TORONTO, Oct. 1 /CNW/ - Lower-income Canadians are entangled in
government programs that discourage personal saving, says a study released by
the C.D. Howe Institute, and the federal government's new Tax-Free Savings
Accounts (TFSAs) could help correct the problem. In "No Strings Attached: How
The Tax-Free Savings Account Can Help Lower-Income Canadians Get Ahead,"
authors John Stapleton and Richard Shillington explain how.
Whether it is seniors who face clawbacks of their Guaranteed Income
Supplement (GIS) benefits because of withdrawals from a registered saving
plan, or families facing clawbacks of welfare benefits for putting a little
money aside, the current rules can make saving pointless, say the authors.
TFSAs can provide a way out of these program traps for the poor. Beginning
January 2009, TFSAs will allow Canadians to hold registered after-tax savings
without incurring further income tax liability on earnings or withdrawals. The
federal government has stipulated that withdrawals would not be subject to the
GIS clawback. The authors stress it is crucial that provinces and territories
also refrain from imposing asset tests or clawbacks that would undo savers'
potential gains. They also say governments should consider supplementing the
savings of poor Canadians, by matching their savings in the new accounts.
For further information:
For further information: http://www.cdhowe.org/pdf/ebrief_64.pdf, C.D.
Howe Institute, (416) 865-1904, email:firstname.lastname@example.org