Non-Registered Personal Accounts
All income activities (dividends, interest earned, and realized gains and/or losses) are taxable within non-registered accounts such as the Personal cash accounts available on Trade. This means it's important to consider what sort of taxes you could be liable for before liquidating or moving assets held within a non-registered account.
Tax-Free Savings Accounts (TFSAs)
Tax-Free Savings accounts are pretty much just that - a tax-free way to watch your investments grow! While you can't claim contributions to your TFSA on your taxes, the returns that you accumulate within your TFSA are sheltered, so if you make a withdrawal, you don't have to worry about paying taxes. Conversely, the tax-free benefits of TFSAs mean that you cannot claim losses in these accounts. The tax-free nature of these accounts, as well as the nature of the contributions, mean that there are no associated tax slips issued for TFSAs!
Just be careful not to over contribute to your TFSA, otherwise, you could receive a bill from the CRA! More on that below.
Your contribution room accumulates from the year you turned 18 and were a permanent resident of Canada! Each annual contribution limit since TFSAs were first introduced in 2009 are as follows:
- 2009, 2010, 2011 and 2012 was $5,000.
- 2013 and 2014 was $5,500.
- 2015 was $10,000.
- 2016, 2017, and 2018 was $5,500.
- 2019, 2020, and 2021 was set at $6,000.
Registered Retirement Savings Plans (RRSPs)
There are limitations to how much you can contribute on an annual basis to your RRSP! You may annually contribute whichever is lower of the following:
- 18% of your earned pre-tax income from the previous year or;
- A maximum of $27,230 (2020)
- The remaining limit after any company-sponsored pension plan contribution
Note: Any unused contribution room from 1991 onwards can be carried forward to the current year.
Regardless of whether you contribute to your RRSP or a Spousal RRSP, the contribution counts towards your own contribution limit! Every Canadian is allowed to over-contribute $2,000 once in their lifetime, but if you over-contribute beyond this amount, you'll be charged a penalty tax of 1% of the over-contribution amount per month.
If you're not certain what available contribution room you have, we highly recommend setting up a MyCRA online profile, which you can do here.