I found these comments over the course of the article"But interest and investment income - including capital gains - earned in the account will not be taxed when it is withdrawn, as is the case with RRSP withdrawals."
The benefits, however, are real. A family of four, for example, would enjoy a gain of $4,000 after 10 years if each spouse or common-law partner invested $5,000 a year in a guaranteed income certificate earning interest of four per cent.
People can buy any investment vehicle they choose and place it into the registered tax-free account. And they can contribute to their spouse`s, or common-law partner`s tax-free account, depending on the available room.
Funds can be withdrawn without penalty at any time whether the money is used to buy a house, a car, go on vacation, start a new business or pay off a debt. There are no restrictions on how the money is spent."
If I start looking behind the curtain again this tells me that this is encouraging Canadians to save, not invest. After saving $10K for 10 years the family has amassed $100K with only $4K to show for it. To me that is a huge opportunity cost. That same $100K could have been leveraged into multiple downpayments on properties that would have yielded increasing cash flow over the same 10 years along with the potential for sizable equity appreciation.
These two lines I find especially interesting: "buy any investment vehicle they choose" & "can be withdrawn without penalty at any time whether the money is used to buy a house" ... what can you buy for $5000? More mutuals, stocks or GICs. And they`ve implied properties cannot be purchased and protected within the account. Hmmm, it makes me wonder what industry might have been pushing for this. Are there any MICs you can get into for $5K?
Would love to hear what others see behind the curtain and what sort of impact (+ or -) you see this having on approaching JV partners.
