The preceding post examined the basics of how an RESP works. It is an excellent tool amongst multiple options to plan for the training costs that may be required to launch your fledging from the nest. The most important ways to optimize your RESP are to open a self-directed account (rather than join a group plan) and to get started early. However, there are other ways to optimize RESP contributions and unlock its full potential. The best strategy depends on your larger financial situation, personality, and preferences. Learn more to decide where an RESP fits into your financial plan and choose an RESP contribution strategy that is optimal for you.
Consider How Your RESP Fits Into Your Financial Life
We are all human. That means we naturally divide information into individual packets, even though they are all part of the same meal. This is called mental accounting and while natural, it is illogical. For the most logical attempt at optimizing our finances, we must consider them as a whole. Think like a Vulcan.
Why consider your RESP in a broader context?
We are especially vulnerable to mental accounting when we are considering RESPs. We think of it as our kids’ money and for the specific mission of funding their education.
However, the reality is that we can draw from multiple pots to fund our kids’ education. For example, we could draw from our excess income, savings, debt, or other investment accounts at the time we need the money.
To illustrate, putting extra money in an RESP beyond the minimum required for grants when you have high-interest debt is illogical. Instead, you could build a more stable platform. Then you will be in a stronger position later to help, using your improved cash flow, or building a larger TFSA to draw from.
So, if you want to make a mathematically optimal RESP contribution plan then consider your overall finances as one. That said, there is still an argument to consider an RESP in isolation.
When does reality trump logic?
If it is behaviorally the only way that you are going to set aside money and not touch it, then consider the RESP on its own. Protect it from your human shortcomings. If you are unlikely to have extra income, savings, or other accessible investments at the time your progeny needs the money – then build and protect your RESP in isolation. Do not waste energy juggling choices that you may not have. Just take action.
The outcome of any financial strategy depends not only upon the math, but also upon the execution. The further into the future and the more complex it is, the more important execution risk becomes. For those with the flexibility and discipline to consider optimization, the strategy is still dictated by your overall financial life. While not an exhaustive approach, here is an overview of some common situations.
So many competing priorities. So little money.
This is by far the most common scenario for the average Canadian. Even as a high-income professional, this was our financial situation when we popped our kids out. Debt, pent-up demand, career, and the fertile-years commonly coincide. In this situation, the priority is to scrape together an RESP contribution large enough to get the full CESG each year. That is a $2500/yr contribution, or possibly $5K/yr if you are behind. You may even be able to get a CLB before your training or business venture pays off and boosts your income.
I fully appreciate the pain of reviewing where the money goes. However, it is the only way to get an accurate idea of how you are spending. That is the first step in cutting the money spent on things you don’t care about to instead spend lavishly on what you do care about. Like educating your kids. Perhaps, even reclaiming your basement one day. To me, budgeting isn’t about being cheap, but about spending to live a rich life.
I got serious about budgeting as I prepared for marriage. For the budget-virgins, Boomer & Echo does a great job of teaching how to budget and a free spreadsheet.
Strategies To Pay Your Kids First
Well, you do want to pay yourself first too if you have unused tax-sheltered accounts. More on that later. However, the same principle applies. If you automate redirecting money to your priorities first, then you are less likely to spend that money on the less important stuff. That does mean having a budget to make sure you don’t leave yourself short on necessities. However, a simple automated process helps you to reliably execute your plan. Behavior and psychology are critical to outcomes.
Automating Your RESP For Better Behavior
One way to improve your behavior is to set up automatic contributions to your RESP that occur shortly after your payday. For those who get large sums in fits and spurts, like a self-employed professional, then try to make your contribution as early in the calendar year as possible. For example, I do our RESP, TFSA, and RRSP in one sitting each January. Get the money out of sight, out of mind. If it further helps you psychologically, then doing this monthly with Canada Child Benefit payments is another option. Making your plan easy to execute is important whether you have budgetary discipline or not because that cash also needs to be fully invested consistently.
Automating DIY Investing
For a self-directed account using All-In-One ETFs, you still must log in to your brokerage and buy ETFs with the money. If you open an RESP using Qtrade, then XBAL/XGRO/XEQT are free to buy and sell. So, small contributions are okay. I made an interactive guide (with pictures and detailed instructions) on how to do this. If you use my Qtrade Direct Investing link, I do get a small commission at no cost to you and you get their best deal. It is the only advertising I allow on the site. That is because it adds value to you and furthers my mission.
