Your essential tax numbers for 2018
Earlier this week, the Canada Revenue Agency announced several important tax numbers for 2018.
The indexation adjustment for personal income tax and benefit amounts is 1.5 per cent for 2018. This figure is used to adjust a few important taxation rules.
Some of these amounts may lead to some year-end tax planning strategies for this year, so I wanted to share them now:
• TFSA contribution room will remain at $5,500 for 2018. The amount of TFSA room you get each year is indexed to inflation and is set to go up in $500 increments.
For 2018, the total TFSA contribution room is $57,500 for someone who has been eligible since the program started in 2009. Also important to note is that you carry forward any unused room as well as re-claim room from withdrawals made in previous years.
You can confirm your current TFSA room on the CRA website.
• The maximum EI insurable earnings for 2018 went up by $400 to $51,700. Does the EI program provide adequate coverage for you or should you be considering individual disability or critical illness insurance coverage?
• For 2018, the maximum RRSP contribution limit has gone up to $26,230 for those that have earned enough income to qualify for the full amount. As always, a proper financial plan will help you to decide if your savings should be directed to an RRSP, a TFSA or possibly both.
• The pension income amount did not change and is still fixed at $2,000, but I wanted remind people who may be eligible but not claiming it.
Anyone over age 65 can claim this non-refundable tax credit as long as they have eligible pension income. CPP and OAS payments are specifically included, but money paid to you from an annuity, pension or RRIF can qualify.
Many people wait until age 71 to convert their RRSP to a RRIF, but by converting a portion over earlier, they can generate income that will qualify.
• Speaking of OAS, the 2018 recovery threshold will begin at $75,910. Any amount of net income above this amount means that you may have to repay some or all of the OAS pension that you receive.
There are a lot of income splitting strategies to avoid this OAS claw-back and anyone that may be affected should ensure that they’re retirement income plans are up to date.
• In their 2017 fall economic update, the federal government announced plans to index the Canada Child Benefit (CCB) beginning in 2018.
In 2017, the maximum you could receive was $6,400 per child under age six and $5,400 per child aged 7-17. T
here is no word yet what the 2018 amounts will be, but a 1.5 per cent increase of these amounts is likely.
The CCB program replaced the Universal Child Care Benefit in 2016 but you can still apply for previous years if you meet certain conditions.
With many more tax changes on the horizon (likely being announced this coming spring), keeping on top of things and ensuring that your own affairs are setup as efficiently as possible is always a challenge. Consider enlisting the help of a certified financial planner (CFP) professional to create and regularly update a plan built just for you.
Brett Millard is a certified financial planner and owner of SPEIR Wealth Management Inc. Email brett@speirwealth.com or call 778-478-4277.