New Employer Tax Reporting for the Canadian Dental Care Plan

The Canadian government has launched a new plan for dental care called the Canadian Dental Care Plan (CDCP). CDCP is intended to help lower dental costs for eligible families earning less than $90,000 per year. Canadians who have access to an employer-sponsored dental insurance plan do not qualify for the CDCP.

Oak House Cares

At Oak House Benefits, the holidays fill us with gratitude. This season, we are delighted to express our appreciation for our outstanding clients and HR community by contributing to impactful causes.
 
We are happy to announce our donations to Food for Life, Burlington Food Bank and Brantford Foodbank. These donations reflect our care for the community we cherish and the significant issue of food insecurity.
 
May your holidays be filled with good health, happiness, and the warmth of giving. Here's to a spectacular New Year ahead!

2024 Employment Insurance Maximums

Dental Fee Guide Adjustments for 2023

It’s that time of year again! The majority of provincial and territorial dental associations across Canada have released their annual fee updates. Most dentists across Canada follow these fee guides, although they can bill their own fees according to their individual practice. Fees can vary based on the amount of time required and/or the level of complexity involved in individual procedures.

See here for the updated dental fee increases across Canada for 2023:

The fee guide information above was provided by the provincial/territorial dental associations.

These adjustments will affect the reasonable & customary rates set by your insurance carrier.

We’re here to help.

If you have any questions regarding what this means for your business and/or how to communicate these changes to your employees, send us a simple hello, and we will make it easy for you.

Here’s to clean teeth and healthy gums!

Holiday Giving at Oak House Benefits

At Oak House Benefits, we are excited about the holidays and the opportunity to give! This year we are proud to announce that as an expression of our appreciation for our clients and community, we are donating to Toonies for Tummies, Brantford Foodbank, and Burlington Food Bank.

Food security is a cause that is near and dear to our hearts at OHB. While the holiday season is a wonderful opportunity to support important causes such as this one, we know that food insecurity never sleeps.

By being part of the OHB family, you can embrace the comfort of knowing that you are part of something far greater than just yourself—our mission is to make a difference in the communities we work, play, and live within. Thank you for another year of being part of this mission.

We wish you great health and happiness for the holidays and a spectacular New Year ahead!

Changes to the EI Sickness Benefit - Effective December 18th, 2022

In the 2022 budget, the federal government announced it will extend paid EI sickness benefits from 15 to 26 weeks. The government has confirmed that December 18th, 2022 is the effective date of this change.

The EI sickness extension does not obligate plan sponsors to amend their STD and LTD plans to align with the new 26-week EI period.

For those who participate, it is expected to be a good amount of time for employers to ensure they remain compliant with the EI Premium Reduction Plan. We will share details as they become available.

With the increased coverage available for employees, it’s essential to evaluate your disability plans and ensure they get the support they need to both fully recover and return to work. Send us a simple hello to discuss your plan design.

For more information, see here.

The Sweet Sound of Benefits: Podcast Episode on Employee Benefits Trends with The HR Gazette

Ways HR Pros Work with Benefits Consultants

In this podcast episode, The HR Gazette and Don Williamson investigate ways benefits consultants can work with HR departments to get more for their employees.

Questions for Don in this Episode:

• Your company is focused on employee benefits. How broad is that focus?

• Are there any particular trends in benefits that you are talking about with your clients?

• What are clients struggling with at the moment and how are you helping them?

• What expectations do most HR people have when dealing with a group benefits broker or consultant? What services and products do they expect to get?

• How often do HR Directors evaluate their benefits program? If they wanted to – how might they do that to determine if it is as effective as it can be? Do you agree with this approach?

• The term ROI is used a lot in evaluating the benefits of a company’s group benefits plan. How do most people define this – do you define it differently?

• Oak House is sponsoring the AGILITY REIMAGINED summit. Tell us why you decided to get involved.

About The HR Gazette

Founded in 2014, The HR Gazette publishes fresh perspectives on topics connected with Human Resources and improving the ways we work.