Robo-Advisor: Fully Automated for a small fee.
If you want it even easier, a robo-advisor allows you to set up automatic contributions to your RESP. Plus, it then automatically buys and maintains the account holdings. Total automation. There are many options out there. If you open a Qtrade Guided Portfolio via my link, it is affiliated with The Loonie Doctor which helps fund this site. The fee for a robo-advisor plus the underlying funds is usually ~0.75%/yr to do everything compared to 0.25%/yr to DIY invest using an All-In-One ETF. The right choice for you is a balance between the fee difference and whether that buys you better behavior and convenience.
Mutual Funds: Fully Automated. Humans & buildings ain’t cheap.
A mutual fund is another fully automated option. For mutual funds, the combination of advisor and fund fees is usually 1.5-3%/yr. Look for the management expense ratio (MER) of any fund you are considering. On the plus side, you usually get a human advisor, which may or may not be a good value for you.
$2500 = No Problem. Unused Tax Shelters = Dilemma.
Perhaps your income has picked up and you wisely haven’t stuck your hand into the earning-spending trap. You have repaid your debt to Future-You. However, you also have unused TFSA or RRSP room. Perhaps you are eligible for the new First Home Saving Account (FHSA). An RESP is a great tax shelter, but the other registered accounts are too. They are all part of building your future financial security and the benefits compound from an even longer investment time frame than possible with an RESP. Even if you are all about the kids, your security is theirs too. So, you want to weigh where to put excess cash against those options.
The biggest advantage of an RESP compared to other registered accounts is the CESG gift. So, you almost always want to put in the $2500/kid/year to get the grant and then prioritize excess cash to other accounts until they are filled. After that, the RESP may be the best place again if there is unused room within the $50K/kid lifetime maximum.
Contributions of $36K spread over 8 to 14.5 years are required to get the maximum CESG. So, if you do make extra contributions, be sure that they do not exceed a total of $14K. Unless you are deliberately trying to use a more aggressive lump sum optimization strategy. More on that later.
RESP vs Debt Repayment
This shouldn’t even be a debate if you have high-interest debt or debt that is keeping you awake at night. If that is the case, then prioritize paying it off with your extra cash. If you are on a secure footing to absorb cashflow shocks, then you can consider putting extra into your RESP. For the first $2500, the grants plus tax sheltering make an RESP a winner with an instant 20% risk-free return. After that, the tax shelter of an RESP makes it a closer call in the pay debt vs invest debate for additional contributions. Paying debt offers a guaranteed after-tax risk-free return equal to the interest rate.
RESP vs First Home Savings Account
The FHSA just became available as I am writing this post. It is like a house-obsessed child resulting from intercourse between a TFSA and an RRSP. It gives both a deduction against income (tax refund), the invested money then grows tax-free, and then you can take it out tax-free. The only catch is that you (or your spouse if co-habiting) cannot have owned a house in the last five years. If you eventually take the money out to buy a house. No problem. If not, then you could add it to your RRSP. On top of the regular RRSP room.
This beast is a crazy tax gift for those who have money to stash and don’t own real estate. A no-brainer. In comparison to an RESP, I may even be tempted to pass on the RESP contribution for a year to get it going if I was forced to. As long as I could make a larger contribution in the near future to make up for the missed CESG (up to $1000/yr unclaimed CESG for $5000/yr contribution). That translates to a minimum of 8 years contributing to the RESP to avoid permanent CESG loss. You could even take the FHSA tax refund and use that for RESP catch-up money if you need to.
RESP vs TFSA
An RESP and Tax-Free Savings Account (TFSA) are both contributed to with after-tax personal money. Investment income in both is tax-sheltered in the same way. However, the growth in an RESP will be taxed in the hands of the beneficiary on the way out and growth in a TFSA is never taxed. That difference is usually negligible if the student has a low taxable income. However, it is not zero and some students have a significant combination of income from jobs, scholarships, and the Education Assistance Payment portion of their RESP withdrawal.
The other way that a TFSA differs is that you can hold it for your whole life. Money that comes out can go back in. You keep the increased room from investment growth. Hopefully, big compounding growth. This is a major advantage over a lifespan. So, the earlier you start growing the tax haven space in a TFSA, the better.
For these reasons, if I had to choose, I would put $2500 into my RESP and then direct extra personal cash towards unused TFSA room. Just try not to waste the TFSA gift with low growth or high-fee investing. That said, only invest money that you don’t need in the near future. If it is intermediate-term saving that you need and you don’t have the financial capacity for long-term investing yet, then the TFSA is still a good account to use. Just don’t try to use it as a revolving door and don’t forget to shift gears to investing when you do have wiggle room to invest for the long-term.
