The tax system in Canada offers a number of advantages and incentives that are intended to support people and families at different phases of life. Canadians need to know about the benefits offered by the Canada Revenue Agency (CRA) as the year draws to a close.
These advantages include savings programs like the TFSA and RRSP as well as targeted assistance for parents and students like the Canada Student Grant and RESP. Furthermore, low-income families are the target of benefits like the Canada Child Benefit, and seniors and those with disabilities are given extra consideration.
Savings Plans For Working Class
People in Canada can save money without having to pay taxes on the profits they earn by using a Tax-Free Savings Account (TFSA). This covers dividends, capital gains, and interest. Crucially, December 31, 2023 is the deadline for contributions to this year’s TFSA. However, individuals who are almost at their yearly contribution cap should pay special attention to this deadline.
Increasing your retirement savings can also be accomplished via a Registered Retirement Savings Plan (RRSP). Contributions made by individuals to an RRSP might lower their taxable income. February 29, 2024 is the deadline for contributions to the RRSP for the 2023 tax year. On the other hand, December 31, 2023 is the cutoff date for anyone who will turn 71 in 2023.
The First Home Savings Account (FHSA), a new program designed to help Canadians save for their first home, was introduced in April 2023. December 31st is the last day to make contributions to this account.
The goal of the Registered Disability Savings Plan (RDSP) is to provide long-term financial stability to Canadians with disabilities and their families. December 31 is the cutoff date for creating an RDSP, contributing, and requesting government bonds and matching funds.
Benefits for Students and Parents
Registered Education Savings Plan (RESP)
A savings plan called the RESP assists guardians, parents, and other family members in setting aside money for a child’s post-secondary education. For every dollar deposited into a RESP, the Canadian government matches 20% of the amount through the Canada Education Savings Grant. This is limited to a maximum of $2,500 annually for each child.
To qualify for the government matching for a given year, contributions to a RESP must be made by December 31st of that year. If the deadline is missed, the government’s prospective annual contribution—basically free money meant to help with future school costs—will be forfeited.
Canada Student Grant
Financially disadvantaged students are eligible to apply for this scholarship. It is meant for individuals who meet the requirements at a certain school. For a single student to be eligible, their family income must be less than $66,942.
The maximum grant amount available to qualified students was $35,429. The Canada Student Grant application period ends on December 31st. The purpose of this award is to lessen the cost of post-secondary education for students by giving them financial help for their studies.
The purpose of the grant amount and qualifying requirements is to assist students from lower-income families so that their access to higher education is not impeded by financial constraints.
