Minister Ministre of Finance des Finances Memorandum To: Conservative Caucus From: Joe Oliver Copy: Kevin Sorenson, Andrew Saxton Date: Tuesday, April 7, 2015 Re: Tax Free Savings Accounts (TFSAs) In 2009, my predecessor the Hon. Jim Flaherty introduced Tax Free Savings Accounts (TFSAs) to help Canadians to save for a down payment on a mortgage, their kids’ education, and retirement. Today, nearly 11 million Canadians enjoy earning interest free income in their TFSA account. Canadian seniors, in particular, have used TFSAs as a way to make their retirement savings go further. During the 2011 election, Prime Minister Stephen Harper committed to doubling TFSAs once the budget was balanced. 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. But the tax and spend Justin Trudeau Liberals have promised to reverse any doubling of TFSAs, hurting Canadians in the pocketbook. Needless to say, the NDP would like to do the same. When I speak to constituents in Eglinton – Lawrence, I hear again and again from people of all ages and income levels that they have TFSAs accounts. But the Opposition parties claim that increasing the TFSA contribution limit would only help the rich. The Department of Finance has already studied who has maxed out their TFSA contribution limits – and who would ultimately stand to benefit from doubling contribution limits. Their research shows that people of all ages and income levels max out their TFSA contribution limits – in fact the vast majority are low to middle income earners, with a large proportion being seniors. It is no wonder the Canadian Association of Retired Persons strongly endorses doubling TFSAs. Yet Liberal MP Scott Brison said that “it does nothing for the middle class,” while NDP MP Nathan Cullen said that the benefit of doubling TFSA contribution limits “goes to people in the highest income brackets.” We know they couldn’t be more wrong. Once again we see that the opposition parties’ high-tax, high-debt agenda will hurt Canadians of all backgrounds. Worst of all, the Liberal’s pledge to cancel doubling TFSAs is a direct attack on the retirement income of Canadian seniors. - 2 - TFSA maximizers* by income and age, 2013 Age Income 18-24 25-34 35-44 45-54 55-64 65-74 75+ Total Below 20 1.20% 0.70% 0.90% 1.90% 3.50% 2.70% 3.00% 13.90% 20-<40 0.50% 0.80% 0.90% 2.00% 4.60% 6.90% 8.60% 24.30% 40-<60 0.30% 1.10% 1.00% 2.40% 5.20% 5.90% 5.30% 21.10% 60-<80 0.10% 1.00% 1.00% 2.00% 3.50% 3.50% 2.70% 13.80% 80-<100 0.10% 0.60% 0.90% 1.80% 2.40% 1.50% 1.20% 8.60% 100-<150 0.00% 0.60% 1.10% 2.30% 2.90% 1.40% 1.10% 9.40% 150-<200 0.00% 0.20% 0.40% 0.90% 1.10% 0.50% 0.40% 3.50% 200 and 0.00% 0.10% 0.60% 1.50% 1.70% 0.90% 0.50% 5.40% over Total 2.20% 5.00% 6.80% 14.90% 24.90% 23.30% 22.90% 100.00% Source: TFSA administrative data and preliminary 2013 T1 Universe. *A TFSA maximizer is an individual who contributed the maximum allowable amount to their personal TFSA Key Stats on TFSA Maximizers 71 per cent are over the age of 55 Just under half (46 per cent) are seniors 59.4 per cent of TFSA max contributors make less than $60,000 91 per cent make less than $150,000 .