RESP vs RRSP
An RRSP is most useful if you are in a high personal tax bracket or near your probable peak tax bracket. The reason is that the contributions can be deducted against income. So, a deduction against income in a 54% tax bracket means a 54% refund.
You can contribute now in a lower tax bracket and deduct later if you know your income is going to jump. However, if you have the option to shelter more in your RESP now, then that may be better. Since you are delaying using the main advantage of an RRSP over the RESP anyway.
Like an FHSA, you could use a fat tax refund to pay down debt, top up your TFSA, or put extra into your RESP.
Lump Sum Strategies, Informal Trusts, & Corporations
It is uncommon for most people to have a big lump of money laying around with no place to go except saving for their kids. Most will build up their RESP slowly. Perhaps, add some lump sum RESP contributions to top it up when able, as they also fill their other tax-sheltered accounts as described in the preceding section. However, it does happen.
Who has $50K straight out of the birth canal anyway?
For some, it may be that a friend or relative gifts the money. That relative may be wealthy or they may have sacrificed in other ways to prioritize giving.
The money could have been socked away by parents who waited until they were financially established before reproducing. They could be older parents who are having kids later for career, social, or biological reasons. Someone may have a big wad of personal cash from realizing a capital gain selling some real estate.
Perhaps, you finally clean the cracks of the couch. Always a source of unexpected treasures.
Where can you park the money besides an RESP?
When optimizing lump sums contributions to an RESP, you must consider the alternatives. The best would be an accessible tax shelter, such as a TFSA, if there is unused room. If the money is a gift, then you would want to be sure that the giver is ok with you keeping it in other accounts rather than dumping it all into the RESP.
The two main non-registered options are a personal cash/taxable account or an informal trust. Both will have tax exposure. So, for the personal account, an account attributable to the lower-income spouse may be best. If the couple has similar incomes, then a joint account is more convenient. The same would apply to an informal trust.
An informal trust is an account attributable to an adult since minors cannot own an investment account. The money is held irrevocably “in trust” for the minor without a formal trust governance structure. They get ownership of the money as an adult to spend however they choose. The taxation of an informal trust is complex. Interest and dividends are taxed in the adult’s hands unless the contribution came from a student job or Canada Child Benefit. and capital gains are taxed in the minor’s hands. Second-generation interest and dividends are taxed in the minor’s hands.
My wife has an informal trust for my daughter to learn how to invest some of her student job income. I made a page with the steps and required paperwork. Again, we used Qtrade and invest with HXT and HXS. Those ETFs are free to trade at Qtrade and will hopefully only have capital gains, keeping the taxes simple. Providing this experience and the habit of investing is another powerful way to ensure your child’s financial success beyond an RESP.
Optimizing a lump sum strategy compared to a personal taxable account.
There are two big options. One is to make an RESP contribution up to a $16500 lump sum (or whatever room you have left) as soon as possible. The $16500 lump (max $14K plus $2.5K in a single year) allows you to still get the maximum CESG grant (a sure thing) as you contribute $2500/yr over 14 years and $1K in the final year. The frontload strategy lump benefits from longer tax-sheltered growth in the RESP compared to the taxable account. For that reason, frontloading beats a strategy of evenly contributing $50K spread out over the years.
The optimal lump sum contribution would be a frontloaded contribution somewhere between $16500 and $50K. In contrast to the $16.5K frontload strategy, it forgoes some of the grants to take advantage of a longer tax-sheltered growth period. Whether increased growth exceeds the lost CESG depends on a bunch of future assumptions. It is not a sure thing. Fortunately, the difference between the $16500 lump and the optimal sum is small. Except perhaps at high income tax levels. The assumptions will certainly be incorrect, but close may be good enough. I model that out in a separate post about lump sum optimization.
What if your extra cash is sitting in a private corporation account?
The money invested in a private corporation is partially taxed and still tax-exposed. So, you must weigh the tax cost of getting more out to make a personal RESP contribution against getting the grants and tax shelter of an RESP. It is also not static. If the corporation is destined to become less tax efficient, then strategically shifting money out and into a tax-sheltered account becomes more attractive.
