It was interesting how so many of us jumped on this at once. It’s definitely an important topic. Nice roundup.

By Michael James on Oct 23, 2009

Thanks for gathering these TFSA articles together in one place, Larry. It is most helpful.

I have put cash into my own & wife’s TFSA but so far haven’t figured out what the best stocks or ETF’s would be for our purposes. I had originally intended to use high quality income trusts exclusively, and then only withdraw the interest generated annually. However, talking heads seem not to like this strategy.

The tax issue is indeed a major problem. I had hoped the Conservatives would simplify the Cdn Personal tax system but maybe they need a majority first. The Liberals are not inclined to do anything but make it more complex. I believe we would benefit from a flat tax system as proposed by Conservatives years ago.

Basically, under a personal flat tax system; all income is taxed at one low rate, maybe 8-10% – no exceptions (subject to exemptions on income for single moms, people who are below the poverty line, handicapped people, etc).

All returns could be done on one page and the tax rules & guidelines would be simplified down to a small book – not the current messed up set of rules on rules. It can be done and as a revenue neutral project to government – but who will undertake this on our behalf??

By Dave in BC on Oct 23, 2009

It was only a matter of time for this new tax change to occur. TFSA’s will still remain the best tax sheltered account for the young. Why not wait for your taxable income to reach it’s peak before maxing out your RRSP if you can only affoard to do an RRSP or TFSA contribution.

By Smac20 on Oct 23, 2009

Dave is correct. But when the ground starts to swell, it will be like a wave on an ocean. Too late. It is just a matter of time when everybody really understands the global markets; then it will be too late. The worst thing the rich guys could do is connect the third world to the Internet. I believe it is too late. Happy October! Hope to hear from all of you in November. If we are all still here.

By Brian Elwin Pomeroy on Oct 24, 2009

As I see it Larry, Canada must streamline it’s cumbersome & messy personal tax system. To me, the best way to really make it more simple, more efficient and, most importantly, as FAIR to all taxpayers as possible – the flat tax is far & away the best model I have ever seen.

In it’s purest form, income from all sources (employment salaries & commissions, bonuses, stock options,investments, etc) & of all types (cap.gains, income, dividends, etc) is taxed from dollar 0 at one fixed rate. Really simple, isn’t it?

In the real world, one would expect to see some modifications to a flat tax structure; possibly as an exemption for a certain minimal earnings amount for folks with very low income, disabilities,students, the elderly etc. This would replicate the relief they get under the current system and would be seen as fair & equitable by most of my fellow citizens who are a charitable lot at the end of the day. Still, a one page tax return is totally doable!

Government could calculate what the flat tax rate should be tomorrow based on the revenue they currently get in the Great Canadian Tax Grab. TFSA’s & RRSP’s would remain the same as tax shelters.

A flat tax system is mainly about fairness and efficiencies – but there would be a few casualties. For instance, the tax dept would not need thousands of the employees they currently employ to process our returns annually. Also, tax return booths that spring up each tax year may not get as much business. No one said life doesn’t suck, did they?

Think about the big picture for a minute though – a pure flat tax is ultra-efficient, it’s easy to calculate & administer, it’s gotta encourage economic growth (and may encourage foreign investment but I need to chew on this one a bit more); and most of all – it’s FAIR.

Right now, there are office buildings where the cleaning staff pay more tax than the CEO & CFO. Honest. The cleaning staff have little or no tax dodges & loopholes.

In a flat tax plan, you pay a percentage tax on everything you earn in a year. So all of the corp.exec’s & hedge fund mgrs that are under the gun currently for huge bonuses & salaries would pay a flat tax on everything. We would no longer need the Liberal & NDP “Robin Hood” mentality where government steals from the rich to pay the poor.

I’m surprised the Conservatives haven’t proposed a flat personal tax yet but, as I say, maybe it takes a majority in Parliament.

I got interested in the flat tax system many years ago when someone who was running for the Conservative leadership proposed it (can’t recall who it was but it may have been Peter Pocklington or someone else from Alberta??) I can’t see anything but good coming from a properly designed & implemented plan, so if it were marketed correctly to the good citizens of Canada it s/b well received.

Don’t for a minute think this is a brand new idea, either folks. It’s already up & running in something like 24 countries. Because it is so successful in places like Russia (tax rate 13%), Lithuania (24%), Czech Republic, Latvia, Romania, Serbia,Slovakia, Iceland, Mongolia & others – many western European countries are currently considering a flat tax too. They feel they will be at a disadvantage if they do NOT install one as eastern European countries have higher economic growth rates now with it & they feel “left behind”. I wonder if we will be “left behind” too?

By Dave in BC on Oct 24, 2009