Personal finance cheat sheet – 2017

Following its success in 2016, the personal financial cheat sheet is back with some important updates.

Since my personal finance cheat sheet has been popular with readers over the past few years, I’ve prepared an updated version with all the numbers you need to know for 2017.

RRSP: the limit for 2018 is $26,230, meaning 2017 earned income of $145,722 is required to maximize the amount since the limit is 18%. See the chart below for RRSP limits over the past five years.

Canada Pension Plan: the year’s maximum pensionable earnings (YMPE) for 2017 is $55,300. The year’s basic exemption (YBE) is $3,500. At a contribution rate of 4.95%, the maximum CPP contribution is therefore $2,564.10. For self-employed individuals the contribution rate is 9.9%, so the maximum CPP contribution is $5,128.20. The maximum CPP retirement pension for 2017 is $1,114.17 a month or $13,370 a year.

The maximum survivor’s benefit for a survivor 65 and older is 60% of that, or $8,022 annually. The death benefit has been fixed at a maximum of $2,500.

In 2017 the reduction for collection of the CPP pension before age 65 as early as 60 is 0.60% a month (7.2% a year). The premium for waiting to start after age 65 up to age 70 is 0.7% a month (8.4% a year).

See chart top right (Key CPP Figures) for a summary of the key CPP figures for the past five years.

RRSP Limit chart

Tax-free savings account: the TFSA started in 2009 for Canadian residents age 18 and older. The annual contribution limit for 2017 is $5,500. The TFSA annual room will be indexed to inflation and rounded to the nearest $500. See a summary of the TFSA contribution limits by year below.

TFSA Contribution Limits chart

Registered education savings plan: contributions to an RESP are not tax deductible but earnings in the plan accumulate on a tax-deferred basis. When the funds are paid out to pay 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.

Since 2007 there has been no annual contribution limit but the total lifetime ceiling is $50,000 per beneficiary. RESP contributions can be made until the beneficiary reaches 31 years of age. They 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 the end of the calendar year of 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 lifetime 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.

Key CPP Figures chart

Gas and Clawback Limits chart

Old age security: the eligibility age to start receiving OAS has been restored to 65. As of July 2013, you can defer receiving your OAS pension for up to five years after the date you become eligible to receive it. Your pension will increase by 0.6% a month (7.2% a year) for every month you delay receiving it up to a maximum of 36% at age 70.

For 2017 the maximum annual OAS pension is $6,942.36, based on the $578.53 maximum monthly amount for the first and second quarters of 2017. The OAS threshold amount after which clawback begins is at net income of $74,789 in 2017. All OAS will be clawed back at net income of $121,071, since 15% of any income in excess of the threshold amount is clawed back.

The OAS pension is adjusted for inflation on a quarterly basis, so this amount may increase during the remainder of 2017.

Maximum marginal tax rates: the combined maximum marginal tax rate for 2017 is the rate a person will pay on income that falls in the top federal tax bracket of $202,800 and above. For provinces and territories that have tax brackets higher than the top federal bracket, the chart below reflects the rates above their top bracket. Those brackets are $303,900 in Alberta, $220,000 in Ontario and $500,000 in the Yukon.

Maximum Marginal Tax Rates % chart