2021 Tax Changes That you Need to Know About

Income Tax is the biggest expense for all Canadian families so it is important that you are familiar with changes for each tax year so that you can keep more money in their pockets.  2020 was a very unique year and many people are wondering what their taxes will look like in 2021.  In 2020 the tax filing deadline was extended to June but in 2021 the filing deadline is back to April 30th.

Here are some important changes to note for 2021

• Federal and provincial income tax brackets are increasing to keep up with inflation.
• Employment Insurance premiums are staying steady at 1.58% in 2020 but maximum insurable earnings will increase from $54,200 to $56,300.
• Maximum pensionable earnings the amount used by the government to calculate contributions to the Canada Pension Plan will increase to $61,600 up from $58,700 in 2020, and the employee and employer contribution rates will be increasing to 5.45% from 5.25% in 2020.
• The Canada Child Benefit will continue to be indexed to inflation.  The maximum that parents will receive is $6,765 for children under age 6 an increase from $6,639 in 2020.  For children ages 6 to 17 the amount will be $5,708 up from $5,602 in 2020.
• The tax free savings account (TFSA) contribution limit for 2020 is $6000.  If you have never contributed to a TFSA and you have been eligible since 2009 you will have $75,500 contribution room.
• The current basic personal amount a non refundable tax credit that all taxpayer can claim is $13,229 in 2020. 
• Any maternity or parental benefits received through EI will be tax-exempt at source starting in 2020 which means an additional $1,800 a year for someone who receives EI benefits and earns $45,000 per year.  
• For parents of disabled children the Child Disability Benefit has increased so that families could get an additional $2,000 a year.

If you are not sure what you are entitled to claim on your income tax return you should think about consulting a professional income tax preparer for help.  

From an article by Sean Cooper