Your 2020 Tax Essentials Reference Guide
We’re four months into 2020 and our clients want to know about updated rates for a host of tax-related items and numbers, including RRSP contribution limits, exemption amounts for pensionable earnings, and the lifetime capital gains exemption. Check out our list below for updated rates for all of our clients—including those with children and dependents, older clients, and clients currently working.
Taxpayers With Children and Dependents
For those with a child under the 18 years of age, the non-refundable tax credit has increased from the 2019 amount of $8,416 to the 2020 amount of $8,576, with a supplement of $5,003 for those under 18. These amounts are reduced if child-care expenses are claimes; $4,909 in 2019.
For those with a child under 18 years of age with a severe and prolonged impairment in physical or mental function, the child disability tax-free benefit has increased from 2019 amount of $2,832 to 2020 amount of $2,886.
If you have a dependant who’s physically or mentally impaired, you may be able to claim up to an additional $2,182 in calculating certain non-refundable tax credits.
In 2020, the maximum Child Care Benefit, a non-taxable benefit that became effective on July 1, 2016, is $6,765 per child under age six and $5,708 per child aged 6 through 17.
Child care expense deduction limits:
As of 2018, the maximum amounts that can be claimed are $8,000 for children under age seven, $5,000 for children aged seven through 16, and $11,000 for children who are eligible for the disability tax credit.
Taxpayers who are 65 years of age or older on December 31 of the taxation year can claim in 2020 is $7,637, up from $7,494 in 2019. You may be able to transfer all or part of your age amount to your spouse or common-law partner or to claim all or part of their age amount.
Clients may be able to claim up to $2,000 if they reported eligible pension, superannuation or annuity payments.
OAS recovery threshold: Taxpayers may have to repay a part or the entire
of their old age security pension if their net world income exceeds $79,054 for 2020, up from $77,580 for 2019.
The basic personal amount for 2020 is $12,298 up from $12,069 in 2019. Note that the Liberal government has promised to phase in an increase in the basic personal amount over 4 years up to a maximum of $15,000, with a clawing back of benefits for those who earn more than $147,667.
Lifetime capital gains exemption:
The lifetime capital gains exemption is $883,384 in 2020, up from $866,912 in 2019.
Maximum pensionable earnings: For 2020, the maximum pensionable earnings is $58,700 ($57,400 in 2019), and the basic exemption amount remains $3,500 for 2019 and 2020.
TFSA limit: In 2020, the annual limit is $6,000, for a total of $69,500 for someone who has never contributed and has been eligible for the TFSA since its introduction in 2009. The amount of $6000 is the same in 2019, allowing for a maximum of $63,500 in room available for someone who has been eligible since 2009.
Maximum RRSP contribution:
The maximum RRSP contribution for 2020 is $27,230, up from $26,500 in 2019.
Maximum EI insurable earnings:
The maximum annual federal insurance earnings for 2020 is $54,200, up from $53,100 in 2019.
The current family loan rate is 2%.
The medical expenses threshold for 2020 is 3% of net income or $2,397, whichever is less. This rate is up from 2019 levels, with a max of 3% or $2,352, whichever is less.
Home buyers’ amount: Homebuyers may be able to claim up to $5,000 of the purchase cost, and get a non-refundable tax credit of up to $750.
There you have it. Starting off the year right means getting up to date on the latest tax information so that you know where you can maximize savings and reduce tax debt. For more in-depth tax planning advise, contact Kalfa Law Firm and one of our tax experts will be happy to provide you with counsel that is specific to your situation.
-James Alvarez, Tax Counsel
© Kalfa Law Firm 2020