Effective January 1st, 2016, the TFSA annual contribution limit will drop from $10,000 to $5,500. Your TFSA will continue to grow but a little more slowly under the new government. With indexing for inflation, the annual limit will continue to grow in $500 increments per year.
So why the cut back in the annual contribution limit? The Liberals had argued that increasing the annual TFSA contribution limit was more beneficial to the wealthy than to middle and lower-income segments of the population. However, the TFSA has proven popular with low-income Canadians who don’t gain any real benefit from RRSP’s.
Note though, that the Liberals are not making changes to all aspects of TFSA’s. For example, you can keep contributing the full limit your entire life and there is no ceiling on how rich your account can grow.
Is the best thing to happen to TFSA’s? Probably not but savers are still better off than before the TFSA was introduced by the Tories in 2009.
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