The Canadian tax landscape is changing in 2024, with major crackdowns on short-term rentals in cities like Vancouver, Toronto, and Montreal. The government aims to put thousands of units back into the long-term rental market. Psychotherapy and counseling services will also see a reduction in bills, as GST and HST will be removed. The contribution limits for TFSA, RRSP, FHSA, CPP, and tax brackets have also been updated, with favorable changes for Canadians. So, keep an eye out for these changes and make the most of the new tax year! ๐ฐ๐จ๐ฆ
The Impact of Tax Changes ๐ธ
Did you know that if you’re making $70,000 in Canada, you’re paying anywhere from $116,000 to $117,000 in taxes every single year? That’s almost a quarter of your income! While taxes can seem boring and intimidating at times, it’s vital to be knowledgeable about the tax benefits out there so that you can keep more of your money in your pockets, especially after a tough year of stubborn inflation and the highest interest rates we’ve seen in two decades.
Drastic Changes in Short-Term Rentals ๐
The Canadian government has made major restrictions to short-term rentals beginning in 2024 in cities with housing shortages like Vancouver, Toronto, and Montreal. This includes denying income tax deductions for expenses incurred to earn short-term rental income, as well as imposing restrictions on short-term rentals in specific provinces and municipalities.
| City | Restrictions |
|---|---|
| Vancouver | Limited to principal and secondary dwelling |
| Toronto | Limited to principal residence and secondary dwelling |
| Montreal | Undergoing similar restrictions |
Positive Changes for Psychotherapy Services ๐โโ๏ธ
The federal government announced the removal of GST and HST on psychotherapist and counseling therapist services to help ensure Canadians can afford the care they need.
New Contribution limits for TFSA and RRSP ๐ฐ
Tax-Free Savings Account (TFSA) ๐
The 2024 TFSA annual room limit has increased to $7,000, allowing for significant tax savings on your investments over time.
| Year of Birth | Cumulative TFSA Room |
|---|---|
| 1991 or earlier | $95,000 |
Registered Retirement Savings Plan (RRSP) ๐ฆ
The 2024 RRSP dollar limit is $31,500, offering a tax-deferred way to save towards your retirement. It’s important to always check your RRSP limit before making a contribution to avoid penalties.
First Home Savings Account (FHSA) ๐ก
The FHSA allows Canadians to save for their first home and combines the benefits of TFSA and RRSP, offering a contribution limit of $40,000 over your lifetime.
Canada Pension Plan (CPP) and Tax Brackets ๐งฎ
Canada Pension Plan (CPP) ๐ผ
The maximum monthly amount for CPP in 2024 is $1,364.60, and the contribution rate is set at 5.95% of your earnings.
Tax Brackets ๐
The tax brackets in 2024 have increased, resulting in higher income being taxed at lower rates compared to the previous year.
In conclusion, being informed about the important tax changes in Canada for 2024 is crucial for effective financial planning. Whether you’re considering investment options or planning for your retirement, understanding these changes can significantly impact your financial well-being ๐๐ฐ
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