Topics covered include HR Technology, Talent Management, Recruitment, Employee Engagement, Benefits, Law, Performance, Learning, Strategy, and Leadership. They deliver opinion, analysis, news, and reviews from the brightest minds in HR and Management – all focused on the most relevant issues facing those involved in the world of work.

About Don Williamson

Don has almost three decades of experience in employee benefits, sales and marketing, leadership, and business management. Before founding Oak House Benefits (OHB) in 2020, Don was President at The Williamson Group (TWG) for eight years before its acquisition in 2015.

With his background in leadership and sales, he has returned to his roots and created OHB: a consultancy, Don says, is built on a culture of caring.

Don has held roles on an Executive Board for a worldwide partnership of employee benefits consultants. Locally, Don is on the Board of Directors of the Brantford-Brant Chamber of Commerce and supports many charities. He has also been a respected member of numerous Advisor Councils, representing clients with Canada’s premier insurance carriers. Don is passionate about client satisfaction, thought leadership, and industry trends and developments.

Don graduated from Western University with a B.A. (Honours) in Psychology, is Life Licensed, and is a Certified Analyst of Predictive Index. He fosters a people-first philosophy and believes in the promising power of a simple hello.

We hope you enjoy this podcast episode! Let us know what you think in the comments.

Find Your Reason to Quit

With World No Tobacco Day taking place on May 31, 2022, we want to promote living a healthier life! Deciding to quit smoking is essential in your path to better wellbeing. And like any significant life change, it takes a plan of action. Find your reason to quit and develop a personal quit plan for free with Smoker’s Helpline.

Pension Plan Updates

Small Changes,

Lifting Big Burdens

On February 14, 2022, the Financial Services Regulatory Authority of Ontario (FSRA) announced several regulatory amendments making it easier for companies to do business in Ontario.

FSRA has made regulatory amendments to remove the requirement for administrators of pension plans providing only Defined Contribution benefits, to file an auditor’s report on the plan’s annual financial statements. Instead, FSRA will simply require audited financial statements under certain circumstances. This amendment will save companies thousands of dollars annually since they no longer need to hire an external auditing company to review the statements before being uploaded to the FSRA portal. 

FSRA has also stated regulatory amendments to remove the requirement for the administrators of member-directed Defined Contribution pension plans to prepare a Statement of Investment Policies and Procedures (SIP&P).

Lastly, FSRA is revising its Form 7 and related processes. These changes took effect voluntarily on January 1, 2022, but will become mandatory on March 31, 2022. The newly updated forms are available on the FSRA website in two formats: a fillable PDF and an Excel file. Form 7 must be completed annually and sent to the custodian (i.e., insurance carrier).

The revised process includes:

• The threshold for reporting variances in expected contributions will be increased from 10% to 25%.

• The reporting period for informing FSRA of variances will change from monthly to quarterly.

• Any variances of 25% or more must be reported to FSRA within 60 days after the end of each quarter.

If you have questions about these amendments or would like to discuss how these changes may affect your plan, reach out to your retirement consultant at Oak House today!

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2022 Dental Fee Guide

The time of year has come when most provincial and territorial dental associations announce their annual dental fee guides. Click below to view the Dental Fee Guide outlining the average dental fee increases and see what it means for you as a plan sponsor!

View the 2022 Dental Fee Guide

2022 Employment Insurance Maximums

Impact on STD Benefits

And What This Means for You

As a reminder, the 2022 changes to Maximum Insurable Earnings, and the Maximum Employment Insurance weekly benefit set forth by the Canada Employment Insurance Commission and Canada Revenue Agency, have come into effect as of January 1, 2022. As a plan sponsor, your short-term disability (STD) benefits may be impacted.

Learn more about what this means for you!

‘Tis The Season of Giving

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"It is greater to give than to receive” - it’s an old adage, but one that is dear to our hearts. When our team sat down to talk about client gifts this year, we were adamant that our holiday giving would be meaningful. Though we had great ideas for things, what became naturally and abundantly clear was how much our clients value giving over receiving; your overwhelmingly positive and supportive response to our evOak survey with a prize of a charitable donation to the recipient of your choice knocked our socks off. We are so proud to partner with clients who also believe that it is greater to give than to receive. Because of your inspiration, Oak House Benefits is proud to support communities both near and far this holiday season through giving initiatives for Nova Vita and Toonies for Tummies.

