSP contribution. I don’t speak for Garth so do not interpret my comments as being endorsed by our host. And don’t take my advice either, talk to a financial advisor. There is nobody you can sue here.

My personal go-round is to use RRSP’s to minimize the tax sting, and then put any additional savings into the TFSA up to the maximum I can. I don’t worry too much about the tax rate when I withdraw from my RRSP’s down the road, because I think we are at peak tax as you will note if you have read some of my previous comments. And anyway I will at least be in a lower bracket.

——————————————

Any input and experienced viewpoints are appreciated.

Much obliged, sir.

#106 Adam Sverenko on 02.23.21 at 8:16 am

DELETED

#107 Dharma Bum on 02.23.21 at 9:19 am

#16 Phil

Re: Adam Skelly

He now has a legal team who are suing the various levels of governments.
———————————————————————-

Why not? Sue everybody!

https://www.youtube.com/watch?v=QhjBlPucpd0

#108 KLNR on 02.23.21 at 9:59 am

@#95 The Woosh on 02.22.21 at 9:43 pm
#61 crowdedelevatorfartz on 02.22.21 at 6:39 pm
@#53 Canaduh
“HOW does trudeau still have a job ?”

++++

The people that vote for him are stupid?

——————————————

Sure about that? Or is just that the political platforms of the other parties are just so unpalatable. What’s more appealing about the Conservatives, the NPD, the Greens, or the BQ than what the Liberals are doing?

exactly this

#109 millmech on 02.23.21 at 11:00 am

Enjoying all the comments on various financial sites now of people who have gone all to cash today due to the “crash”.
Just wait and see what happens when housing retrenches, the panic will be even worse, if people can not handle a single digit decrease temporarily in investment assets, what will happen to them when psychologically when housing does the same.

What stock market crash? The Dow is 0.6% below its all-time high. More evidence of financial illiteracy. – Garth

#110 crowdedelevatorfartz on 02.23.21 at 11:17 am

@#95 The Woosh of the toilet
“The people that vote for him are stupid?

——————————————

Sure about that? Or is just that the political platforms of the other parties are just so unpalatable. ”

++++

Nah. They’re stupid.

#111 Squire on 02.23.21 at 11:19 am

We are in interesting times….
https://www.cbc.ca/news/business/renters-market-businesses-office-1.5919455

How will the office space look like in 6 to 9 months ?? anyone’s guess….

#112 Dr V on 02.23.21 at 11:33 am

And all is well…in the garden…..

https://ca.finance.yahoo.com/news/bank-montreal-scotiabank-beat-profit-122400640.html

#113 Tudval on 02.23.21 at 11:34 am

25 years ago, against the advice of all financial advisors, I decided to ditch both my RRSP and my spouse’s, take on a big mortgage (crazy, I know) and go for the other tax free ‘savings plan’ – the nicest house I could afford in the 416. It worked well – I lived well and I have nice equity. Sure, I knew this sector or that sector of the economy will outperform and a few lucky ones will make like bandits in the stock market. My logic was simple though: let them take the risk, do the work and the lucky ones will, in the end, want what everybody wants: a nicer house in a good location, the final destination of money.

Now you have to convert it into actual money to finance an income stream. Houses cost. They do not pay. – Garth

#114 IHCTD9 on 02.23.21 at 11:40 am

#88 crowdedelevatorfartz on 02.22.21 at 8:43 pm
@#76 Ponzies Preamble
“Many Conversative voters are older folks, prone to hearing loss.
Get a hearing test.
They are free”

++++

Many Liberal votes are young, inexperienced and prone to naivety.
Get a reality check.
Those are also free.
___

Heh, those Lib voters are going to get that whether they want it or not. Of course the rest of us are all along for the ride too.

