Financial Education

The CRA has made changes to three deductions - income tax, Employment Insurance (EI) premiums, and your contribution toward the Canada Pension Plan (CPP). Here I will discuss what these deductions are and how these changes will impact your paycheck. What are the changes in paycheck deductions? The Canada Pension Plan: The CPP program aims to make you save for your retirement from the day you start working. For 2021, Service Canada raised the employee CPP contribution rate to ...5.45% from 5.25% in 2020. It has also increased the maximum pensionable earnings to $61,600 from $58,700 for 2020. Employment Insurance premiums: The government deducts EI premiums from your salary to collect money to support you when you are unemployed. For 2021, the Canada Employment Insurance Commission (CEIC) has not changed employee’s EI premium rate due to the pandemic. It continues to be 1.58%. However, the CEIC increased the maximum insurable earnings to $56,300 from $54,200 in 2020. Income Tax: For 2021, the CRA increased the bracket of taxable income but has retained the tax rates. The lowest federal tax rate of 15% will apply to an income of up to $49,020. The highest rate of 33% will apply on an income of more than $216,511. These figures were $48,535 and $214,368, respectively, for 2020.

If you have never contributed to a TFSA before, your contribution room would be $75,500. I can help you get the best rate of return. Remember the rule of 72 when it comes to investing.