CRA has announced the TFSA contribution limit for 2021. TFSA is a Tax-Free Savings Account set up in 2009 by the Government Of Canada to help Canadians save money and don’t pay any taxes on earnings and grow the account generates.
With this TFSA dollar limit announcement, the total contribution room available in 2021 for someone who has never contributed and has been eligible for the TFSA since its introduction in 2009 is $75,500.
The annual TFSA dollar limit is indexed to inflation and rounded to the nearest $500. The Canada Revenue Agency’s indexation increase in 2021 is 1.0%. For clients who have withdrawn from TFSAs, their crystallized gains and losses from withdrawals are factored into their TFSA room.
The formula is Unused TFSA contribution room to date + total withdrawal made in this year + next year’s TFSA dollar limit = TFSA contribution room at the beginning of next year.
Contribution Limit By Years
Anyone 18 or older and who has a valid social insurance number is eligible to open a TFSA. The contribution room accumulates beginning in the year in which a person turns 18.
Federal tax bracket thresholds for 2021
- The 33.0% tax rate begins at taxable income of over $216,511, up from $214,368 in 2020.
- The 29.0% tax rate begins at taxable income of over $151,978, up from $150,473 in 2020.
- The 26.0% tax rate begins at taxable income of over $98,040, up from $97,069 in 2020.
- The 20.5% tax rate begins at taxable income of over $49,020, up from $48,535 in 2020.
- Income below $49,020 is taxed at 15.0%.
The basic personal amount for 2021 is $13,808 for taxpayers with a net income of $151,978 or less. At income levels above $151,978, the basic personal amount is gradually clawed back until it reaches $12,421 for a net income of $216,511.