Whether it’s getting back in the gym or dusting off the book on your shelf you’ve been meaning to read, there’s plenty of optimism and drive to set resolutions in 2024. For many Canadians, part of the ritual will include setting some financial resolutions. In fact, a recent study from Fidelity Investments found that 66% of Canadians surveyed have set financial resolutions for a better 2024. Some of the top categories included savings goals and paying down debt. As you begin to financially prepare for the year ahead, let’s discuss some things you should be aware of when planning for 2024.
TFSA Annual Contribution limit
In 2024, the TFSA contribution limit has increased to $7,000 for all Canadians.
CPP Changes
Starting in 2024, the Canada Pension Plan (CPP) has made changes. Now, there are two levels for how much you earn.
- The first level is for earners up to $68,500, just like before. You pay a set part of your money towards CPP, just like always.
- The second level is new, for earners between $68,500 and $73,200. You will pay an extra 4% on money you make in this range. In 2024, this means a max of $188 more in deductions. If you earned more than $73,200, you’ll contribute an extra $300 compared to last year.
CPP Annual Adjustment
Retiree CPP benefits will increase by 4.4% in 2024, following CPI Inflation data from 2023.
OAS Quarterly Adjustment
The OAS Benefit has received a quarterly adjustment of 0.8% from January-March to reflect last quarter’s CPI Inflation data.
2024 Financial Resolution Checklist
Are you looking for more financial goal-setting inspiration? Here are a few more important financial resolutions for Canadians in 2024.
Talk to your kids about First Home Savings Accounts
The Federal Government rolled out the First Home Savings Account as part of their 2023 Federal Budget, but despite its immense benefits many Canadians have been reluctant to take advantage so far. As the name suggests, the account is designed to help Canadians save for their first home purchase. They must be aged 18 and older and have not owned a house for the past 4 calendar years. They are eligible to contribute up to $8,000 per year, up to $40,000 in lifetime contribution space. The contributions are tax-deductible (like an RRSP contribution), and the proceeds can be withdrawn tax-free (like a TFSA), provided the funds are used to purchase a home. If you’re interested to learn more about the benefits, click HERE to read our latest article detailing everything you need to know.
Revisit your financial plan with a professional
Keeping your financial plan up to date is crucial, especially during important life decisions. A good financial plan is never finished, because your situation changes constantly, and so do regulations.
For instance, in 2024, the government tweaked the Alternative Minimum Tax (AMT) to target high earners better. The AMT aims to ensure that all individuals pay their fair share of tax and to prevent high income taxpayers from using deductions to disproportionately lower their tax bills. Think of the AMT as a “floor” to make sure high earning Canadians pay a minimum amount of tax. Starting in 2024, the government will increase the AMT tax rate, raise the exemption, and limit certain deductions. This means 99% of the AMT tax will be paid by people earning over $300,000, and 80% will come from those making over $1,000,000. However, even if you’re not in that high-earning group, you may still be affected. For example, if you experience a one-off income spike for any given year, you could be subjugated to hefty amounts of AMT tax. This could be from selling a non-primary residence or liquidating a high volume of stocks. This is why it’s crucial to plan accordingly with a professional by refreshing your financial plan and continuously re-visiting your long-term planning goals.
As you embark on financial planning for 2024, staying informed and creating actionable resolutions can pave the way for a prosperous financial future. Whatever your financial goals are, proactive planning ensures you’ll be ready for whatever the year brings!