For the child of an incorporated professional, it most commonly makes the most sense to take out just enough money to get the maximum grants. When I modeled a corporation vs RESP, that 20% risk-free return and the tax-sheltered growth made up for the incremental loss of tax deferral in the corporation. For the less common RESP vs corp situations, a lump sum strategy may be worth considering. That is because a corporation over the active-passive income limits or taking very little out can become less efficient for investing. Plus, if you are taking very little out, the personal tax bump to access the cash is much less.
Great post. Found you through GreaterFool website.
It is a lot easy to set aside $3K per year than it is to come up with $50K up front, especially if they have a mortgage.
My plan is as follows: $5K initial contribution and then $3K per year until age 15. Total contribution: $50K. Total CESG: $7,200. My calculations suggest that portfolio will hit just over $100K by the time the kid is 18.
Thanks! That seems like a good plan and slightly better than what we have done to this point. We definitely could not have come up with $50k when we first had kids and I like the more gradual optimizing the CESG approach better anyway. We still had huge student debt at the time. We put in 5k the first year for our first kid and then 2500/yr for each kid when we had our second. We are better off financially now about a decade later and will make some top ups now that I examined the math better writing this article. Thanks for visiting!
i liked this post a lot and just came back to reread it
was reading a few comments on the canadian couch potato blog on the new Vanguard 1 fund solutions and a commenter made a comment similar to yours about trying to maximize total value of RESPs
wondering if you could comment on comparing the Mawer balanced fund and the similar Vanguard 1 fund ETF….would this be VBAL? in terms of how much value this Mawer fund now has in your opinion
Thanks Elmer. Canadian Couch Potato is better for comparing specific funds than I am and had this to say about VBAL. The VBAL looks to be more passive with a lower fee of 0.22%. Mawer is actively managed with a higher fee (~1%). That is a relatively low fee for a managed fund, but is the manager going to be able to consistently outperform enough to make up for that fee over the long-haul? I don’t know. It is like predicting the weather to me. I did do a comparison of active versus passive managed funds in general which showed passive generally wins.
Great look at this issue! Would you consider adding in the consideration of where the $50k for front loading comes from – cash from Grandpa vs dividends from Corp, probably the two most likely sources of funds for many of us? Of course, there’s also the financial planning issue of it probably not being a good idea to put $50K in a RESP just to squeeze out a few more $s in 18 years time, when you have student loans that need taking care off now.
Thanks Grant! Great points. I have been thinking that I should revisit this one with the recent interest in it. Where the money comes from is key. A gift is one thing, but taking money out of a corp and getting taxed on it is entirely another. Also, if a gift or you just happen to have the money at a personal level, one would also need to consider the alternatives about where that money could be held for a fair comparison. Competing priorities if you do have the money is a key issue for most people. When we started our RESPs, we had loans which took precedence. We are now looking at doing a lump sum top up (without losing any of the potential grant) since we are in an entirely different financial position and our timeline/returns still make it worthwhile. Rational or not, I also psychologically have a hard time turning away a guaranteed government grant – the money flows the other way so often.
Great post, the power of compounding wins another one.
I was wondering if you’ve ever considered the advantage of using Informal Trusts for investing any windfalls from grandparents or the Canadian Child Benefit. If one can trust your future kids at 18, it seems like it offers more flexibility in how the money is used? Allowing one to give money to the kids without strings attached?
Hi Stevie. An informal trust can be particularly useful if you fund it via CCB (which we don’t get anymore if high income) or an inheritance since all income would be attributed to the beneficiary (minimal or no tax). Outside of CCB or inheritance funding, interest/dividends are attributed to the donor (interest or dividends from re-investment and capital gains are not). The main benefit compared to RESP is not needing to withdraw the money in a prescribed way and the amount of money being limited only by how much is available. It simply becomes theirs at age 18 (although an IFT funded via a Will can set out other parameters in most provinces). The money cannot be taken back and the trustee needs to be different from the contributor. The main benefit is also the main drawback – you would need to be happy that they can use the money for whatever they want – whether funding an education or trips to Vegas. Thanks for bringing it up – warrants a full post I think!
Great post! I was just wondering if you could explain why the up front 50K did worse than the gradual (16.5 + 2.5K + 1K) approach in this brochure I saw from Manulife? Really appreciate all the content on here!!!
Excellent question and I am glad you brought this up. It has been on my todo list to do a follow-up article to this one that specifically looks at the lump sum issue. This current article compares RESP contribution strategies to other RESP contribution strategies. However, the more relevant comparison if you have a $50K lump sum to invest is RESP vs taxable account. That is what the Manulife comparison is doing.