Surfin’ the Trudeau Tsunami. I’ve been coaching my kids on a few different ways to approach the Tax apocalypse that will be coming – if the Liberals ever decide to give us an actual Budget that is. I’ve come to realize both seem to appreciate a minimalist white collar lifestyle. Few possessions, good incomes, big savings, and early retirement. Many educated youth seem to have a similar fondness for this type of lifestyle. Neither of my kids give a rip about any of the stuff I wanted at their age.

I see now that they don’t need my help at all, the lifestyle they want is by nature, very hard to extract a lot taxes from. Trudeau would have to go medieval on just one or two taxes to get anything out of this group, – and that will be a one way ticket out of power.

As more clues to our potential future are revealed, the more clear it is that Trudeau has made some absolutely massive mistakes. Grievous errors that will haunt 2-3 generations, and possibly even lead to the insolvency of the Country itself decades from now.

Boomers, GenX, and the oldest of Millennials will be fine – but from there on down, there will be more bad years ahead than good years behind. They will only know a post-Trudeau Liberal Canada, where getting off the hamster wheel or getting on the RE Ladder, will be nigh impossible. Without this ability, the future middle class is toast.

#115 need Powel on 02.23.21 at 12:00 pm

powell speaks soon– the market sell off or hold from the lows of today r awaiting on him

we live in spectacular time– printing presses full throttle folks!!

Ontario lost 360,000 jobs lol, highest ever.

go powell go!

No mystery about what he will say, or do. Or where we are headed. – Garth

#116 Young Man Yells at Cloud on 02.23.21 at 12:07 pm

PDQ = Pretty DOGgone Quick

#117 Sail Away on 02.23.21 at 12:08 pm

Faron, Michael Burry is long GEO- purchase price $8.9. Hmm…

#118 jess on 02.23.21 at 12:32 pm

Trump Intelligence Chiefs Hid Evidence of Russian Election Interference
Internal Intelligence Community Report Names Grenell and Ratcliffe for ‘Politicalization’ of Analysts’ Findings

By Alison Greene
https://www.dcreport.org/2021/02/18/russian-interference-intelligence-chiefs-hid-evidence/

https://fas.org/irp/eprint/politicization.pdf

#119 Love_The_Cottage on 02.23.21 at 1:18 pm

#114 IHCTD9 on 02.23.21 at 11:40 am
Grievous errors that will haunt 2-3 generations, and possibly even lead to the insolvency of the Country itself decades from now.
___
The key question is whether you are a Russian troll or an Iranian troll?

https://bc.ctvnews.ca/study-details-ways-russian-and-iranian-trolls-tried-to-influence-canada-s-2015-election-1.5319541

#120 Bill on 02.23.21 at 1:38 pm

#1 Rick Fast on 02.22.21 at 1:40 pm
GTA housing bubble will crash by 50% in second half of the year! KABOOM
————-
Cheering on a depression are we?
Thats what it would likley take.
Banks would likley be insolvent and I bet you have no Tuna stocked away? Oh and the stock market would collapse.
Its all the same. You cant have one without the other.
Cash is king then. Just like last March when I was all in cash then buying the blood.
A short lived burp dude.
They have been talking down RE here for years while I was buying.
Good luck!

#121 Bill on 02.23.21 at 2:00 pm

I put in a new hardwood and marble bathroom Vanity yesterday.
Got the floor model at costco for $230.
Locally $650 is the price.
Drain was over $80 for brass. Retarded in the good ol days maybe $22.
Tap $350 solid brass no plastic (was free from a job way back)
Had to move the GFI plug.
Redo base board trim.
So a plumber electricial and carpenter thankfully I am.
Total cost would have been $2000.
Cost me $340 all in and thats real value added.
Learn to do your own stuff at wholesale.
Thats why houses cost so much, building suplys up 20% in one year at minumum. Some 50%….the gouging has arrived.

