On April 21, 2015, Finance Minister Joe Oliver tabled his first federal budget. The provisions of the budget will be of particular interest to owners of small and medium sized businesses, seniors and families with children. As well, those looking to make certain charitable donations will be encouraged by Oliver’s budget.
Below is a brief commentary on each of the key budget proposals.
For Seniors and Savers
Increase in Tax Free Savings Account (TFSA) Limit
- Effective January 1, 2015 the annual contribution limit has been increased from $5,500 to $10,000;
- As a consequence, the automatic indexing of the annual contribution limit has been eliminated;
- On April 24, the CRA announced that even though this provision is not law as yet, they will allow increased deposits to a TFSA effective immediately.
The 2014 Registered Retirement Savings Plan (RRSP) contribution deadline is Monday, March 2, 2015. Here are some facts about RRSPs to help you make the most of this great opportunity to grow your retirement savings, better plan your personal taxes, and enjoy a comfortable retirement.
Make your maximum contribution
Your RRSP contributions provide a deduction from your taxable income, which for most, results in a tax refund when you file your personal tax return.
For 2014, you can contribute a maximum of 18% of your earned income in 2013, to a maximum of $24,270. Refer to your 2013 notice of assessment as you may have additional unused carry forward limit.
This number will be adjusted if you are a member of pension plans and/or profit sharing plans, depending on the value of your benefits in the previous year.
Making the maximum contribution at the beginning of each year will add additional compounding power to your RRSP. Read more