As the holiday season closes most of us start looking towards the new year and determining how best to approach it. There have been a few changes that I felt it prudent to share; particularly with regards to recent tax and registered tax program changes.
As most are aware, we have the first 60 days of each year to complete getting any RRSP contributions in if we want to use them for the previous tax year. As it is a leap year this means that we have until Feb. 29, 2016. Any RRSP contributions done after that cannot be used for the 2015 tax year. The federal government does not allow any exceptions whatsoever. The potential impact of RRSP’s is likely to increase for higher income earners going forward as recent changes have increased the potential taxes owing greatly.
The contribution limits regarding TFSA’s have changed quite a bit over the last year so an update regarding those is certainly in order. We began 2015 with an additional $5,500 in contribution room for all resident Canadians aged eighteen or older. During the 2015 Federal budget they increased the available contribution room for 2015 to $10,000. Many people contributed earlier in the year and were not aware of the increased room available so they will still have that room should they chose to maximize their contributions as it does not expire. For 2016 the new government has reverted to the previous methodology and allowed only $5,500 room for 2016 and beyond.
Here is a link to CRA’s website detailing previous contribution limits.
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/tfsa-celi/cntrbtn-eng.html
I have personally come across numerous situations where people who could benefit through the use of the RDSP have been unaware of them so also wanted to mention them here as well. The Registered Disability Savings Plan is available for all Canadians who are eligible for the disability tax credit. The potential benefits are huge; up to $70,000 of grant and $20,000 of bond money available per person so it is certainly worth looking into. If you know someone with a disability you may be able to help them by asking if they are aware of RDSP’s.
Here is a link to CRA’s website referencing frequently asked questions.
http://www.cra-arc.gc.ca/tx/rgstrd/rdsp/fq-eng.html
Please feel free to contact me about any questions you may have. Many of the recent tax changes are too complex to include here but I will be happy to discuss how any of the changes affect any of our clients.
Cheers!
