But with that said I’m estatic about this fund.

Best Wishes,
D4L

It’s not a requirement to buy just bonds and GICs inside TFSA. We’re free to invest in stocks. No tax is still better than capital gain tax, so I plan on investing in stocks and income trusts inside my TFSA.

By the way, I’m still praying for the governments to nix the 15% US withholding tax. I feel it can happen. US has some of the most fabulous international dividend paying stocks, and they’re cheap too.

Ted Rogers Jr and Galen Weston ‘inherited’ their wealth from the fathers and grandfathers.

Warren Buffet is a buy a hold investor who would greatly benefit from a TFSA if he was a Canadian.

Bill Gates is the only entrepreneur in the list you mention ( I assume that is the point you were trying to make).

I left my thought over at Canadian Capitalist’s blog. I’ll re-post here –>

This is meant to nullify the effect of lower corporate taxes, not to increase the overall tax burden on dividend investors. The combined effect of lower corporate taxes and higher dividend tax rates basically evens out at the end of the day.

An example with the 2nd [Federal] tax bracket:

2007
Corporate: $100 - $19.5 (corp tax) = $80.50
Individual: $80.50(dividend) - $3.542 (div tax) = $76.958

2012
Corporate: $100 - $15 (corp tax) = $85.00
Individual: $85.00(dividend) - $8.1855(div tax) = $76.8145

… or a reduction of 0.186% after tax. Nothing to mourn about.

Note that when you factor in a slower ascent to higher tax brackets due to a smaller gross-up percentage, the overall effect is basically zero. i.e. a 38% grossed-up dividend will hit the next bracket slower than 45%.

Corporations have the option of distributing all the tax savings to shareholders, or reinvesting back to the business for future dividend increases. Either way, nothing is gained or lost in the context of after-tax total dividend return.

[Furthermore, BC still has the most generous dividend tax credits in Canada. I haven’t crunched the numbers, but I’m guessing a British Columbian couple can still earn up to ~$90k tax-free in dividends, assuming they have no other incomes. In addition, the lower gross-up amount will help tame the criticism that dividends are robbing us of income-tested government benefits such as GIS and CCTB.]

I’m just as lazy because I wanted to see what your thoughts were first.

Overally, I think its good that the government is reducing the corporate tax rates. This should help our Canadian corporations to be more competitive globally. I just wish that dividend investors (like me) didn’t have to pick up the difference. Of course, corporations that want loyal dividend investors will use some of this tax savings to increase their dividends, so this is some consolation. And with the new TFSA, I can try to further shelter some of this income although my ITs and bonds would be the first candidates for the TFSA since they still have a much higher tax rate.

I just wish they chose to make the system simpler. I think another type of account will not help most poor folks. It’ll just confuse them. In this confusion, banks and brokerage firms will be the ones to profit with their fees and hidden charges. I figure this will become the hidden TFSA “tax” that the poor will own.