The CELIAPP that we promised for April 1st. Here we are in May… And it’s still waiting. But rest assured, it wasn’t a joke. Given the ongoing negotiations between the Canadian government and the civil service, the current radio silence is entirely understandable and should not continue. The program simply had a false start, but aborting it is out of the question. A little patience is required.
Let’s recall the main elements of the CELIAPP
This is a tax-free federal government savings account available to Canadian residents between the ages of 18 and 71 who have not owned a property for at least five years.
- Annual fee: $8000
- Total contributions: $40,000
- Duration : up to 15 years
This program is a supplement to the RAP, which allows you to use $35,000 of your RRSPs to purchase a primary home. By combining the two programs, a couple can collect up to $150,000. The difference between the CELIAPP and the RAP is that the CELIAPP does not have to be paid back.
Note that it is possible to use your accumulated RRSPs to contribute to the CELIAPP.
Waiting for the planets to align
Although financial institutions cannot currently offer the TFSA to their customers, we should not throw in the towel.
We contacted the Desjardins movement to see if they knew more about the intentions of Justin Trudeau’s government. At the moment, we were told, nothing is coming out from Canada’s tax authorities. So stay calm on this side. In the meantime, Desjardins is offering pre-TFSA term savings. The level of the CELIAPP contribution for 2023 is set at a subsidy rate of 4.65%. As soon as the government gives the go-ahead, this sum and the interest will be used to contribute to the program.
One question, two scenarios
Since RRSPs can be converted to TFSAs, a reader who has a $10,000 RRSP and a $9,000 savings account asks what she should do once she can open her TFSA account. She juggles between two possibilities.
1. Deposit $8,000 from RRSPs to TFSA account.
2. Transfer $8,000 from savings account to TFSA account.
My final answer
Without guessing, the two scenarios you develop will likely produce essentially the same long-term results. I would prefer the second option.
Despite this crisis of numbers, don’t forget that the most important thing in this process is that you own your first home and that it meets your expectations.
Advice
If you are thinking of buying your first home and you are in school or starting a new job, open a TFSA account as soon as possible even if you cannot pay the fees. You will do this when your income allows. During that time, your right to contribute $8,000 per year will increase to a maximum of $40,000.