The Liberals’ lowering of the annual limit Canadians can contribute to their tax-free savings accounts to $5,500 a year from $10,000 is getting mixed reviews, a new poll suggests.
Respondents to a Nanos Research survey were almost evenly divided on lowering the contribution cap for the savings vehicle. Thirty-five per cent said they supported the Liberals’ lower limit and 13 per cent somewhat supported it, while 33 per cent opposed it and 13 per cent somewhat opposed it.
“The tax-free savings account is difficult politically because you’re taking away something that’s been given,” pollster Nik Nanos said. “The Conservatives made it a political gift before the election and the Liberals took it away.”
The previous Conservative government created TFSAs in the 2008 budget as a way for Canadians to set aside money that could be invested, and any returns would not be taxed even when withdrawn. The accounts differ from registered retirement savings plans in that contributions are not tax-deductible.
The annual limit was originally set at $5,000 a year, before rising to $5,500 for 2013 and 2014, and up to $10,000 for 2015.
The Liberals lowered the TFSA annual cap back to $5,500, as well as cutting the middle-income tax rate and increasing the rate for the highest earners, in a bill tabled in Parliament earlier this month. The TFSA changes take effect for 2016, but do not apply retroactively, meaning that 2015 will be the only year for which tax filers can claim the maximum $10,000 amount.
The annual TFSA limits are cumulative, so the maximum a Canadian could claim since Jan. 1, 2009, is a total of $41,000.
The lower limit is expected to save the Treasury $1.1-billion over five years, according to an analysis released by the Finance Department in December.
But no matter how popular or unpopular the Liberal change is, Mr. Nanos said he doesn’t think it will have a long-term impact for Prime Minister Justin Trudeau.
“The Liberals made a promise to roll back the contribution and they delivered on it,” he said.
“They likely knew from the get-go that this was going to alienate people who were going to use the extra room. Any political fallout probably already occurred during the campaign for voters who thought it was important.”
The Nanos phone-online hybrid survey was conducted for The Globe and Mail and based on the opinions of 1,000 Canadians. The margin of error is 3.1 percentage points, 19 times out of 20.Report Typo/Error