In the fall of 2019, the Canada Revenue Agency revealed the inflation rate or indexation factor (1.9%) that will be used to determine key personal income tax and benefit numbers for 2020. 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 this year.
2020 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. However, given a recent uptick in inflation, the limit is finally going up!
For 2020, the TFSA contribution limit remains at $6,000. If you’ve never contributed to the TFSA and have been eligible since 2009, your total contribution room is now $69,500. The TFSA contribution limit in 2019 was $6,000.
2020 RRSP Limit
The maximum RRSP contribution allowable in 2020 is the lower of $27,230 or 18% of your earned income in 2019. If you have any workplace pension, this amount may be further reduced by a pension adjustment. The limit was a maximum of $26,500 for 2019.
2020 Canada Child Benefits
Canada Child Benefit base amounts are increasing in 2020. For kids under 6 years of age, the maximum child benefit receivable in 2020 is $6,765 (up from $6,639 in 2019). While kids between 6-17 years of age can receive a maximum child benefit amount of $5,708 in 2020 (compared to $5,602 in 2019).
The total amount you will receive will depend on the number of children and your family net income.
Child Disability Amount: The child disability benefit for a child under 18 in 2019 is $2,886 (up from $2,832 in 2019).
2019-2020 OAS Maximum and Clawback
For the third quarter of 2019 (October to December), the maximum monthly OAS benefit at 65 years is $613.53.
OAS clawback starts when your net income is $79,054 for 2020 ($77,580 for 2019), and you will receive no OAS if your income exceeds $126,058. The OAS amount is adjusted for inflation every 3 months.
Also indexed to inflation are the GIS and Allowance. For the first quarter of 2020, the following amounts apply:
- Maximum GIS amount for a single individual: $916.38
- Maximum GIS amount to a senior who has a spouse also receiving OAS: $551.63
- Maximum monthly Allowance benefit: $1,165.16
- Maximum monthly Allowance for the Survivor benefit: $1,388.92
2020 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 ($57,400) for the year.
For 2020, the MCE is $58,700, up from $53,900 in 2019. Therefore, the maximum employee contribution to CPP for 2020 is $2,898 (at a 5.25% contribution rate and an increase from 5.10% in 2019).
The maximum CPP contribution in 2020 for self-employed individuals is $5,796.
The maximum monthly CPP amount that will be paid out to seniors in 2020 is $1,175.83. However, the average monthly pension paid out will be much lower for most seniors.
2020 Age Amount
Seniors who were 65 years or older at the end of 2019 can claim the age amount if their net income was less than $87,750. The maximum age amount that can be claimed for 2020 is $7,637. Your net income has to be $37,790 or less to claim the full age amount deduction.
2020 Federal Tax Brackets
Federal tax brackets for 2018 are as follows:
- First $48,535 = 15%
- Over $48,535 up to $97,069 = 20.5%
- Over $97,069 up to $150,473 = 26%
- Over $150,473 up to $214,368 = 29%
- Over $214,368 = 33%
2020 Employment Insurance (EI) Rate and Maximum
The maximum annual insurable earning for 2020 is $54,200 ($53,100 for 2019), with EI premiums payable at a rate of 1.58%. This means that the maximum annual employee premium for 2020 is $856.36. The maximum annual employer premium is $1,198.90 for 2020.
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2020 Basic Personal Amount
The basic personal amount for 2020 is $12,298. It was $12,069 in 2019.