With the new year comes new tax breaks, and it’s up to Canadians to make the most of these changes.
As you settle into 2020, are you starting to get your receipts together? Wondering where to move your money to make it work for you?
Devon Ethier, an Associate Investment Advisor with HollisWealth, recommends focusing on your tax-free savings account. In 2020 there’s another $6,000 of allowable room, for a total of $69,500.
“Many financial institutions sold these accounts as just another savings account. But we recommend people use these accounts for investments that are likely to grow – not just cash for a rainy day,” he says.
Ethier’s other big tip? Smart tax planning is something Canadians should do throughout the year, not just in the spring.
“Talk to your accountant and your financial advisor now to find out what you can do year-round to pay less at tax time.”
Overall, Ethier says, tax changes this year are minimal, but there are still a few changes to keep you on your toes.
1. Basic Personal Amount
2020 sees the Basic Personal Amount increase to $13,229, the first step in the current government’s proposal to bring the amount to $15,000 by 2023. But the savings aren’t the same across the board.
“Most families will see an increase in the basic personal amount,” Ethier says.
Lower and middle income Canadians could see savings between $140 and $240. Canadians with an income above $150,473 start to lose out on this deduction, and those earning more than $214,368 will have no basic personal amount.
2. Paycheque Deductions
CPP contributions increase this year to 5.25 per cent, but EI premiums decrease to 1.58 per cent.
“Together these changes will hardly be noticeable. And they add up to less than $5 a paycheque for most Canadians,” Ethier says.
3. First-time Home Buyers
The Home Buyers’ Plan allows qualifying first-time home builders and buyers to withdraw from a registered retirement savings plan without having to pay tax on the withdrawal. For 2020 the withdrawal limit has increased to $35,000, up from the previous amount of $25,000.
4. Old Age Security
During the election campaign, the Liberals promised to increase Old Age Security payments by 10 per cent for those earning less than $77,580. “This will be a nice boost to many seniors’ incomes,” Ethier says. Look for the increase in July.
All federal tax brackets are rising 1.9 per cent to keep up with inflation. Child Tax Benefits will increase by 1.9 per cent as well.
For more information, email email@example.com or call 250-586-1332 for financial advice right here in Parksville.
This information has been prepared by Devon Ethier who is an Investment Advisor for HollisWealth® and an Insurance Advisor with Hollis Insurance Agency. Opinions expressed in this article are those of the Investment Advisor only and do not necessarily reflect those of HollisWealth. HollisWealth® is a division of Industrial Alliance Securities Inc., a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. Insurance products provided through Hollis Insurance Agency.