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Canada's Finance Minister Joe Oliver meets with private sector economists in Ottawa, April 9.Patrick Doyle/Reuters

Unless Finance Minister Joe Oliver is deliberately misleading his caucus (in which case he's in trouble!) the contribution limit for tax-free savings accounts will be raised when he brings down his budget on April 21.

In a letter last week to Conservative members of Parliament, the minister strongly indicated that the party would fulfil the promise it made during the last election campaign to double the annual contribution limit for TFSAs once the federal budget is balanced.

"During the 2011 election, Prime Minister Stephen Harper committed to doubling TFSAs once the budget was balanced," he wrote. "Canadians know that we stick to our commitments. And on April 21st I will present a balanced budget that will make life more affordable for Canadians."

That seems pretty clear. But is it really? We won't know the details until the minister rises in the Commons to speak, but the doubling of the limit may not be quite as straightforward as it appears at first glance.

For starters, the party platform from 2011 specifically uses the figure of $10,000 for the new annual limit. That would have been double the original $5,000 limit, however it has since increased to $5,500 as a result of indexing. That brings us to question one: Will Mr. Oliver go with the original $10,000 figure (which would cost governments slightly less money in the long run) or will he do a true double and take the limit to $11,000?

Next, consider the issue of timing. The government could keep its promise by phasing in the contribution increase over several years – say 20 per cent more a year for each of the next five years. That would have the effect of deferring the negative impact on revenue for a period of time. So question two: Will the limit be doubled immediately, or effective with the 2016 tax year, or spread out over time?

Then we need to consider what will happen with indexing going forward. TFSAs have an unusual indexing provision that only allows for increases (or decreases) in increments of $500. The plan uses a formula based on the cumulative rate of inflation over time. The limit is not raised until that amount exceeds $250, which is then rounded up to the nearest $500. That has happened only once, in 2013. If inflation were to average 2 per cent - and it's much lower right now – the next increase would not be until 2017.

But if the contribution limit is raised to, say, $11,000, this formula would result in more frequent indexing increases. Suppose that the first year for the new limit is 2016 and that $11,000 becomes the revised base for indexing. Under the current formula, using 2-per-cent inflation, the contribution limit would increase to $11,500 in 2018, to $12,000 in 2020, and to $12,500 in 2022. By 2030, we'd be up to $14,500 a year.

So the third question is this: Will indexing still apply after the doubling or will the new contribution limit be etched in stone? And if indexing is still applicable, will the formula remain the same?

We'll have to wait until April 21 for the answers.

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