As the new 2020 tax year begins and the tax filing deadline for 2019 approaches, it is important to know the deadlines and limits for your various saving tools, specifically Registered Retirement Savings Plans (RRSPs) and Tax Free Savings Accounts (TFSAs) - two of the most common tools for planning your financial future.
Below are the significant dates and contribution limits for these two accounts:
RRSP Contributions
RRSPs can be a great tool for reducing your tax owing.
Unlike other tax planning tools, you can utilize your RRSP until March of the following year. As such, the RRSP contribution deadline for your 2019 tax return is March 2, 2020, unless you turned 71 in 2019. In that case, your RRSP contribution deadline was December 31, 2019.
The 2019 RRSP contribution limit is 18% of the income reported on your 2018 tax return to a maximum of $147,222 in income (maximum contributions of $26,500, less any company-sponsored pension plan contributions).
Similarly, the 2020 RRSP contribution limit is 18% of the income reported on your 2019 tax return, up to a maximum contribution of $27,230. To claim this full amount, you will have had to have earned $151,278 in 2019.
TFSA Contributions
The contribution limit for TFSAs in 2019 was $6,000. Unlike RRSPs, however, your TFSA can not be contributed to after December 31, 2019 for the 2019 tax year.
Your TFSA contribution for 2020 will again be $6,000 plus any re-contribution amounts from previous tax years. For someone who has never contributed to their TFSA and has been eligible since 2009, this brings the total contribution limit to $69,500 for 2020.
Your re-contribution room is equivalent to the sum of the amounts withdrawn from your TFSA in previous years.
If you are unsure of how much you can contribute in 2020, contact the Canada Revenue Agency (CRA) at 1-800-959-8281 or log into your My Account. It can be incredibly useful to seek expert help from a chartered professional accountant such as Koroll & Company, we will ensure you are maximizing your tax breaks for the year.
And remember, if you make a withdrawal from your TFSA in 2020, the same amount cannot be re-contributed until 2021, unless you have remaining contribution space.
For more information on upcoming deadlines and the filing of your tax return, contact us today!
