In the fall of 2020, the Canada Revenue Agency revealed the inflation rate or indexation factor (1%) that will be used to determine key personal income tax and benefit numbers for 2021.
Given that inflation numbers have been low for the last couple of years and months, the amounts are not radically different.
Here are some of the updated numbers to get you started for your savings, retirement, and tax return filing efforts in 2021.
2021 TFSA Contribution Limit
The TFSA numbers kept steady for four years (except for 2015 when it briefly rose to $10,000). This lack of change was due to how the TFSA limit is calculated – i.e. annually indexed to inflation and rounded off to the nearest $500.
For 2021, the TFSA contribution limit remains at $6,000 (similar to 2020). If you’ve never contributed to the TFSA and have been eligible since 2009, your total contribution room will increase to $75,500.
2021 RRSP Limit
The maximum RRSP contribution allowable in 2021 is the lower of $27,830 or 18% of your earned income in 2020. If you have any workplace pension, this amount may be further reduced by a pension adjustment.
The limit was a maximum of $27,230 for 2020.
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2021 Canada Child Benefits
Canada Child Benefit base amounts are increasing in 2021.
For kids under 6 years of age, the maximum child benefit receivable in 2021 is $6,833 (up from $6,765 in 2020). While kids between 6-17 years of age can receive a maximum child benefit amount of $5,765 in 2021 (compared to $5,708 in 2020).
The total amount you will receive will depend on the number of children and your family net income. A phaseout of benefits start when your family net income exceeds $32,028.
Child Disability Amount: The child disability benefit for a child under 18 in 2021 is $2,915 (up from $2,886 in 2020).
2021 CPP Contribution and Payout Amounts
CPP contributions are paid by you and your employer every year on income earned up to a certain amount referred to as the Maximum Contributory Earnings (MCE).
The maximum contributory earnings for the year is calculated by deducting the basic exemption amount ($3,500) from the maximum pensionable amount ($61,600) for the year.
For 2021, the MCE is $58,100, up from $55,200 in 2020. Therefore, the maximum employee contribution to CPP for 2021 is $3,166.45 (at a 5.45% contribution rate and an increase from 5.25% in 2020).
The maximum CPP contribution in 2021 for self-employed individuals is $6,332.90.
The maximum monthly CPP amount paid out to seniors in 2021 is $1,203.75. However, the average monthly pension paid is lower for most seniors at $689.17.
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2021 Age Amount
Seniors who were 65 years or older at the end of 2020 can claim the age amount if their net income was less than $89,421.
The maximum age amount that can be claimed for 2021 is $7,713. Your net income has to be $38,893 or less to claim the full age amount deduction.
2021 Federal Tax Brackets
Federal tax brackets for 2021 are as follows:
- First $49,020 = 15%
- Over $49,020 up to $98,040 = 20.5%
- Over $98,040 up to $151,978 = 26%
- Over $151,978 up to $216,511 = 29%
- Over $216,511 = 33%
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2021 Employment Insurance (EI) Rate and Maximum
The maximum annual insurable earning for 2021 is $56,300 ($54,200 for 2020), with EI premiums payable at a rate of 1.58%.
This means that the maximum annual employee premium for 2021 is $889.54. The maximum annual employer premium is $1,245.36 for 2021.
2021 OAS Maximum and Clawback
For the first quarter of 2021 (January to March), the maximum monthly OAS benefit at 65 years is $615.37.
OAS clawback starts when your net income is $79,054 for 2020 ($79,845 for 2021), and you will receive no OAS if your income exceeds $129,075. The OAS amount is adjusted for inflation every 3 months.
Also indexed to inflation are the GIS and Allowance. For the first quarter of 2021, the following amounts apply:
- Maximum GIS amount for a single individual: $919.12
- Maximum GIS amount to a senior who has a spouse also receiving OAS: $553.28
- Maximum monthly Allowance benefit: $1,168.65
- Maximum monthly Allowance for the Survivor benefit: $1,393.08
2021 Basic Personal Amount
The basic personal amount for 2021 is $13,808 if your income is 151,978 or less. The increase in the basic personal amount is phased out gradually until it reaches $12,421 for incomes of $216,511 and over.