The Next New Tax Facts: Plan Now for 2020

Walter Harder

Once you’ve done your year-end planning for 2019, it’s important to know what your tax situation for 2020 will look like. Indexation of tax brackets and personal amounts are based on the Consumer Price Index for September, while prescribed interest rates are based on the average rate for three-month Treasury Bills for October. Although the CRA won’t announce the exact figures until later in November, here’s what to expect the new tax numbers to look like based on a federal indexing factor of 1.9%

Tax Brackets. The federal indexation factor for 2020 of 1.9% results in the following changes to the federal tax brackets:

2020 Brackets

2020 Rates

Up to $48,535

15%

$48,536 to $97,069

20.5%

$97,070 to $150,473

26%

$150,474 to $214,368

29%

Over $214,368

33%

Personal amounts are likewise indexed:

Personal Amount

 

2019

2020

Basic Personal Amount

Maximum Claim

$12,069

$12,2982

Age Amount

Maximum Claim

$7,494

$7,637

Reduced by net inc. over

$37,790

$38,508

Spouse or C/L Partner Amt.

Not infirm

$12,069

$12,298

Eligible Dependant Amount

Not infirm

$12,069

$12,298

Pension Income Amount

Maximum Claim1

$2,000

$2,000

Adoption Expenses

Maximum Claim

$16,255

$16,563

Canada Caregiver Credit

Infirm spouse, elig. dep. or child

$2,230

$2,273

Other infirm dependants

$7,140

$7,276

Reduced by net inc. over

$16,766

$17,085

Disability Amount

Basic Amount

$8,416

$8,576

Supplementary Amount

$4,910

$5,003

Base Child Care Amount

$2,875

$2,930

Tuition Tax Credit

Minimum Tuition1

$100

$100

Medical Expenses

3% limitation

$2,352

$2,397

Refundable Medical Expense Supplement

Maximum

$1,248

$1,245

Base Family Income

$27,639

$28,164

Minimum earned income

$3,645

$3,714

Donation Credit

Low-rate ceiling1

$200

$200

Canada Employment Amt.

Maximum

$1,222

$1,245

Home Buyers’ Amount

Maximum1

$5,000

$5,000

Volunteer Firefighters

Maximum1

$3,000

$3,000

Volunteer Search & Rescue

Maximum1

$3,000

$3,000

Home Accessibility TC

Maximum1

$10,000

$10,000

1 These amounts are not indexed

2 The basic personal amount (BPA) is expected to be changed per the Liberal election platform

Prescribed Interest Rate. The prescribed interest rate for January to March 2020 will remain at 2% based on the average rate on October's three-month treasury bills.

TFSA Contribution Room. The additional TFSA contribution room earned on January 1, 2020 will be $6,000 as the indexation rate is not enough to increase it to the next level.

Source Deductions. Here’s what Canadians can expect to contribute to CPP and EI.

Program

 

 

Employment Insurance

Maximum insurable earnings

$54,200.00

 

Premium rate

1.58%

 

Maximum employee premium

$856.36

 

Maximum employee premium

$1,198.90

 

Clawback zone begins at

$67,750.00

Canada Pension Plan

Maximum pensionable earnings

$58,700

 

Contribution rate

5.25%

 

Maximum employee/employer contribution

$2,898.00

 

Maximum self-employed contribution

$5,796.00

RRSP

Maximum new contribution room earned

$27,230.00

 

Based on maximum 2019 earned income of

$151,278.00

 

Additional educational resources: Find out more about the theory behind these provisions by taking a certificate tax course from Knowledge Bureau in the DFA-Tax Services Specialist™ Program.

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