#122 IHCTD9 on 02.23.21 at 2:04 pm

#95 The Woosh on 02.22.21 at 9:43 pm

Sure about that? Or is just that the political platforms of the other parties are just so unpalatable. What’s more appealing about the Conservatives, the NPD, the Greens, or the BQ than what the Liberals are doing?
____

Harper almost had the deficit nuked at the time we elected the nose honking ass-clown we currently have to a majority.

I can’t recall what the issue was with Harper, I think he was “mean”, “not transparent” among other things.

Now we have 1 Trillion worth of Federal debt (and counting) with zero plan for how we’ll manage, or service it.

This is worse for Canadians than any, and every; bad thing all PM’s in the last 100 years of the country have done – combined.

And at least Harper doesn’t run around wearing black face and grope young female reporters at every opportunity like Mr. elite frat-boy Trudeau likes to do.

Trudeau is the worst PM in Canadian history by 100 miles.

#123 IHCTD9 on 02.23.21 at 2:10 pm

#119 Love_The_Cottage on 02.23.21 at 1:18 pm
#114 IHCTD9 on 02.23.21 at 11:40 am
Grievous errors that will haunt 2-3 generations, and possibly even lead to the insolvency of the Country itself decades from now.
___
The key question is whether you are a Russian troll or an Iranian troll?

https://bc.ctvnews.ca/study-details-ways-russian-and-iranian-trolls-tried-to-influence-canada-s-2015-election-1.5319541
____

Well if I get to choose, I’d definitely choose to be a Russian Troll. Those Slavic Women are HOT!

#124 Bill on 02.23.21 at 2:19 pm

My Cousin sold their house in Powell River in a few weeks.
$539,000
Older super tidy home with a large heated shop on a 1/4 acre
Ocean views from the deck….
Thats not a bubble price. You cant replace the setup for even close to that. Some places are mental. People are ignorat and i spend more time buying tuna then some do in the purchase of their home. They will get what they deserve. Last person to trust is your realator or 98% of them.
Just know your market.

#125 Bill on 02.23.21 at 2:31 pm

Trudeau
Now removing guns. 3 incidences last 10yr with legal fire arms. All others were illegal.
Wont help our boys in Chinas jail.
Give 2 thumbs up fot CCPs Huawei 5G
400% carbon taxes coming your way. Hope you dont have to heat your home.
If you suport this guy you need to check yourself into a mental institution.
Hope you are wealthy you maybe able to figure out how to survive.
Money helps.

#126 Gravy Train on 02.23.21 at 5:03 pm

#125 Bill on 02.23.21 at 2:31 pm
“[…] 400% carbon taxes coming your way. Hope you don’t have to heat your home.[…]” Hey, Billy. Almost half (48%) of my home energy is produced by my solar panels. And guess what! There isn’t any carbon tax on the sun. You paleos are so retro, and you never ever learn. :P

#127 Dave on 02.23.21 at 9:35 pm

I’ve been investing money into fixing dilapidated old houses for rent – seems like this will provide a better return than I could get investing especially if I leverage increased equity in order to expand real estate.

I live outside of the crazy bubble areas so my total investment remains relatively low.

Am I barking up the wrong tree?

For example I have 30k in cash in the bank – I will probably use that to fix up a property that will increase in value from the 25k I bought it for up to 250k or so.. Will bring in around 3k/month rental.

What do y’all think?

#128 Sail Away on 02.24.21 at 10:43 am

#127 Dave on 02.23.21 at 9:35 pm
I’ve been investing money into fixing dilapidated old houses for rent – seems like this will provide a better return than I could get investing especially if I leverage increased equity in order to expand real estate.

I live outside of the crazy bubble areas so my total investment remains relatively low.

Am I barking up the wrong tree?

For example I have 30k in cash in the bank – I will probably use that to fix up a property that will increase in value from the 25k I bought it for up to 250k or so.. Will bring in around 3k/month rental.

What do y’all think?

————-

Honestly? It sounds like you’re putting forward an idea you have. The numbers seem wildly optimistic. Go ahead and try it, though; you will gain knowledge at the very least.