The Ministry of Finance has all but indicated its next federal budget will double the maximum amount Canadians can contribute to their tax-free savings accounts.
Finance Minister Joe Oliver has indicated to the Conservative caucus that he will follow through on a 2011 election promise to double the amount Canadians can contribute each year to their TFSAs.
"Canadians know that we stick to our commitments," Oliver said in a confidential letter to fellow caucus members on April 7. "And on April 21st I will present a balanced budget that will make life more affordable for Canadians."
Canada's TFSA limit was $5,000 a year at the time the promise was made in 2011, but the current limit is now $5,500 a year.
That means the new TFSA limit under the next federal budget could be between $10,000 and $11,000.
Oliver will table his federal budget in the House of Commons on April 21.
The TFSA budget increase would amount to another fulfilled election promise for the Tories, who also introduced income-splitting for families during their time in power.
In Oliver's letter to his fellow caucus members, he says nearly 11 million Canadians "enjoy earning interest free income in their TFSA account."
According to 2013 TFSA data included in the letter, 71 per cent of those who contributed the maximum amount to their TFSAs were over the age of 55. About 59 per cent of those who contributed the maximum amount made less than $60,000 annually, while 91 per cent made less than $150,000.
The Bank of Montreal's Household Savings Report says 31 per cent of Canadians had a fixed savings plan in 2014, while 19 per cent of Canadians did not have any savings last year. The report also found 40 per cent of respondents felt they were not saving enough money.
Last February, two studies on TFSAs warned that doubling the annual limit could cost Ottawa billions of dollars in the future.
The left-leaning Broadbent Institute said a $10,000 TFSA limit would primarily line the pockets of the wealthy, while the majority of Canadians would be forced to deal with reduced public services or higher taxes to offset lost revenues.
The Parliamentary Budget Officer also slammed the notion of a TFSA budget increase in a report last February. The PBO report said Ottawa could lose about $14.7 billion a year in revenue by 2060, while provinces could stand to lose about $7.6 billion.
The PBO report said the federal government shoulders about two-thirds of the fiscal impact created by TFSAs, while Canada's provinces take one-third of the hit.