Located in Brantford, Nova Vita believes that every person is entitled to a life without violence. They work to end interpersonal violence and abuse by supporting individuals and families who have experienced domestic violence, intimate partner violence, or gender-based violence through the provision of crisis intervention, emergency shelter, transitional support, children’s programs, and counselling; and by fostering accountability for those who harm through intervention, counselling, public education, and systemic advocacy. If you would like to learn more about Nova Vita or explore how to donate, please visit Nova Vita: Donate.

Toonies for Tummies is a national campaign hosted by The Grocery Foundation. The Grocery Foundation is a community of grocery, food, beverage, and consumer product companies united by the mission to feed the one child in five who comes to school hungry. By coming together, they leverage combined resources and work together to support student nutrition programs in hundreds of Canadian communities feeding over 1 million children.

Toonies for Tummies helps hungry children start the day with a healthy meal. Breakfast is a vital part of a child’s daily nutrition – it supports their physical and emotional wellbeing helping them succeed in school and achieve a future full of potential. The Grocery Foundation works with Student Nutrition Program partners to ensure donations benefit hundreds of communities across Canada. If you would like to learn more about The Grocery Foundation or take part in the #ToonieChallenge, please visit Toonies for Tummies: Donate.

In this season of giving, peace, and gratitude, know that we so deeply value our clients, colleagues, and network as members of our Oak House Benefits community and look forward to growing together (and getting together) in 2022! Until then, may you find the time to relax, recharge and enjoy a well-deserved break over this holiday season.

Save Your Spot at evOak: November 18, 2021

The challenges we have faced throughout the COVID-19 pandemic have left leaders asking – now what?  Purpose-driven leadership expert, Ron Tite, believes that the leaders who will succeed in this new world are those who are willing to lean into the bountiful opportunities that have been presented post-pandemic. To see them for what they really are — a once-in-a-lifetime, once-in-a-career opportunity to not just recover, but to completely reinvent ourselves.

Join us on November 18th to learn how to inspire, inform, and prepare your people and organization for reinvention. Register for free today!

evOak Webinar Series presents Ron Tite

The challenges we have faced throughout the COVID-19 pandemic have left leaders asking – now what?  Purpose-driven leadership expert, Ron Tite, believes that the leaders who will succeed in this new world are those who are willing to lean into the bountiful opportunities that have been presented post-pandemic. To see them for what they really are — a once-in-a-lifetime, once-in-a-career opportunity to not just recover, but to completely reinvent ourselves.

Join us on November 18th to learn how to inspire, inform, and prepare your people and organization for reinvention. Register for free today!

Join Us at evOak!

From the coronavirus pandemic to significant social movements to technological innovations, the events of the past year have left a monumental mark on the world. It has revolutionized the way we work and the way we connect with each other. It has also propelled the shifting needs of society, demanding forward thinking in many aspects of life. Therefore, it comes at no surprise that these shifting needs greatly impact the benefits landscape.

During this half-day conference, we will explore the changing benefits landscape with topics such as diversity, equity and inclusion, mental health, disability, and emerging drug trends. We have lined up an exceptional group of thought-provoking speakers to share their first-hand experience along with valuable insights to help you and your organization navigate through the ever-changing benefits landscape and help bring your benefits philosophy to life.

Join us at evOak on July 8th to engage, learn, and grow alongside your peers and industry leaders.

Who Should Attend?

Designed for Canadian HR leaders and group benefits decision-markets, evOak will provide actionable insights from industry thought leaders to help you explore a more inclusive benefits program for your organization.

