Tax Free Savings Account

The Tax Free Savings Account (TFSA) has been around since 2009, yet many people still don’t fully understand this savings product.  Here are few common misperceptions:

  1.  I can only put in $5K, so my income, and hence tax savings, would be minimal, so what’s the point?  Well, sure in 2009 that was true, but that $5K was per year, was indexed to inflation, and was increased to $10K per year in this last Federal budget.  So if you haven’t yet put any money into your TFSA to date, you should now be able to contribute $41,000! 
  2. But I can only get minimal interest income on my money.  For whatever reason TFSA’s seem to be marketed like a cash savings account with great introductory interest rates.  The reality is you can invest within your TFSA just like you do in your RRSP.  So if you invest the cash in your TFSA in equities, then you can in fact get a much higher return than interest rates, all tax free.
  3. TFSA’s are great because I can pull out my money at any time without penalty.  While this is technically true, there are two things to watch out for here.  One, if you pull out the money, you have to wait until next year to re-contribute it, otherwise, if you don’t have the TFSA room, you will face a penalty tax on an over-contribution.  Though this seems unfair and silly, presumably the law has been structured this way so that CRA can properly track your contributions and withdrawals year over year.  Two, if you’re going to contribute to a TFSA and just pull it out to buy the new fancy toy every few years, it sort of defeats the purpose of using your TFSA for a retirement savings vehicle.  In this respect the RRSP may be the better choice for you because you save taxes on the contribution, and there is a penalty for withdrawing the funds, thus giving an incentive to keep your money saved.  But the choice of whether you should buy TFSA or RRSP really depends on your specific situation, so best is to get help from an accredited financial

For more information on TFSA’s visit


BC Training and Education Savings Grant

Time to collect your free $1,200!

Well it’s been over two years since the BC government introduced the BC Training and Education Savings Grant, but the time has finally come where you should be able to apply for your $1,200 free grant to your child’s RESP. At least this is according the BC government’s website  (bc training and education savings grant)

However, upon contacting a financial institution they were still “developing” the application form, so I trust other institutions are in the same boat. I hope they... don’t take too long as there are two deadlines to worry about: 1) you only have three years to apply for the grant after your child turns 6 – once your child turns 9 presumably you’ve missed the boat; 2) certain BC political parties have vowed to scrap the Grant, so the entire program may disappear with the next BC election in 2017. So don’t delay in approaching your bank on this! We’d be interested in hearing which financial institutions already have the application form developed, so if your bank is taking applications we’d love for you to comment which institution.

Increase in British Columbia’s Minimum Wage

Did you know the minimum wage in BC is increasing effective September 15, 2015? General minimum wage will increase from $10.25 per hour to $ 10.45 per hour; and for liquor servers the increase is from $ 9.00 to $ 9.20 per hour. Minimum wage for live-in home support workers, resident caretakers, etc. also increases, and a full listing of the new rates can be found at this link If you have questions on what this means for your business, please contact your accounting professional at The Coast Group Chartered Professional Accountants.