4 ms·

Has anyone been thinking about or seen analyses on the potential changes to tax treatment of stock options for start-ups in Canada under the new government? ht

by kspaans 11y ago

Has anyone been thinking about or seen analyses on the potential changes to tax treatment of stock options for start-ups in Canada under the new government? http://www.lexology.com/library/detail.aspx?g=86190d96-b169-4774-885e-db04486ad63d http://www.lexology.com/library/detail.aspx?g=86190d96-b169-...

lewisl9029 11y ago
This is why I have mixed feelings about the Liberal party. I voted for them because I agree with their platform in principle (i.e. invest in infrastructure, take global warming seriously, help the middle class prosper), but between this and reverting of the TFSA contribution limits, their actual policies makes me a bit nervous about their definition of middle class. What definition of middle class consists of people who can't benefit from being able to save and invest 4.5k more per year or from working at a startup with low pay in hopes for a better quality of life down the line from equities?
- kspaans 11y ago
  I've got mixed feelings about the TFSA as well. I think they are easier to understand than RRSPs and thus easier for people to use. But I have this nagging suspicion that the $10k/year would forgo too much revenue down the line. Though maybe I'm too optimistic about how much use TFSAs would get and what kind of growth they would see (assuming no "IRA-stuffing" equivalent).
- tempestn 11y ago
  The thing is, basically by definition, no one who is middle class (aside from perhaps upper, upper middle class) maxes out both their TFSA and RRSP. Even with the reduced TFSA limit, that's 18% of income plus $5500 per year. So really all a lower TFSA means is that more RRSP needs to be used to get the same sheltered space. The TFSA certainly has advantages: flexibility being the biggest one. No bookkeeping, put money in whenever, and take it out with minimal restriction (aside from waiting until Jan. 1 to re-contribute). That said, as long as you invest the tax refund you get from contributing to the RRSP (or even better, file a T1213 so you don't pay those taxes in the first place), the RRSP is arguably a better retirement savings vehicle for most people (ie anyone who expects to be in a lower tax bracket in retirement than while they are contributing). Also, the lack of flexibility makes it more likely that the money will still be there in retirement. The TFSA is great, and selfishly I'd love to keep the extra space. I have to agree though that it (the larger size, not necessarily the TFSA in general) disproportionately benefits the wealthy, and that government revenue would be better spent elsewhere.
  - lewisl9029 11y ago
    This post got me interested in the actual statistics of what income range the middle class represents in Canada, and I found an early 2015 Macleans article [1] listing the following statistics: - Lowest 20% individual income is 18717 and below - Highest 20% individual income is 55498 and above That definitely brought some perspective to my view on this issue. I guess my views on what qualified as a middle class income was pretty heavily skewed towards my own salary range. Now I definitely agree with the conclusions made by you and the Liberal party regarding the TFSA contribution limits. [1] http://www.macleans.ca/economy/money-economy/are-you-in-the-middle-class/ http://www.macleans.ca/economy/money-economy/are-you-in-the-...
    - tempestn 11y ago
      That's why politicians love to cater to the middle class, right? Almost everyone self-identifies that way. Edit: Ha, wrote that before clicking through to your link, which leads off with the same point in almost identical wording. Interesting numbers in general too. Thanks!

by kspaans 11y ago

lewisl9029 11y ago

This is why I have mixed feelings about the Liberal party. I voted for them because I agree with their platform in principle (i.e. invest in infrastructure, take global warming seriously, help the middle class prosper), but between this and reverting of the TFSA contribution limits, their actual policies makes me a bit nervous about their definition of middle class. What definition of middle class consists of people who can't benefit from being able to save and invest 4.5k more per year or from working at a startup with low pay in hopes for a better quality of life down the line from equities?

kspaans 11y ago
I've got mixed feelings about the TFSA as well. I think they are easier to understand than RRSPs and thus easier for people to use. But I have this nagging suspicion that the $10k/year would forgo too much revenue down the line. Though maybe I'm too optimistic about how much use TFSAs would get and what kind of growth they would see (assuming no "IRA-stuffing" equivalent).
tempestn 11y ago
The thing is, basically by definition, no one who is middle class (aside from perhaps upper, upper middle class) maxes out both their TFSA and RRSP. Even with the reduced TFSA limit, that's 18% of income plus $5500 per year. So really all a lower TFSA means is that more RRSP needs to be used to get the same sheltered space. The TFSA certainly has advantages: flexibility being the biggest one. No bookkeeping, put money in whenever, and take it out with minimal restriction (aside from waiting until Jan. 1 to re-contribute). That said, as long as you invest the tax refund you get from contributing to the RRSP (or even better, file a T1213 so you don't pay those taxes in the first place), the RRSP is arguably a better retirement savings vehicle for most people (ie anyone who expects to be in a lower tax bracket in retirement than while they are contributing). Also, the lack of flexibility makes it more likely that the money will still be there in retirement. The TFSA is great, and selfishly I'd love to keep the extra space. I have to agree though that it (the larger size, not necessarily the TFSA in general) disproportionately benefits the wealthy, and that government revenue would be better spent elsewhere.
- lewisl9029 11y ago
  This post got me interested in the actual statistics of what income range the middle class represents in Canada, and I found an early 2015 Macleans article [1] listing the following statistics: - Lowest 20% individual income is 18717 and below - Highest 20% individual income is 55498 and above That definitely brought some perspective to my view on this issue. I guess my views on what qualified as a middle class income was pretty heavily skewed towards my own salary range. Now I definitely agree with the conclusions made by you and the Liberal party regarding the TFSA contribution limits. [1] http://www.macleans.ca/economy/money-economy/are-you-in-the-middle-class/ http://www.macleans.ca/economy/money-economy/are-you-in-the-...
  - tempestn 11y ago
    That's why politicians love to cater to the middle class, right? Almost everyone self-identifies that way. Edit: Ha, wrote that before clicking through to your link, which leads off with the same point in almost identical wording. Interesting numbers in general too. Thanks!