Business & Investment

Do you hate taxes? You will love these two CRA changes in 2021

Canadians should be aware of the Canada Revenue Agency (CRA) Adjustment this year. If you hate taxes, these changes couldn’t come at a better time. The pandemic is causing a huge financial burden, and the possibility of completely reducing federal taxes while making tax-exempt money is welcome news.

Bisphenol A (BPA) has increased again this year, leaving room for additional donations for users of duty-free savings accounts (TFSA). Many Canadians will benefit from both CRA changes in 2021.

More tax savings

All individual Canadian taxpayers can claim BPA, which is a non-refundable tax credit. BPA will be available after 2020 Income tax law.. If your 2021 income is less than $ 151,978, the CRA will not collect federal tax on the first $ 13,808. Last year’s BPA was 13,229, which effectively saves $ 579.

As the CRA continues to adjust BPA, it is expected to increase further in the next two tax years. If taxpayers do not exceed the taxable threshold, they can claim a non-refundable tax credit of $ 14,398 and $ 15,000 in 2022 and 2023. BPA adjustments from 2020 to 2023 Lower taxes For the middle class.

Additional Contribution Room

The new $ 6,000 TFSA contribution limit for 2021 is also a meaningful change. Whenever we maximize TFSA, we manage to recover the taxes payable to CRA. Interest, profits and dividends in your account are not taxable income.

For those who have never opened a TFSA, there is a large donation room. As long as you were 18 or older in 2009, your cumulative limit will be $ 75,500. The CRA announces TFSA limits each November, but has not changed for three years now.

Existing users who do not know the available contribution rooms can visit the CRAMy Account to find out. The CRA imposes a penalty tax on excess contributions (1% of excess contributions per month). If you are saving for the future, your TFSA balance will accelerate faster because your money growth is tax exempt.

Earn tax-exempt income

Among the coveted income stocks TSX is Northwest Healthcare Properties (TSX: NWH.UN). This $ 2.32 billion real estate investment trust (REIT) will offer a 6.1% dividend. An investment of $ 6,000 will generate $ 360.60 of tax-exempt income. Assuming the donation room available is $ 75,500, the tax-exempt revenue is $ 4,537.55.

NorthWest Healthcare boasts a portfolio of high quality real estate properties. REITs focus on healthcare, so you become a clinic building, hospital, or clinic pseudo-landlord. Similarly, property locations are international (Canada, Australia, Brazil, New Zealand, and Europe).

REITs have not yet reported their full-year 2020 financial report. However, the nine-month results ending September 30, 2020 are evidence of the defensive nature and resilience of the stock. NorthWest’s net income was $ 181.1 million, an increase of 282.7% compared to the same period in 2019.

NorthWest Healthcare expects to continue to generate stable rental income with high occupancy rates (97.2%) and long-term rental contracts. At $ 13.19 per share, it’s worth the money.

The long-awaited tax cut

The 2021 increase in BPA and the new TFSA restrictions are highly needed tax cuts during the pandemic. Claim BPA to reduce taxes, maximize TFSA’s contribution and earn tax-free money.

Speaking of the two CRA changes in 2021, it’s a very much needed tax deduction for Canadians …

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Stupid contributor Christopher Liu There are no positions in any of the listed stocks. Motley Fool recommends NORTHWEST HEALTHCARE PPTYS REIT UNITS.

Do you hate taxes? You will love these two CRA changes in 2021 Do you hate taxes? You will love these two CRA changes in 2021

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