Tax-Free Savings Accounts - Shifting Opportunity
AbstractIn 2009, Canada's federal government introduced a new saving instrument for individuals – the Tax-Free Savings Account (TFSA). This paper reviews the TFSA focusing on how it may benefit individuals at different income levels. To that end, the paper presents advantages and disadvantages of the TFSA and considers international experience in introducing TFSA-like instruments. The paper also discusses the challenges and opportunities offered by TFSA to such groups as individuals, employers and the government. The analysis shows that introduction of TFSA necessitates greater decision-making attention of Canadians in choosing among different tax-proffered saving options. The shift away from using Registered Retirement Savings Plans (RRSP) in favour of using TFSA may, in turn, result in some revenues foregone by the government.
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Bibliographic InfoPaper provided by Certified General Accountants Association of Canada in its series Working Papers with number 090101.
Length: 30 pages
Date of creation: Jan 2009
Date of revision:
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household savings; household finance; tax incentives;
Find related papers by JEL classification:
- G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
- H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
- D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
- E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
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