New Canada Revenue Agency (CRA) Tax Rules 2024

New Canada Tax rules 2024

New Canada Revenue Agency (CRA) Tax Rules 2024

Gagandeep Kaur Sekhon Gagandeep Kaur Sekhon-

New CRA Tax Rules 2024: A raft of new legislation has come into effect in 2024, including adjustments to the CRA (Canada Revenue Agency) tax standards.

From remote worker adjustments to payroll deductions, here’s what to expect this year in terms of the newly updated CRA tax rules.

Province of Employment For Remote Workers

The CRA has issued a new administrative regulation effective January 1, 2024, that outlines how to assess a remote worker’s province of employment for payroll purposes.

If a remote worker’s province of employment and province of residence differ, they may be subject to additional or reduced payroll tax withholdings.

The new measures aim to establish which province the employee’s income taxes, pension, and employment insurance should be filed in.

TFSA Contribution Limit

The yearly contribution maximum for tax-free savings accounts (TFSAs) increased to $7,000 on January 1, 2024, from $6,500 in 2023.

It also implies that qualified Canadians will have a maximum lifetime TFSA contribution of $95,000.

The TFSA program, which allows contributors to avoid paying taxes on capital gains and withdrawals, is continually increasing in line with inflation.

When the program was launched in 2009, the cap was set at only $5,000 per year.

RRSP Contribution Limit

The CRA sets an annual limit on the amount that Canadians can deposit into their registered retirement savings plan (RRSP) account.

The cap for 2024 remains 18% of the previous year’s salary, although the maximum contribution is now $31,560 rather than the $30,780 allowed in 2023.

Payroll deductions for Canada Pension Plan and Employment Insurance

Canadians should expect greater Canada Pension Plan (CPP) and Employment Insurance (EI) deductions on their paychecks in 2024.

CPP contributions are increasing as part of a six-year strategy to improve contributions and benefits.

The CPP contribution rate will stay at 5.95 percent in 2024, although the expected maximum contribution is $3,867, up from $3,754 in 2023.

In Quebec, the QPP contribution rate has increased by 6.4 percent to $4,348 for 2024.

The federal government also proposed a second CPP tax, which would begin in 2024 and apply only to workers whose income exceeds the first wage threshold.

The CPP2 contribution will apply to pensionable wages ranging from $68,500 to $73,200, with a maximum contribution of $188 in 2024.

The 2024 self-employed CPP2 contribution rate will be 8%, with a maximum self-employed contribution of $376.

Employment insurance premiums are also rising, with a federal contribution rate for employees of 1.66 percent, up to a maximum of $1,049.12.

In 2023, the maximum contribution for federal EI was $1,002.45. Meanwhile, employers will contribute a maximum of $1,468.77 to EI in 2024.

The Quebec Pension Plan tax rate will also rise in 2024 as the government adds another component to the supplementary plan launched in 2022.

This means that employees and employers will each contribute $4,348 to the QPP in 2024.

Link: https://immigrationnewscanada.ca/new-canada-tax-rules-2024/?fbclid=IwAR3HUdaH95gY-R4u19-dKi3CN_IoaZK205QaSDnm4thT_MQUvyE1tyI11Ao

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