Updates on 2021 TFSA, RRSP and CPP payments


Each year, the CRA provides Canadian taxpayers with New Year’s gifts. These gifts include new contribution limits and mandatory contribution amounts. The new figures help us prepare for the next fiscal years and give us crucial information we may need for tax preparation. It happens every year, and 2021 is no exception, even as it follows one of the most eventful years of the decade.
Passionate savers and investors looking to maximize their TFSA and RRSP each year are keeping a close eye on the new contribution limits. If the limits are increased significantly, they must adjust their savings rate. For 2021, here are the three most important announcements from the CRA regarding contribution limits and pension payments.

CPP payments

The CPP limit, or maximum amount of pensionable earnings, has been raised to $ 56,300 for 2021. It was $ 54,200 last year. the contribution rate for next year, was also raised to 5.45%, up 0.2% from the contribution rate last year. This is the largest increase in the past two decades, but since CPP contributions are spread over the year, most taxpayers will not feel too much of an impact on their earnings.

The maximum RRSP contribution limit for 2021

The maximum RRSP contribution limit has been increased slightly for 2021. Last year, you could contribute a maximum of $ 27,230 to your RRSP (if 18% of your income exceeded that amount). For 2021, the maximum limit is slightly increased and you can now contribute up to $ 27,830 to your RRSP. Since these contributions are tax deductible, you can get a decent tax break if you maximize your RRSP.

2021 TFSA contribution limit

Unlike the other two, the TFSA contributions I haven’t seen any change from last year. You could contribute $ 6,000 in 2020, and you could contribute $ 6,000 to your TFSA in 2021. It may seem a bit small, especially compared to RRSPs, but in the right stock it can become a sizable nest egg (with ample time) . A good stock could be GDI Integrated Installation Services (TSX: GDI).

GDI offers a wide range of facilities management services to various industries in Canada and the United States (21 cities in Canada and 13 cities in the United States). It has a market cap of $ 753.9 million and an enterprise value of over $ 900 million.

GDI has a very strong balance sheet and has grown its revenue at a decent pace for nine consecutive quarters. The company pays no dividends, but its strong growth rate more than compensates for this limitation. It has a five-year CAGR of 24.5%. And if he can maintain that for just a decade, he can turn your investment of $ 6,000 into a nest egg of $ 50,000.

Take away idea

If you can’t save enough to maximize both your TFSA and your RRSP, you need to create an asset allocation plan. The easiest solution is to maximize your TFSA (since these are funds you can always access) and put the remaining savings in your RRSP. But unlike an RRSP, TFSA contributions are made from after-tax dollars and you can’t deduct them from your taxes.

Silly contributor Adam Othman has no position in any of the stocks mentioned.


Please enter your comment!
Please enter your name here