2022 Contribution Limits

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Going into a new year, it is always helpful to know what the contribution limits are for your annual cash flow planning. A new calendar year brings increased statutory deduction amounts from your income and potentially increased contribution limits to tax-advantaged investment accounts.

Canada Pension Plan

In 2022, the Canada Pension Plan contribution rate is 5.7% for an employee and 5.7% for an employer. Self-employed individuals must pay both the employee and employer amount (11.40%). The Yearly Minimum Earnings remains at $3,500 but the Yearly Maximum Pensionable Earnings increases to $64,900. Therefore, an employee earning in excess of $64,900 in 2022 will contribute the maximum ($3,499.80). This is calculated on the earnings between $64,900 and $3,500.

These deductions occur from your regular pay and will reduce your net pay for the period. If, and when, you reach the maximum contribution amount, you’ll notice an increase to your net pay.

Employment Insurance

For employed individuals, the compulsory contribution rate is 1.58% of the Maximum Insurable Earnings ($60,300 in 2022). The contribution is calculated on your income up to $60,300. Maximum deduction from your pay is $952.74 for the year.

Similar to the CPP, your net pay will increase once you have contributed the maximum for EI.

RRSP Deduction Limit

The RRSP Deduction limit is always 18% of your previous year’s pre-tax earnings up to a maximum. The maximum for 2022 is $29,210. If your previous year’s pre-tax earnings was in excess $162,278, you do not get an increased deduction limit.

Your RRSP contribution room slightly differs from the annual deduction limit. RRSP contribution room is specific to every individual. Your RRSP contribution room is the lesser of 18% of your previous year’s pre-tax earnings or $29,210, plus any unused contribution room from previous years.

Refer to your previous year’s Notice of Assessment to determine your current year’s RRSP contribution room.

TFSA Contribution Limit

For 2022, the new contribution room is again $6,000. If you have been fortunate enough to maximize your TFSA since the year they were created (2009), then you can contribute an additional $6,000 in 2022.
The total contributions allowable since 2009 is $81,500.

Remember, any withdrawals made from your TFSA in a given year gets added back into your next calendar year contribution room. For example, if you withdrew $10,000 from your TFSA in 2021, then you can contribute $16,000 in 2022. This is assuming you have been maximizing the room every year.

Speak with your TMFG advisor today, if you have questions about these new 2022 limits.

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