TFSA limit for 2022 published
The annual TFSA limit is indexed to inflation and rounded to the nearest $ 500. The Canada Revenue Agency’s indexation increase for 2022 is 2.4%
For clients who have withdrawn from TFSAs, their crystallized gains and losses on withdrawals are factored into their TFSA entitlement. The formula is:
Unused TFSA contribution room to date + total withdrawal made this year + TFSA dollar limit for next year = TFSA contribution room at the start of next year
Here are the dollar amounts per year:
|For 2009, 2010, 2011 and 2012:||$ 5,000|
|For 2013 and 2014:||$ 5,500|
|For 2015:||$ 10,000|
|For 2016, 2017 and 2018:||$ 5,500|
|For 2019, 2020, 2021 and 2022||$ 6,000|
Anyone 18 years of age or older with a valid Social Insurance Number is eligible to open a TFSA. Contribution room accumulates from the year a person turns 18.
TFSA holders are permitted to hold a wide variety of investments in their TFSA, including mutual funds, ETFs, bonds, publicly traded securities and certain shares of private companies. In short, all the types of investments that an investor can hold in an RRSP or a RRIF.
However, many people limit their TFSA holdings to GICs or cash.
“People still make the mistake of thinking it’s a savings account, so they leave [assets in the account] in cash or they will buy a GIC and earn very little interest, ”said Carol Bezaire, senior vice president of tax, estates and strategic philanthropy at Mackenzie Investments in Toronto. “But if you use the TFSA as a investment account, you will be able to make that money grow much faster, with good advice.
Graham Priest, financial advisor at BlueShore Financial in Vancouver, said some clients have seen the tangible benefits of holding investments in their TFSAs as stock markets have risen. Customers who sold high-end securities held in their non-registered accounts were unpleasantly surprised by the amount of capital gains tax raised.
“They say to themselves: ‘You know what, I wish I had remembered that [security] in my TFSA, ”Priest said.
Clients can choose to make an “in-kind” contribution of an investment to their TFSA, subject to certain restrictions. The contributed property is deemed to be sold and any resulting capital gain must be reported in the individual’s income tax return. However, if the contributed property is in a loss position, the resulting capital loss cannot be claimed.
Foreign funds or securities may be deposited into a TFSA, but the financial institution issuing the TFSA will report the transaction as converted to Canadian currency on the day of the transaction. The amount of the contribution in Canadian dollars cannot exceed the available contribution room.
Clients should also be aware that foreign dividend income earned in a TFSA may be subject to foreign withholding tax, for which no offset foreign tax credit is available.
“There is no withholding tax if you hold the [same] investing in your RRSP or RRIF because many foreign governments recognize RRSPs / RRIFs as retirement accounts, but TFSAs are not recognized [as such]”Bézaire said.” They will withhold tax when they pay a dividend to your TFSA, but you can’t claim it as a foreign tax credit. “
Federal tax bracket thresholds for 2022
- The 33.0% tax rate starts from taxable income over $ 221,708, up from $ 216,511 in 2021.
- The 29.0% tax rate starts from taxable income over $ 155,625, up from $ 151,978 in 2021.
- The 26.0% tax rate starts from taxable income over $ 100,392, up from $ 98,040 in 2021.
- The 20.5% tax rate starts from taxable income over $ 50,197, up from $ 49,020 in 2021.
- Income below $ 50,197 is taxed at 15.0%.
The basic personal amount for 2022 is $ 14,398 for taxpayers with net income of $ 155,625 or less. At income levels above $ 155,625, the basic personal amount is gradually recovered until it reaches $ 12,719 for a net income of $ 221,708.