Happy New Year from your team at Finatics Accounting!
Below is a summary of 2020 Canadian payroll tax changes that will be in effect starting January 1, 2020:
Federal Personal Tax Credits increase from $12,069 to $12,298. The 2020 TD1 forms are now available on CRA’s website.
- EI premiums are decreasing from 1.62% to 1.58%. This reduced rate is offset by an increase in the maximum annual insurable earnings from $53,100 to $54,200. If your employees are earning more than the maximum, it equates to an decreased contribution of $3.86 per year for the employee and $5.41 to your business expense.
- CPP premiums are increasing (the second of five consecutive years of scheduled increases to reach 5.95%) from 5.10% to 5.25%. The maximum annual pensionable earnings are also increasing from $57,400 to $58,700 (the basic exemption stays the same at $3,500). If your employees are earning more than the maximum, it equates to an increased contribution of $149.10 per year to both the employee and your business expense.
Additional changes to Tax Free Savings Account (TSFA) and Registered Retirement Savings Plan (RRSP):
- TFSA contribution limit for 2020 remains at $6,000 and the cumulative total is now $69,500.
- RRSP contribution limit for 2020 increases from $26,500 to $27,230
From the team at Finatics Accounting Solutions we wish you a Prosperous 2020!