REGISTERED RETIREMENT SAVINGS PLAN (RRSP)
Make sure to confirm with CRA how much room you have available. The contribution limit is whichever is less than $29,210 or 18% of last year’s income (minus any pension adjustments) plus any unused contribution room from previous years. The contribution deadline for the 2021 tax year is March 1, 2022.
REGISTERED RETIREMENT INCOME FUND (RRIF)
If you turn 71 by the end of 2022, you will need to transfer your RRSP to an RRIF and will no longer be able to make contributions. You don’t need to do this until December 31st and don’t need to make any withdrawals until the end of 2023. You don’t need to cash in any investments, your portfolio can be moved “in-kind”.
TAX-FREE SAVINGS ACCOUNTS (TFSA)
Everyone 18 and older has another $6000 more contribution room on January 1, 2022. The cumulative contribution total for 2022 is $81,500 if you have been eligible to contribute to a TFSA every year. See the breakdown below:
Years TFSA Annual Limit Cumulative Total
2009–2012 $5,000 $20,000
2013–2014 $5,500 $31,000
2015 $10,000 $41,000
2016–2018 $5,500 $57,500
2019-2022 $6000 $81,500
REGISTERED EDUCATION SAVINGS PLAN (RESP)
$2,500 a year contribution gets you the maximum grant of $500 and you can go back up one year in catch up. If you missed last year’s contribution you can contribute $5,000 to receive $1,000 from the government. The lifetime contribution limit per beneficiary is $50,000.
CORPORATE INVESTMENTS
If you have a corporate surplus from earnings over the year, save to a corporate investment account. It only cost 11cents on the dollar to save the first $500,000 per year in earnings. Don’t make any withdrawals to save to TFSA’s as you will trigger additional taxes on income in order to do so. You never lose your TFSA contribution room and can use it later if/when you sell your business.
If you’ve checked off all of the above boxes, remember you can always save and invest in a non-registered investment account.
Sometimes it can be challenging to come up with the money after the holidays to contribute to your registered accounts. Consider setting up monthly contributions to a non-registered investment account, after you have maxed out your registered accounts. By doing this you can build up funds so that in the new year you already have capital ready that can be moved to your TFSA, RRSP or wherever.