How that analysis turns out actually depends on the tax drag of the funds invested in the taxable account, your marginal tax rate, and the rate of return. In the Manulife analysis, they use a portfolio that is only giving off 1.2%/yr of the 6%/yr as taxable income. That would be assuming a portfolio that gets almost all of its return from capital gains (which is tax deferral and very efficient, but riskier). A 60:40 stocks:bonds portfolio would likely give off 1.2%/yr from the bonds alone if they pay a measly 3% interest. Dividends would be on top of that as would be any realized capital gains. That would be about 2-3%/yr as tax-exposed income. The second part is at what rate that is taxed at. The Manulife analysis uses a tax rate of 25%. Looking at tax rates on interest and dividends, that probably corresponds to an income in the $40-70K/yr range. Put together, the tax drag on their model is about 0.3%/yr. Tax drag on the same portfolio putting off the more likely 2.5%/yr income and taxed at top marginal rates would have a tax drag in the 1.3%/yr range. That 1%/yr compounded tax drag could make a difference in the outcome of the analysis. I will have to circle back and run the analysis in detail. Should be interesting.
Thanks for the educational experience as always.
I have also been debating the pros and cons of in-trust investment accounts for children versus inter vivos trust versus personal investment account. (Once the RESP has been maxed)
Assuming our children are decent humans beings (at least financially astute), then in-trust investment account would seem to be better and lower cost. You can effectively income split as capital gains are attributed to your children and if you can hold out until they are 18, then you can take advantage of their lower tax bracket.
For those with a spouse of similar income or who are frugally minded (I’m not ashamed to be confused with a penniless student as I carry the same mindset and embarrassingly sport the same attire and haircut ), there may be excess money after RESP, RRSP, and TFSA have been optimized.
What are the considerations of personal investment account versus in trust investment account versus inter vivos trust?
With use of non dividend paying stocks eg Berkshire or Swap based ETF (still available on European markets), it is foreseeable to have a diversified portfolio that generates only capital gains.
Hey George. We have thought about an in-trust account and it can be done as a way of income-splitting. If capital gains oriented, it can be efficient. Even with income, only the “first generation” of investment income is attributed to the high-income contributor. Income earned on that income is attributed to the beneficiary. The main issues, from my limited understanding, are that you need to be fully prepared that it is their money to spend how they want and a layer of complexity. We have been able to effectively enough income-split with my wife’s investment account and building a tax-efficient portfolio that we aren’t going to bother. We will likely simply start gifting money to our kids as they (and we) get older. My attire helps me blend in with students also – my thinning hair with white-patches are starting to give me away though 😉
On a separate note, the European synthetic-ETFs that I have been able to find all pay distributions. The physical non-distributing ones (accumulating) basically function as dividend-reinvestment and tax is due on the dividends. I haven’t found a synthetic accumulating ETF (like our swap-ETFs under siege). Happy to learn of some if you have found any.
Dear Loonie Doctor,
I had presumed that the European swap- based ETFs described as accumulating and which do not report regular distributions are similar to the (beloved) Horizon ETFs and please correct me if I am mistaken. If there are distributions, given the swap-based tracking, would the distributions be considered capital gains instead of traditional dividends?
Using the European ETF screener (https://www.justetf.com/) and searching for swap-based ETF with low MER and high fund size, the following ETFs stand out. (Just be cautious about the listing exchange as the ticker can vary and the currency – sometimes in GBP, EUR or USD)
1) Amundi MSCI Europe UCITS ETF – EUR (C) (https://www.justetf.com/uk/etf-profile.html?listId=first&isin=LU1681042609&from=search)
Benchmark: MSCI Europe
Key Investor information: https://www.justetf.com/servlet/download?isin=LU1681042609&documentType=KID&country=UK&lang=en
2) Invesco MSCI Emerging Markets UCITS ETF (https://www.justetf.com/uk/etf-profile.html?listId=first&isin=IE00B3DWVS88&from=search)
Benchmark: MSCI Emerging Market
Key Investor Information:
3) Invesco S&P 500 UCITS ETF (https://www.justetf.com/uk/etf-profile.html?listId=first&isin=IE00B3YCGJ38&from=search)
Key Investor Information:
4) Xtrackers Barclays Global Aggregate Bond UCITS ETF 2C (USD hedged) (https://www.justetf.com/uk/etf-profile.html?listId=first&isin=LU0942970285&from=search)
Key Investor Information: https://www.justetf.com/servlet/download?isin=LU0942970285&documentType=KID&country=UK&lang=en
Hey George. I honestly don’t know the answer and found it really hard to find. My guess is that it would count as “other income” same as interest or foreign dividends. Only guessing though.
