Tax-free savings accounts are a gift to the banks, not to Canadians

M. Spector wrote:

Jamie Golombek is full of shit when he says, "Typically, the bigger the risk, the higher the expected rate of return." If that were true, then everybody would invest in the riskiest, most speculative investments around!

The bigger the risk, [b]the lower the chance of any positive return at all.[/b] That's what "risk" means.

You are grasping at straws and resorting to quibbles.
Golembek's contextual meaning would be apparent to anyone familiar with investments.  That is, "One would not knowingly take a higher risk gamble unless they expect that risk to be potentially compensated with a very substantial win". 
Though I find many of your posts informative, I have yet to see analysis from you on this subject that demonstrates you understand it.
I didn't realize I was  "yelling and screaming", nor using gratuitous obscenities to insist on feeble points.

This is not about TFSAs per se, but in the current issue of L'aut'journal ("200 MILLIARDS AUX BANQUES - La face cachée du budget Flaherty"), Michel Chossudovsky estimates at 200 billion $ the Canadian gov't handout to the banks, with nary a word from the Opposition.

Opening lines:

Les médias ont fait grand cas du déficit de 85 milliards sur cinq ans du budget Flaherty, mais ils ont complètement passé sous silence le montant faramineux de 200 milliards $ (12 pour cent du PIB) prévu dans ce que le gouvernement appelle un « Cadre de financement exceptionnel » pour venir en aide aux institutions financières canadiennes. En soi, ce transfert monétaire auprès des banques est la principale cause du déficit budgétaire et de l'endettement du gouvernement fédéral.

Déjà, le gouvernement Harper avait débloqué en catimini un premier montant de 25 milliards $ le 10 octobre dernier, puis un autre de 50 milliards le 12 novembre, pour racheter des prêts hypothécaires des institutions financières. Malgré l'importance des montants en jeu, ni les partis d'opposition, ni les médias n'ont crû bon de poser des questions au gouvernement, d'analyser les implications de cette « aide » aux grandes banques canadiennes. (...)

martin dufresne wrote:

This is not about TFSAs per se, but in the current issue of L'aut'journal ("200 MILLIARDS AUX BANQUES - La face cachée du budget Flaherty"), Michel Chossudovsky estimates at 200 billion $ the Canadian gov't handout to the banks, with nary a word from the Opposition.

Is this available online anywhere? I couldn't find it at the link you provided.

The excerpt you quoted talks about the 25 billion in October and the 50 billion in November. Chossudovsky talks about the same figures in [url=http://www.globalresearch.ca/index.php?context=va&aid=12007][color=mediu... English article a few days ago.[/u][/color][/url] But how does he get the total up to $200 billion?

I didn't say you made a trite observation. I said your paraphrase turned Golombek's statement into a trite observation.

And the context for understanding Golombek's statement is to be found in [b]his[/b] words - not in any context provided by you.

If you could see past your sarcasm, you might be able to comprehend what others are saying. 

spam and spammer deleted.

thanks M. Spector

og

For some large percentage of Canadians, saving money is not likely when their debt to income began increasing since before the start of this meltdown. [url=http://www.banqueducanada.ca/en/fsr/2009/highlights0609.pdf]Bank of Canada review of the financial system[/url](pdf) says that rising household and personal debt represent the greatest risk to the financial system. And Canadian families with incomes of around $35,000 a year have seen their debt increased the most. And these debts are generally not due to frivolous living but for basic necessities of life, like rent, mortgages, groceries, utilities, transportation to and from work etc.

Quote:

"There has been a further deterioration in the financial position of the Canadian household sector as a result of the continued turmoil in financial markets, the deepening global recession, and worsening labour market conditions."

