Business & Investment

22021 Significant changes to note

Many Canadians have a more positive outlook for 2021 due to the ongoing deployment of the vaccine. The second wave was tough worldwide, with many Canadians returning in isolation due to a pandemic. However, vaccination campaigns may offer something to look forward to as the years go by.

The Canada Revenue Agency (CRA) has played a major role in distributing various emergency payments to pandemic-affected Canadians so they can continue to generate income.The· CRA also announced Two important changes you should be aware of.

CPP contribution rate

The CRA’s Canadian Pension System (CPP) is being strengthened. The CPP contribution rate has been gradually increasing since 2019. With the 2021 renewal, employer and employee contributions have risen from 5.25% in 2020 to 5.45%. The self-employed Canadian contribution rate was 10.5%.

This year’s maximum pension income will be $ 61,600 in 2021, compared to $ 58,700 in 2020 due to rising contribution rates. For now it may cost more from your pocket, but strengthening the CPP will result in higher pension payments from the CRA.

Update of TFSA contribution limit

Duty Free Savings Account (TFSA) users can learn about the new contribution rooms available in their investment vehicles. The 2021 update gives active TFSA users an additional $ 6,000 donation room. Contribution rooms increase annually, indexed by inflation, and are rounded to the nearest $ 500.

Inflation was not so high this time, so the CRA stuck to the same increase in limits as in 2019 and 2020. Due to the latest increase, the cumulative TFSA contribution room since 2009 is now $ 75,500.

Stocks to consider at TFSA

Fortis (TSX: FTS)(NYSE: FTS) Is an ideal asset to consider at least part of your new contribution room. It is a key asset in the long-term investor portfolio. Utilities provide investors with ever-increasing and reliable returns. Fortis is a Canadian dividend aristocrat with 47 years of continuous dividend growth.

This means that the company has increased shareholder payments for almost half a century. Fortis’ business model allows it to increase dividends to shareholders. The company provides essential services to customers nationwide. No matter how bad the economy is, Fortis can continue to generate income.

In addition, almost all of its revenue comes from highly regulated assets and long-term contracts. Fortis management knows the cash flow at the beginning of the year so they can allocate funds without fear of unforeseen events.

Fortis can comfortably cover its expansion and dividend increases. This could be a great addition to the TFSA portfolio.

Stupid takeaway

As CPP enhancements increase out-of-pocket costs, tax-exempt and passive dividend income through equity portfolios such as TFSA’s Fortis can help offset some of the costs. By continuing to invest in stocks over the long term, you can supplement your active income until you retire. Boost your pension Use TFSA as a secondary pension plan through trusted dividend stocks.

Stupid contributor Adam Ottoman There are no positions in any of the listed stocks. Motley Fool recommends FORTIS INC.

22021 Significant changes to note 22021 Significant changes to note

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