The head of the Investment Industry Association of Canada is recommending the government consider raising the annual contribution limit for tax-free savings accounts to help offset the impact of the proposed tax changes.
Ian Russell, president and CEO of the IIAC penned a letter Friday outlining the background and potential ripple effects of the proposed changes for taxing private corporations, with particular focus on the feds’ plan to target passive income.
He highlighted TFSAs as one possible area to make up ground.
Russell proposed an increase in the annual TFSA contribution limit from $5,500 to $7,500, noting “a modest increase in the allowable limit would still leave these savings vehicles within reach of middle income Canadians.”
The TFSA proposal was one of three key initiatives Russell put forward, alongside some changes to capital gains tax provisions and a Canadian take on the U.K.’s Enterprise Investment Scheme, which he says “provides a personal tax credit for the purchase of small business shares, and an exemption from capital gains if the shares are held for more than three years.”
Correction: An earlier version of this story incorrectly stated the current annual TFSA limit. BNN apologizes for the error.