Canadian Tax Changes for 2020
Each year, the CRA makes changes that have the ability to impact your Canadian tax filing. While changes some years can be minimal, it’s important to be aware of them, because they may still impact your individual tax situation. Here are some changes that were made in 2020; some of these changes impacted your 2019 tax return filing, while others will take effect when you file your 2020 return.
Basic Personal Amounts (Federal)
The basic personal amount was $12,069 in 2019 and has been increased to $13,229 for 2020; what this means is that a taxpayer can earn up to this amount before paying any federal income tax. As per the Liberal election platform proposal, we could see this amount increase over the next few years to $15,000 by 2023, if approved.
Tax-free Savings Accounts (TFSAs)
The Registered Plans Directorate announced the amount Canadians will be able to put into their Tax Free Savings Account (TFSA) remains at $6,000 for 2020, as it was for 2019. If you have not been maximizing your contributions over the years, make sure to check your CRA My Account for your own personal contribution balance limit.
Income Tax Brackets
Canadian income tax rates vary according to the amount of income you earn, and you pay different rates on different portions of your income. This is a marginal tax rate system. Our tax brackets change each year, usually with inflation. This year it increased by 1.9%. For the current and previous tax rates, check out our current overview. Stay tuned for updates each year.
Digital News Subscriptions Tax Credit
This has now reached Royal Assent. This tax credit is a non-refundable tax credit for payments for qualifying subscriptions, paid by individuals, for tax years 2020 to 2024. More information can be found here.
RRSP Contributions
The new maximum contribution amount for 2020 is $27,230. If you have not been maximizing your contributions year over year, check your My Account for your current available contribution balance.
CPP Contribution Rates
Effective 2019 we saw the introduction of the CPP Enhancement. Over a 5 year period, the CPP contribution rate will be increasing to 5.95%. For 2020, the CPP contribution rate is 5.25%.
Home Buyers’ Amount (HBA) & Home Buyers’ Plan (HBP)
In 2019 the Home Buyers’ Plan (HBP) withdrawal limit increased from $25,000 to $35,000, for withdrawals made after March 19, 2019.
New homeowners qualify for the $5,000 first-time Home Buyers’ Amount (HBA)* if they or their partner have purchased a home in the tax year, and did not live in another home owned by either of them in the four years before the purchase.
*Credit was previously called First Time Home Buyers’ Tax Credit (HBTC)
