Vikramjit Bhatt

The TFSA contribution limit for 2024 has been officially released. That limit is $7,000, up from $6,500 in 2023 and $6,000 in 2022.

“This marks the first time that we have seen two consecutive years of increases on the annual TFSA limit,” said Aaron Hector, private wealth advisor with CWB Wealth in Calgary, in an email.

With Thursday’s TFSA limit announcement from the Canada Revenue Agency, the total contribution room available in 2024 for someone who has never contributed and has been eligible for the TFSA since its introduction in 2009 is $95,000.

The annual TFSA dollar limit is indexed to inflation and rounded to the nearest $500. The CRA’s indexation increase for 2024 is 4.7%, down from 6.3% in 2023.

For clients who have withdrawn from TFSAs, their crystallized gains and losses from withdrawals are factored in to their TFSA room. The formula is: 

Unused TFSA contribution room to date + total withdrawal made in this year + next year’s TFSA dollar limit = TFSA contribution room at the beginning of next year

Anyone 18 or older and who has a valid social insurance number is eligible to open a TFSA. Contribution room begins accumulating in the year in which a person turns 18.

Federal tax bracket thresholds for 2024

Federal bracket thresholds will also be adjusted higher in 2024.

• The 33.0% tax rate begins at taxable income of over $246,752, up from $235,675 in 2023.
• The 29.0% tax rate begins at taxable income of over $173,205 up from $165,430 in 2023.
• The 26.0% tax rate begins at taxable income of over $111,733 up from $106,717 in 2023.
• The 20.5% tax rate begins at taxable income of over $55,867, up from $53,359 in 2023.
• Income up to $55,867 is taxed at 15.0%.

The basic personal amount for 2024 is $15,705 for taxpayers with net income of $173,205 or less. At income levels above $173,205, the basic personal amount is gradually clawed back until it reaches $14,156 for net income of $246,752.

Factoring in the compounding effects of indexation for 2024 (4.7%) and 2023 (6.3%), federal tax brackets as well as other dollar amounts in 2024 will be 11.3% higher than in 2022.

For example, the clawback threshold for old age security will be $90,997 in 2024, up from $81,761 in 2022 and an increase of $9,236.

“That [degree of increase] is striking,” Hector said. “For advisors, it becomes that much more important to pay attention to the new levels because the dollar amounts have been changing so much each year. If you rely on your memory of the numbers from just a few years ago, you’re going to be off by quite a bit.”

Source:   Advisor .ca