Canadian Money Forum banner

Should register accounts be eliminated?

  • yes

    Votes: 0 0.0%
  • no

    Votes: 7 100.0%
1 - 7 of 7 Posts

·
Registered
Joined
·
2 Posts
Discussion Starter · #1 ·
I wanted to know if anyone has any idea of the proposed changes to registered accounts under the Universal Basic Income bills before the house. On the UBI website, they present ideas on raising money to fund UBI. There is a lot of disturbing ideas on the page. The one that stood out to me right away was the elimination of RRSPs, TFSAs, and pension funds. The TFSA isn't so much of an issue because they are funded with after-tax dollars. The RRSP and pension funds are funded with pre-tax dollars. Tax is owed on the withdrawal of funds from these accounts. If you have a large RRSP or pension fund, what happens when these tax-deferred vehicles are no longer in existence? Are the total amounts withdrawn, and do you have a lump sum of money dumped into your income? This lump sum payment would put many people into the highest (or higher) income brackets. The government would tax these lump sum withdrawals at insane rates. If you had a 500k RRSP and lived in Ontario, the taxes deducted on a one-time withdrawal would be just under 50 percent (this isn't counting any other income). Do they plan on offering any tax amnesty? Does anyone have any insight into what is being proposed? I believe these UBI bills will pass in one form or another. I've attached a copy of the UBI website below.

 

·
Registered
Joined
·
4,035 Posts
Firstly, I personally don't believe a UBI will get passed in Canada. I don't think it has the broad popular support needed.

Secondly, if you look at the list of ways to pay for it, eliminating registered accounts is in only one of the 8 ways. Another way included "reducing the tax break" on RRSPs.

I think if they did eliminate registered accounts, existing accounts would be grandfathered in, and it would just be impossible to contribute any more money to registered accounts in the future. As you say, forcing everyone to deregister an existing RRSP all at once would be insane.
 

·
Registered
Joined
·
3,194 Posts
I would not loose any sleep over it. The current Government wants to remain in power. This would be political suicide for any Government.
 

·
Registered
Joined
·
558 Posts
Looks like a typical idiot's list of "grab the money wherever it is, except in my pockets". Probably with the also typical optimistic accounting which assumes no change in behavior after a new tax is introduced. Because, you know, money grows on trees. And collecting it has no consequences because the tree will grow new dollar bills next spring.
 

·
Registered
Joined
·
176 Posts
Trudeau dreams of a welfare state but this will never happen. Political suicide. They're tip toeing a minefield just to somehow increase taxes so messing with sacred cow retirement plans is a no go. A novel idea would be to control spending.
 
1 - 7 of 7 Posts
Top