there is one assumption in this analysis that still confuses me (would love it if someone had the answer to it – it is just bugging me). The question shouldn’t be whether putting in 50K RESP now vs spreading it out 2500 a time is better I think (?) because that ignores the point that if you had 50K magically at the start it you do other things with the 50K other than putting it in the RESP. For instance put 16.5K in the RESP, put the rest it in a TFSA if you have room, then take the returns from the TFSA which almost the 2500 a year on average using the rates mentioned and put those returns into the RESP. In effect you get the benefit of both the starting early and the grant that way and overall end up with more. It seems (?) even if the initially money was invested in a taxable account investing mostly in equites so only paying mostly capital gains on profits, if you used those profits and some of the principle to invest in RESP yearly you still come slightly ahead. What am I missing here?
That is an excellent point you raise. If you have the money for lump sums, then the comparator needs to be what account type you would put it in otherwise.
I did this for a personal taxable account in better detail here and a corporate account here. The RESP generally beats a taxable account, but it depends on parental income, investment mix, and timeframe. There was also a RESP lump sum optimizer calculator that I built that you can manipulate the investment returns and income type. If you set the returns to all capital gains and the investor’s income to zero, then it would emulate an TFSA except still some tax on the capital gains when realized. I went into the background coding and did it without tax and that does show a TFSA coming out as a tie (within a couple hundred dollars either way depending on whether you get the grant money faster with a lower household income or not). Further, the RESP modelling assumes that the student taking out the RESP money pays no income tax – they might have some income which would further favor a TFSA. I guess one of the assumptions that I made in thinking about this is that I would want to use my precious TFSA space all for retirement saving. However, if I had TFSA room, other means on which to retire (like a pension), and not enough money to maximize both my RESP and TFSA, then it could make sense. Thanks for bringing it up!
Hi LD, this is an excellent post – one of the things that really got me thinking about RESPs and how best to use them. Some great questions in the comments, especially around the front-loading vs incremental strategy to fund an RESP.
I spent a fair bit of time running a few scenarios and illustrating the results with charts in the following post that you and/of your readers might be interested in: https://moneysmartmd.com/how-to-fund-your-childs-resp/
Thanks Matt. Like your new blog (will add it to my blog roll). I like your comparison between TFSA and RESP – probably the most apples to apples if you haven’t used your TFSA already and get a lump sum.
For some other “real-life” type comparisons, I also did a comparison of:
RESP vs non-registered taxable account
RESP vs Keeping Money In The Corp (low-moderate income)
RESP vs Corp (High-income)
Thanks for adding to the RESP database! I will have to link to your article when I re-vamp my RESP section.
Another great article. Hilarious take on the FHSA.
I’ll likely start the FHSA for the kids after 18 by gifting them money and they get the tax credit .
Our RESP was funded over 6 years to get the grants and I filled it up with Canadian banks and utilities.
I Wondered about your take on the “too good to be true “ transfer of FHSA to a RRSP if you don’t buy a house. Essentially adding to the RRSP even if RRSP maxed out.
The intention of the FHSA is to buy a house. The intention of the FHSA is not to add to your RRSP.
I can see this as a gift to long term renters. But then long term renters likely don’t have the resources to contribute.
CRA is always big on intentions so I’m wondering if CRA will modify this and dis allow in the future as they’ve done with other issues .
LOL , It wouldn’t surprise me , CRA loves to charge late interest , penalty fees and monthly interest penalties on programs they change the rules on.
Hey Dad MD,
Thanks! I already have some great ideas for funny memes when I write about the FHSA explicitly. I think the FHSA is a crazy policy and that it will have the opposite of intended effects. More space to shelter money and inflate house prices for those with excess cash and limited benefit to those who don’t. On the other hand, I am glad it benefits long-term renters who miss out on the principal residence exemption. The rules could change in the future, but that would probably require legislative change. Housing is such an emotional topic and these accounts seem like a nice idea on the surface. Easy sound bites and the dangers require some deeper economic thought. So, it would be a pretty tough political pill to swallow to undo it. If they gain popularity, it would be even more politically suicidal. If they aren’t popular – probably not worth the political risk to take on for a small amount of revenue. I think the horse is out of the barn.