And regardless of what Stephen Harper conservatives say about our "sound banking system", they have been lying to us same as Mulroney era conservatives. The $75 billion dollar bailout of Canadian banks, which occurred two weeks aftyer the last $300 million dollar federal election, is the equivalent of the US bailout of Wall Street when it was just $700 billion US taxpayer dollars old. Equivalent on a per capita basis according to Canadian economist Michel Chossudovsky. And Canada's big six banking monopoly has actually been bailed out by Canadian taxpayers several times since deregulation began in the 1980's, including the great bank robbery of 1991 before Brian Mulroney exited stage right in avoiding to face the electorate.Tory times have been bad times for workers and increasingly indebted Canadians

Looks as if you didn't read the thread before you posted here, tostig. You are simply restating what Alice Klein said in the article in the OP. We have already dealt with this "hoarding" thing at length.

As a self employed person I do find the TSF account helpful for 'rainy day' planning. I once had to withdraw some of my RRSP savings when I was unable to do much work for 3 months (caring for my father recovering from a heart attack). Ever had to pay the withdrawal penalty? Now THAT is a gift to the banks!

[url=http://www.theglobeandmail.com/globe-investor/personal-finance/tfsa-move... the overcontribution and other loopholes[/url]

Quote:

In an announcement released late Friday [Oct. 16], the Finance Minister unveiled a series of changes designed to clamp down on "inappropriate transactions to draw excessive benefits." The changes, which kicked in on Saturday, aim to eliminate schemes that involve investors making deliberate over-contributions or unapproved investments because the tax-free gains exceed the penalties.

The first loophole Mr. Flaherty is trying to close is [b]deliberate over-contribution[/b], where people put money into their tax-free accounts in excess of the annual $5,000 limit. The old penalty for going over the limit was 1 per cent a month tax on the excess contribution. Under the new rules, people will also have to pay a 100 per cent levy on any gains or income they make with the excess contribution, effectively erasing any incentive to earn that money.

One theoretical situation involves an investor putting an extra $100,000 into a TFSA and buying a junior mining penny stock on bets it will be taken over. If the company does indeed get scooped up and the stock doubles, the investor would have to pay a penalty of $1,000 (the 1 per cent a month on the amount of the over-contribution) but would be left with a large gain that is then secure in a tax-free shelter. The new rules will mean that all of the investor's stock gains and/or income from the $100,000 excess contribution will go to the taxman.

"For the average person who invests a little more than $5,000, this is not a big deal. Again, this is targeting people making enormous amounts of over-contribution," Mr. Golombek said.

The government was also concerned about [b]asset transfer transactions[/b], where investors were trying to make gains in the value of their investments by transferring money from their RRSPs and other registered savings plans, which discourage early withdrawals with heavy taxes, to their TFSAs. From now on, TFSA amounts that are "reasonably attributable" to these kinds of transfers will face a tax of 100 per cent.

The last loophole Mr. Flaherty tackled relates to [b]prohibited or non-qualified investments[/b]. It appears some investors were making these investments despite the existing penalties because the gains remained in the accounts even after the offending purchase was removed. Again, under the new rules, any gains on prohibited investments, such as shares of a company in which you own a significant interest, will be taxed at 100 per cent while any secondary income related to non-qualified investments, such as land or general partnership units, will be taxed at regular rates.

Did you read the date on Andrew Jackson's piece?

The loophole closings render it completely obsolete.

M. Spector wrote:

Did you read the date on Andrew Jackson's piece?

The loophole closings render it completely obsolete.

I disagree. There is nothing in the Jackson piece that even hints that he was aware of the embarrassing loopholes that were closed (ie. deliberate over-contribution, asset transfer transactions, and prohibited or non-qualified investments.).
All Jackson talks about is the lost revenue over time from "standard" reinvestment by high earners.
Jackson doesn't even talk about the speculative windfalls--still perfectly legal "qualified investments"--available to the savvy minority of daytraders who play, say, double and triple long and short leveraged funds, or someone who has an insiders tip on a penny stock (not legal, the latter instance, but you can bet it happens with few being caught), etc.