Summary
This article talks about the new savings program that was introduced in canada, this saving account features a tax free incentive, so contributions each year will not be deductible for income tax purposes, unlike the RSP savings plan. This new saving program is issued to help the federal budget in canada. There are many privaliges that come with this program as well as advantages, such as people are able to invest in a new car, that enable to choose and place it into the registered tax-free account.Almost any amount withdrawn can be put back into the tax-free account without reducing the contribution room.
Connection
In this chapter , it talks about the different types of deposits, one being a savings account, defined as accounts maintained by retail financial instituations that pay interest but can not be used directly as money (by, for example, writing a cheque). These accounts let customers set aside a portion of their liquid assets while earning a monetary return. Relating to article the savings account thats been issued can have effects on middle- and upper-middle income Canadians who can afford to set aside up to $5,000 a year, then compared to a normal savings account who's open to anyone with minimal benefits.
Reflection
I think that a new savings plan is profitable, but i think it will change canadians spending habits for the worse. This savings plan is a tax-free savings account, meaning when you withdraw money from a savings account you wouldn't need to pay the tax on it, so this again will temp people take out money frequently. There are also many cons to be considered in savings such as In a savings bank, the money cannot be used as it is done in a current or on-demand account. There are small opening balances required in savings accounts. The interest also varies. There are interests like one fourths of 1% annually. If you want to get higher interests you should consider opening a high–yield savings account.
1 comment:
The new saving program is good for people who want to save their money. It would be better if the account is only addressed to people who want to save their money and not given any privilages of withdrawing the money any time that pleases them. This will help people save money and since their will not be any tax cuts, it will increase the number of people and amount of money being saved but only if people do not have access to the account untill a certain amount of time.
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