![]() ![]() ![]() Invest $6,000 of your TFSA contribution in RioCan REIT (TSX:REI.UN). Dividend stocks are the new income source However, the pandemic has created some good dividend opportunities. But the pandemic crisis has pulled down interest rates to near zero, making fixed-income securities unattractive. Investors generally look for fixed-income securities to earn passive income. The CRA allows the money you contribute to TFSA to grow tax-free, and you can withdraw this money without worrying about taxes. One tax-efficient way to earn passive income is through a Tax-Free Savings Account (TFSA). An effective way to deal with this pay cut is to fill the gap with passive income. This means you could see a higher pay cut every year. The CPP enhancement will increase your contribution every year till 2025. You can deduct this additional contribution from your 2021 taxable income. Moreover, Service Canada has increased the Registered Retirement Savings Plan (RRSP) contribution limit by $600. It has increased the basic personal amount tax credit by $174 in 2021 and has started a $250 Canada Training Credit. You can fill the $500 monthly gap, or $6,000 annual gap, by claiming the various tax benefits the Canada Revenue Agency (CRA) offers. The many benefits of CPP outweigh the $500 pay cut every month. How can you offset the $500 gap in your paycheck? After 65, Service Canada will pay you a monthly pension equivalent to a third of your average work earnings you received post 2019. You will realize the CPP benefit when you turn 65. While it will reduce your current salary, it will give you a federal tax credit of around $409.86. This modest increase in contribution will go a long way. Service Canada has increased the total annual CPP contribution of employer and employee combined by $537 to $6,333 in 2021 ($5,796 in 2020). ![]() In 2021, you will get $4,606 every month in salary. This comes to $528 per month in total CPP contribution. Your employer will deduct both employer and employee contribution of 5.45% each towards CPP. If your gross annual income is $61,600, your monthly salary comes to slightly above $5,100. How will this impact your paycheck in 2021? How will CPP impact your pay? What you get is the net income after these deductions.Īs part of the CPP enhancement plan, Service Canada has increased the CPP contribution rate to 5.45% and maximum pensionable earnings to $61,6. The CPP is a mandatory pension plan, where your employer deducts your contribution as well as their contribution. These changes could mean a $500 pay cut every month. Service Canada is bringing changes to the Canada Pension Plan (CPP) in 2021. ![]()
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