Happy new years everyone! This was kind of a good change as I saw today that ING Direct has decided to increase its tax free savings account rate to 3%.
As indicated on the fine print too, “Rate as at January 1, 2010 and (like the weather) is subject to change. Interest is calculated daily and paid monthly.” This is currently the highest interest rate offered to my knowledge though. Not a bad way to start 2010.
There hasn’t been too much news and happenings when it comes to tax free savings accounts since its launch. I would say the highlights would be how the interest rates took a huge dive which kind of killed the excitement of it for many.
However, I was just browsing around and reading a piece about the government of Canada proposing to add the following amendments to the income tax act in regards to how TFSA’s work:
-Make any income attributable to deliberate overcontributions and prohibited investments subject to existing anti-avoidance rules in the Income Tax Act.
-Make any income attributable to non-qualified investments taxable at regular income tax rates.
– Ensure that withdrawals of deliberate overcontributions, prohibited investments, non-qualified investments or amounts attributable to swap transactions, or of related investment income, from a TFSA do not create additional TFSA contribution room.
– Effectively prohibit asset transfer transactions between TFSAs and other accounts.
I suppose it is a direct attempt to prevent intentional abuse of the plan where one can avoid paying income taxes on their investments. An example would be someone intentionally over contributing to their account where the investment would then generate more money than the actual 1% penalty fee you would have to pay.
This doesn’t really affect the average person though that simply uses the account more as a savings account. Basically, I’m sure most people just want higher interest rates.
I know on the ING Direct TFSA site the rate appeared to have dropped for about a month now, but I was hearing mixed stories about how some people were still getting the 3% rate. Thanks to some readers I guess this confirms that everyone is getting a 1.5% rate now.
This is a good update for Scotiabank TFSA customers as the rate climbed up to 1.5%
While the highest rate initially was about 2%, this is a pretty good increase considering almost everyone else seems to be dropping its rates. This could be a sign that the bigger banks are going to increase its rates as well.
Been awhile since anything really changed in the TFSA scene. HSBC’s TFSA rate fell by 0.2% not too long as you can see here:
Guess it doesn’t really make too much of a difference, but a drop is a drop.
Maybe this was a Canada day boost, but it’s nice to know that at least one financial institution has dramatically bumped up its tax free savings account interest rate. As you can see, ING Direct is now at 3% which makes it the highest.
Maybe that is a good sign that others will increase their rates as well or it could be simply that ING is trying to stand out from the rest. ING usually has some of the higher interest rates when it comes to the more conventional savings accounts and so it would be nice if they kept this rate. Or better yet, increase it. 🙂
This one was to surprising to me as I expected the bigger banks to drop its interest rates sooner or later. I guess you can add RBC to the mix as its new rate is 2.25% compared to its original 2.5%
The rate is kind of interesting as it is in-line with Outlook Financial’s change that I posted today as well. Makes you wonder if there is a certain reason why financial institutions or banks would be favoring that number.
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