Speakers

Anthony McLean, Actor, leader, and anti-racism & mental health advocate

Anna Petosa, Vice President, People Ops, Pelmorex Corp. (Home of The Weather Network)

Ingrid Wilson, Senior HR Executive &Diversity, Inclusion & Equity Strategist, GridFern Strategic HR

John Law, Director, Total Compensation & HR Systems, Multimatic Inc.

Justine Fedak, Corporate Hippie, Chief Brand Strategist, Pollara Strategic Insights, and Co-Founder (Star Jones), Instant Impact Group

Allison Elliott, Customer Experience & Projects Specialist, Green Shield Canada

Sam Mikail, Director, Mental Health Solutions, Sun Life

Barbara Martinez, National Practice Leader, Drug Solutions, Canada Life

Elliot Stone, Co-Founder & CEO, ALAViDA

Agenda

Please click here to view the full agenda.

Our Team is Growing!

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We had 6 employees before we had 6 clients. Why?

Because we believe in the power of our team. To stand alongside a strong, dynamic and passionate team makes it easy to look a potential client in the eye and confidently demonstrate how we will make a difference as their benefits and retirement partner.

Oak House Benefits is growing again with 4 new roles that will help us continue to offer superior expertise and service to our clients and prospective clients.

Investing in talent and growth is more than a business plan - it’s a promise our president, Don Williamson, made at the start, to plan for internal growth, prevent burnout and lay the groundwork for succession planning.

We believe in people before profits – we work hard, but we have fun doing it.
We are numbers nerds – we take benefits data and make it actionable.
We are built on trust and commitment – to one another, and for our clients.

For those of you who have weathered the pandemic in your current jobs, and have been holding on for the “right” opportunity to make a change, check us out for a breath of fresh air. Insurance doesn’t have to be boring - come and see for yourself!

Interested, or know anyone who might be?!

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The Tax Man Giveth and the Tax Man Taketh Away

How to Reduce Your Future Tax Bills

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Earlier this month, I put together a list of easy-to-implement uses to spend your tax refund effectively. Now, let’s flip the script. If you are one of the 6.4 million Canadians who ended up owing money back to the Government of Canada this tax season, you may be considering methods to limit future tax exposure. Try employing the simple approaches outlined below to lower your future taxes owing as close to $0 as possible.

Rethink your current income tax structure. Ask payroll to increase the taxes being withheld.

If you realize you owe money at the end of the year, set up time with your payroll team. Ask payroll to withhold more taxes from your paycheques. If you do not have any additional sources of income to claim (which can impact this strategy), you will be able to increase your taxes monthly and reduce annual tax owed.

Do you have a retirement plan? Invest in your future by increasing your RRSP contributions.

If you have a group retirement program available through work, you can increase the amount being deducted directly from your paycheque. Completing your taxes in February can help you determine if you will owe taxes or be eligible for a refund. Prior to submitting taxes, you can adjust your RRSP contribution amount prior to the RRSP deadline (typically the first business day of March). If you owe taxes, this method allows you to contribute a lump sum payment to your RRSP account to lessen taxes owed—or even bring that bill to $0.

It is important to note that RRSP contributions reduce the tax based on your marginal tax rate. This means if you are in one tax bracket and your RRSP contribution lowers your income to a different tax bracket, the remaining dollars from your RRSP contribution will now be based on the lower tax rate.

Do you enjoy making a difference? Contribute to your favourite charities!

Registered charities provide a great way to give back to your community, while also benefiting your tax return*. I touched on the importance of making charitable contributions in the previous tax refund article, drawing attention to the importance of these organizations’ positive work in communities.

The Bottom Line

Remember that simple habits performed throughout the year can significantly reduce your tax exposure. The more you understand your personal finances and own tax situation, the better prepared you will be to take advantage of these methods.

Do you want to set your employees up for financial success? Reach out and say hello! Oak House Benefits provides tailored financial education sessions and group retirement support for your teams year-round.

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Chris Santos

Group Retirement Consultant

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* Please note that charitable donations are a non-refundable tax credit; this means you must claim your other credits first. If the impact of your other credits is sufficient to bring your tax payable to zero, you will not be able to use your charitable donations to generate or increase a tax refund. If you still have tax payable, you will be able to use all or a portion of the donation amount. You can carry forward unused donations for up to 5 years but remember that donations can be claimed only once. For additional information on charitable donations in Canada and the tax implications, visit TurboTax for an informative article.

