Pre-Budget Consultations: Recommendations

The Knowledge Bureau has submitted its pre-budget consultation recommendations to the Federal Government.  Please indicate whether you agree:<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com🏢office" />

 ® yes                    ® no        ®  why?

 1. Reduce Tax Withholdings:   Governments should withhold less tax at source so that Canadians can  invest more, and sooner, to an RRSP and then to  TFSA.  Reduce business and personal taxes by increasing tax free zones.

$1400 INVESTED ANNUALLY FOR A 40 YEAR WORKING LIFE GROWS TO:

                                    (30% marginal tax rate assumed)

At 5%                    At 2%                    RATE DIFFERENCE

INSIDE RRSP                       $177,576              $86,254                         $91,322

OUTSIDE RRSP                   $122,513              $75,430                         $47,038

TAX SAVINGS                    $  55,063               $10,824                         $44,239

$980 ANNUAL TAX SAVINGS REINVESTED IN A TFSA       

                                                At 5%                    at 2%                     RATE DIFFERENCE

INSIDE TFSA

OUTSIDE TFSA

TAX SAVINGS   

TOTAL SAVINGS BY LEVERAGING RRSP AND TFSA CONTRIBUTIONS:

                                                At 5%                    at 2%                     RATE DIFFERENCE

RRSP SAVINGS

TFSA SAVINGS

TOTAL TAX SAVINGS     

Source:  Knowledge Bureauís EverGreen Explanatory Notes: Retirement Income Calculator

® yes                    ® no        ®  why?

2.       Income splitting:  anyone generating a periodic pension from superannuation, RRSP, RRIF, LIFs, annuities should be able to split pension income with the spouse.  Currently the rules discriminate again those with RRSP/LIF, who must wait to age 65 to take advantage of pension income splitting.  Other families should be able to income split on any income source.

® yes                    ® no        ®  why?

3.       Bring Back Income Averaging:  Hard economic times bring unintended business results.  Income averaging over a period of 5 years should be allowed, as in prior years.

® yes                    ® no        ®  why?

4.       RRIF/LIF Minimums/Fund Access Barriers.  Abolish them.  This is not practical or desirable.

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