Personal finance cheat sheet

An overview of the latest key numbers related to personal finance — from RRSPs to OAS.

I often find myself googling to find the latest figures related to personal finance, so I thought a short cheat sheet of all the key numbers would be handy.

RRSP: the RRSP limit for 2015 is $24,930. The 18% of earned income in 2014 needed to create this amount of room was $138,500. The limit for 2016 is $25,370, meaning earned income of $140,944 in 2015 will be required to maximize the amount.

 RRSP Limit chart

Canada Pension Plan: the year’s maximum pensionable earnings (YMPE) for 2015 is $53,600. The year’s basic exemption (YBE) is $3,500. Therefore, at a contribution rate of 4.95%, the maximum Canada Pension Plan contribution is $2,479.95. For self-employed individuals the contribution rate is 9.9%, so the maximum CPP contribution is $4,959.90.

Note that the YMPE is adjusted annually based on the change in the industrial composite wage index that is tracked by Statistics Canada. The YBE is no longer indexed.

Key CPP Issues chart 

The maximum monthly CPP retirement pension for 2015 is $1,065 and the maximum survivor’s benefit is 60% of that, or $639. The death benefit has been fixed at a maximum one-time payment of $2,500. In 2015 the reduction for collection of the CPP pension before age 65 is 0.58% a month (6.96% a year). The premium for waiting to start after age 65 is 0.7% a month (8.4% a year).

Tax-free savings account: the TFSA started in 2009 for Canadian residents aged 18 and older. Investment income earned in a TFSA and any withdrawals are tax free. Unused TFSA contribution room is carried forward and accumulates in future years. The full amount of withdrawals can be put back into the TFSA in future years. Neither income earned in a TFSA nor withdrawals from it affect eligibility for federal income-tested benefits and credits such as Old Age Security, the Guaranteed Income Supplement and the Canada child tax benefit.

TFSA Contribution Limitschart 

Registered education savings plan: amounts you contribute to an RESP are not tax deductible but earnings in the plan accumulate on a tax- deferred basis. When the funds are paid out for a child’s education, the accumulated income earned in the plan is taxed in the child’s hands at his or her lower tax rate.

As of 2007 there is no annual contribution limit but the total lifetime ceiling is $50,000 per beneficiary. RESPs are often set up as family plans so you can allocate the plan assets among related children or change the beneficiary of the plan to someone else in the family.

One of the key benefits of an RESP is that the federal government pays a subsidy called the Canada education savings grant (CESG) for each child who is a beneficiary of an RESP from the day the child is born to his or her 17th birthday. Payments made to an RESP under the CESG or under a designated provincial program are not included when determining if the life-time limit has been exceeded.

The current annual maximum CESG per beneficiary is $500, which is 20% of the first $2,500 of contributions paid annually. Each child is entitled to a cumulative CESG limit of $7,200. In some cases the CESG will have to be repaid. This can happen if the beneficiary doesn’t pursue higher education or the plan is terminated.

Old Age Security: in 2014 the maximum annual OAS pension was $6,676.59. Clawback of OAS begins at net income of $71,592 (the threshold amount.) All OAS will be clawed back at net income of $116,103, since 15% of any income in excess of the threshold amount is clawed back.

For 2015 the maximum annual OAS pension is $6,764.88 based on the $563.74 maximum monthly amount for the first quarter of 2015. Note that the OAS pension is adjusted for inflation on a quarterly basis so this amount will probably increase during 2015.

OAS and Clawback limits chart