Received Your Tax Refund – Now What?

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Congratulations on filing your 2020 tax return! If you fall into the over 13-million Canadians who received a refund (as of April 29, 2021), you may be contemplating how to best make your refund work for you. To help you make sense of your options, we have put together a list of easy-to-implement uses for that extra cash.

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1.     Pay Down Your Debt

According to a Q4 2020 report from TransUnion, the average Canadian consumer carries a credit card balance of $3,661 and an average debt of $29,529 excluding mortgages. There is a strong chance those debts are bearing high interest rates, especially on your credit card (typically around 20%).

Look at paying down higher interest debts first. Beyond the pure stress relief of tackling debt, paying down the higher-interest debts first ensures that more of your money goes to the actual debt, instead of only paying down the interest.

2.     Pay Down Your Mortgage

Most mortgages in Canada allow you to make an annual lump sum payment of up to 20% without penalty. Review your mortgage contract to determine if, when and how you are eligible to do so. Some lenders allow you to make the payment at any time during the year while others require it to be on your mortgage’s “anniversary date”.

Check how much you could save by making a lump sum payment on your mortgage, by trying out the Government of Canada website’s pre-payment calculator tool.

3.     Invest Into an RRSP and/or a TFSA

The average retirement age in Canada has increased from 61.6 (in 2000) to 64.5 (2020). According to Statistics Canada, if you retire at age 64, you can expect to live (happily retired) for another 21.7 years.  Longevity for you, and your savings, is the ideal - ensuring that your finances can sustain you through retirement is critical.

Saving for retirement in a registered retirement savings plan (RRSP) not only offers tax deductions, but it also provides you a tax-deferred solution for your investments.

You may also wish to consider another valuable retirement tool – the tax-free savings account (TFSA). A TFSA provides you an after-tax savings option; because you have already paid tax on your money, no taxes are levied on any investment growth in the future.

4.     Save For Your Child’s Education

Tuition in Canada has increased steadily over time. Statistics Canada has reported that in 2020/2021 the average Canadian undergrad pays $6,580 per year for tuition, while the average post-graduate pays about $7,304. Bear in mind that this number varies by what you study and where you study it.

Utilizing a registered educations savings plan (RESP) allows you to save for your child’s future and take advantage of savings-matching through government grants (up to a maximum of $7,200) and bonds (up to $2,000 for modest-income families). Make your investments go further by unlocking these valuable contributions. Investing today can alleviate the burden of future costs, open educational doors and create a world of possibility for a child in your life.

If you would like additional information on RESPs in Canada, including how the grants and bonds work, feel free to reach out to us and say hello or visit the Government of Canada website to learn more.

5.     Invest in Yourself!

No article would be complete without shouting from the roof tops the intrinsic value of self-care. Being fiscally responsible is important, but the investment in our mental health, our hopes and dreams, and our “bucket list” items carry its own worth. “Worth” is as individual as you are. Consider the value of turning a dream into a reality - create your bucket list and see what that would cost, even if it’s just for fun. Throw a bit of caution to the wind and plan out the costs for that long overdue kitchen renovation or the pool you’ve always wanted. Unless you plan it out, you may never know how achievable it could be. Remember – your money serves you. Sometimes, it’s for an RRSP. Sometimes, it’s for a fancy dinner. Or a new coffee maker. Regardless of how you budget, knowing your financial goals and still finding opportunities for fun in the spaces between the ledger lines can be a healthy balance to consider.

6.     How Healthy is Your Emergency Fund?

According to the 2019 data from the Government of Canada, 64% of Canadians have an emergency fund healthy enough to float 3 months’ worth of expenses.  While there are options (and opinions) on where to “park” this money, a lower risk investment that can be turned into cash quickly—like a TFSA—is ideal. The goal for the emergency fund investment is to obtain a rate of return that would mirror inflation (or higher) ensuring you obtain the same purchasing power in the future when you may require those assets. In plain speak, if you can withdraw $1,000 from your investments and actually end up with $1,000, it’s a good option for emergency use. Paying tax on your emergency funds just adds insult to injury.

When contemplating the use of your emergency fund, consider: “is this urgent, necessary and unexpected?” If the answer to all is yes, then it is clear that your emergency fund should come to the rescue. If the answer to some is no – consider your options and proceed with care. Examining your definition of urgency, necessity and your ability to “go with the flow” is helpful in emergency planning.

COVID-19 has provided us the opportunity to take stock of our physical and emotional wellbeing.  It may be beneficial to focus additional effort on replenishing or shoring up your emergency fund if circumstances allow.

7.     Donate to Your Favourite Charity

Donating to your charity of choice helps others – and your bottom line (thanks to tax deductions*). During COVID-19, not-for-profit organizations have seen a significant rise in usage by Canadians but have not seen an equivalent rise in donations. According to the Angus Reid report, 37% of Canadians have reported giving less to charities since the pandemic started.

The Choice is Yours

We have offered you with options on how to make use of your refund—now the choice is yours. Everyone is unique. Be mindful of your financial situation when determining what choice fits best for you and your family. If you would like additional information or guidance on your tax refund, feel free to reach out and say hello!

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Chris Santos

Group Retirement Consultant

* Please note that charitable donations are a non-refundable tax credit; this means you must claim your other credits first. If the impact of your other credits is sufficient to bring your tax payable to zero, you will not be able to use your charitable donations to generate or increase a tax refund. If you still have tax payable, you will be able to use all or a portion of the donation amount. You can carry forward unused donations for up to 5 years but remember that donations can be claimed only once. For additional information on charitable donations in Canada and the tax implications, visit TurboTax for an informative article.

Tax Season in the Age of COVID-19

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What’s New for 2020?

Income Tax Filing and Deadlines

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From the CERB benefit to working from home, the events of last year have left many Canadians wondering what their taxes will look like this season. We had our Group Retirement Consultant, Chris Santos, CFP, RPA, take the time to clarify and simplify this year’s tax changes.

Be on the Lookout for New Tax Slips

As we move towards the tax return deadline of April 30, 2021 (for employees) and June 15, 2021 (for self-employed), you should have already received your T4 form from your employer, RRSP contribution slips for time periods of March 1-December 31, 2020 and January 1-March 1, 2021, as well as any charitable donation slips if made during 2020.

You may also be wondering why you received a T4A or a T4E this year. If you received support benefit payments due to COVID-19, you would need to include that income on your tax return as it is considered taxable.

The Work from Home Era

During the first wave of the pandemic, many Canadians had to shift from going into the workplace every day to working from the comfort of their own home. For some, this continued for the entire duration of the year. With this, the Government of Canada made changes to the employment expenses, including expenses for a home office. The Canada Revenue Agency (CRA) announced two methods for claiming home office expenses from 2020 – the new temporary flat-rate method and the detailed method.

Temporary Flat-Rate Method

You are eligible to use the temporary flat-rate method if you worked over half of your time from home with a period of at least four consecutive weeks due to COVID-19. You can claim $2 for each day you worked from home to a maximum of $400. If you are using this method to claim your work from home expenses, you do not need to determine the size of your workspace, nor is it required for your employer to sign any tax related forms. For eligibility details on temporary flat-rate method, visit the Government of Canada website.

Sharing a Workspace with a Family Member?

You can both claim the space without having to divide the amount between the number of people sharing.

Detailed Method

If your expenses exceed the maximum claim amount of the method, you should consider using the detailed method. Using this method, the claim amount is calculated by the size of your workspace and the percentage of use. You will need to provide supporting documents for the claim along with a completed and signed Form T2200S/Form T2200 from your employer. For additional eligibility criteria on the detailed method, visit the Government of Canada website.

Sharing a Workspace with a Family Member?

With the detailed method, you must divide the workspace based on the space used by each person.

Make sure that you seek the expertise of a tax professional to assist you. If you have a simple tax return, and like to do it yourself, visit Wealthsimple for a convenient tax overview and checklist on what you need for this year’s filing.

Disclaimer: Oak House Benefits Inc. does not provide tax advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax advice. You should consult your own tax advisor should you have questions about your own personal tax situation.

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Your RRSP Season Simplified

What you need to know ahead of the March 1st contribution deadline.

Countless Canadians open a registered retirement savings plan (RRSP) to save for their future. However, that’s not the only benefit of an RRSP. With the 2020 RRSP contribution deadline coming up on March 1, 2021, many are looking to contribute extra money as a way to reduce taxes payable or increase the tax refund they are eligible to receive.

Are you ready for RRSP season? If so, congratulations on making a smart choice to save for retirement. If not, don’t fret – you still have time. We put together the ABCs of RRSPs so you can feel confident in your investments now and in the future.

Now, let’s review what you need to know!

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What is an RRSP? And why should I have one?

First and foremost, a registered retirement savings plan is a personal savings account that allows Canadians to save for retirement. A RRSP can hold a variety of investments, including stocks, bonds, mutual funds, and more.

It is an impactful savings tool due to its tax advantages. Any contributions made within your RRSP are tax deductible meaning any money that you put into your RRSP, up to a certain limit every year, can reduce your annual taxable income. Your RRSP contributions are also tax deferred. The taxes on any investment growth are differed until withdrawn. Most Canadians wait until retirement to take any money out. At retirement, you will likely be in a lower tax bracket and therefore reduce the tax rate on your RRSP withdrawals.

How much can I contribute to my RRSP?

For 2020, you can contribute an amount equal to 18% of prior year income or $27,230, whichever is lower. But pay attention to the next three questions as they may impact your RRSP contribution room.

What if I haven’t contributed the maximum limit in previous years?

If you haven’t contributed the maximum limit in previous years, you can carry forward the unused RRSP contribution room to the current year. For example, if you earn $50,000 in 2019, you can contribute an amount equal to $9,000 plus any unused room from previous years.

How does my employer plan impact my RRSP room?

If you are part of a group retirement program where your employer matches, those monies will reduce the amount of eligible room you can contribute. If the program is a Pension (DCPP) or Deferred Profit Sharing Plan (DPSP), the amount contributed by your employer will show up on your T4 as a ‘pension adjustment’ and reduces your RRSP room the following year. 

If the program you participate in is a Group RRSP, the monies that are contributed by your employer will reduce the RRSP room in the same year. You will need to ensure that the monies that are being contributed by yourself and work stay within your individual RRSP limit.

How can I find out my RRSP contribution room?

To find out your eligible 2021 RRSP contribution room, you can review your notice of assessment sent to you by the CRA last year or visit, My Service Canada Account.

How much will this reduce my taxes or increase my refund?

Your RRSP contributions will reduce your taxes payable or increase your refund based on the tax bracket. For example, if you lived in Ontario, had an income of $50,000 contributed $2,500 to your RRSP, you would reduce your taxes payable or increase your tax refund in the amount of $685. It is important to be aware that your tax savings will be based on your income, tax bracket, how much you contribute, and where you live.

Should I wait to contribute until the RRSP deadline each year?

Although you can make a lump sum contribution during RRSP season, there is a more effective way to contribute. Smaller, more regular contributions can provide you with the same tax benefits, but your investments can grow faster in the long run.

Making regular, monthly contributions through payroll deductions can lower the tax deducted from each paycheque. Rather than receiving a large tax refund, you reduce your taxes year-round.

Contributing to your RRSP monthly allows you to take advantage of dollar cost averaging and to minimize market fluctuations. You also gain the benefits of tax-deferred investment growth, letting your savings increase more rapidly as the investments have a longer time to grow in value.

Lastly…

If you like the idea of having your employees continue this mindset year-round, reach out and say hello! We can provide tailored education sessions for your teams – this way, you’re not having a last-minute impact come RRSP season.

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