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Federal & Ontario 2009 Budget
Complete details are available on the
Federal Budget website. See the Federal Budget
website
Quick Index for links to selected budget topics.
Subsequent Department of Finance documents:
Personal Income Tax Changes
Basic personal amount, tax brackets, tax
credits
Basic personal exemption
increased from $10,100 to $10,375 for 2009. The spousal
amount, and equivalent to spouse amount will also
increase to $10,375.
2009 Tax bracket threshold increases for lowest 2
brackets:
1. from $38,832 to $40,726
2. from $77,664 to $81,452
the Age Credit for persons 65 and older is being
increased by $1,000 to $6,408
Employees will see the effect
of these tax reductions on their pay cheques starting
April 1, 2009. Canada Revenue Agency (CRA) has now
published new payroll deduction tables which are
effective April 1.
Enhanced Working Income Tax Benefit (WITB)
For 2009, for most provinces
and territories, the WITB will provide a refundable tax
credit of 25% (previously 20%) of each dollar of earned
income in excess of $3,000, to a maximum of:
for single individuals, $925 (previously $522 for 2009)
for single parents and couples, $1,680 (previously
$1,044 for 2009)
The income amounts above which
the WITB is not available is being increased, for most
provinces and territories:
for single individuals, from $13,404 to $16,667
for single parents and couples, from $22,108 to $25,700
Home Renovation Tax Credit (HRTC)
The
Home Renovation Tax Credit (HRTC) is a proposed tax
credit that will only be available for the 2009
tax year. It was proposed as part of the
2009 Federal Budget.
Basics of the HRTC
temporary, non-refundable tax
credit
tax credit 15% of eligible expenditures on home
renovations made in respect of eligible buildings
The tax credit applies to expenditures over $1,000, up
to $10,000.
maximum credit amount of $1,350 per family
($9,000 x 15%)
Tax credit will apply for costs incurred after January
27, 2009 and before February 1, 2010.
Costs related to an agreement entered into before
January 28, 2009 are not eligible for the credit
Costs incurred will be claimed on the 2009 tax return,
including the January 2010 costs.
The HRTC will not be reduced by any other tax credits or
grants to which a taxpayer is entitled, for the same
expenditures, under other government programs. For
example, if an eligible expenditure also qualifies for
the medical expense tax credit (METC), both the METC and
the HRTC can be claimed.
Family, for purposes of
sharing the HRTC:
A family consists of an
individual, and where applicable, their spouse or
common-law partner, and children under 18.
each family is subject to the maximum tax credit of
$1,350, based on eligible expenditures
If one family member is unable to utilize the entire
credit, the unused portion may be claimed by one or more
of the other family members
If two or more families share ownership of an eligible
dwelling, each of those families will be eligible for
their own credit up to $1,350, based on eligible
expenditures
Eligible dwellings
An
eligible dwelling is a dwelling which qualifies as the
individual's principal residence at any time during the
period January 28, 2009 to January 31, 2010 inclusive,
and includes the land that forms part of the dwelling.
A housing unit qualifies as a principal residence if it
is owned by the individual and ordinarily inhabited by
the individual, the individual's spouse or common-law
partner, or their children. This could include a
cottage or vacation home.
For condos and co-op housing, costs will be eligible for
the credit if they are incurred to renovate the
individual's principal residence "unit", and a share of
the cost in respect of common areas may also be claimed.
Where a portion of a principal residence is rented out,
the credit can be claimed only for expenditures made in
respect of the personal-use areas of the home.
Where costs are incurred for common-areas of a
partly-rented home, such as a
roof, the credit
will apply only to the portion allocated as personal
use. See our article on property rental expenses.
Eligible expenditures
Must be supported by receipts, which will not have to be
submitted with the tax return, but must be available if
requested by Canada Revenue Agency (CRA).
Expenditures will qualify if the renovation or
alteration of the eligible dwelling is of an enduring
nature, and is integral to, or built into, the dwelling.
Examples of eligible expenditures would be
1. re-shingling a roof
2. interior or exterior painting
3. kitchen, bathroom, or
basement renovations
4. replacing windows or doors
5. new furnace or
water heater
6. resurfacing a driveway
7. laying new sod
8. upgrading wiring
9. upgrading insulation
Expenditures are not eligible if the goods or services
are provided by a person with whom the taxpayer is not
dealing
at arm's length (e.g. close relative), unless
that person is registered to collect GST/HST.
Expenditures are not eligible if they are for repairs
and maintenance which are usually performed on an annual
or more frequent basis.
Expenditures for appliances (e.g. fridge, stove) and
audio-visual electronics are not eligible.
Financing costs are not eligible.
Other examples of non-eligible expenditures:
1. furniture and draperies
2. purchase of tools or other construction
equipment
3. carpet cleaning
4. house cleaning
5. maintenance contracts for furnace cleaning, snow
removal, lawn care, etc.
First-time home buyer's tax credit
Home buyer's plan
The Home Buyer's Plan (HBP)
allows an individual to borrow from an RRSP to buy or
build a home, without paying tax on the amount
withdrawn. The HBP withdrawal limit has been increased
from $20,000 to $25,000. This change is now in effect,
as it was included in Bill C-10, which received Royal
Assent on March 12, 2009.
Employment Insurance,
Longer period of
benefits
All regular benefit
entitlements will be increased by five extra weeks to a
maximum of 50 weeks for the next two years.
Tax-Free Savings Accounts (TFSAs)
The government proposes to
change the Succession Law Reform Act (SLRA) to allow for
beneficiary designation of TFSAs. This would allow
TFSAs to be passed to designated beneficiaries outside
of a will, without being subject to Estate
Administration Tax.
Retail Sales Tax (RST)
It is proposed to combine the
8% Ontario sales tax and the 5% GST into a single 13%
value-added sales tax that would be federally
administered, starting July 1, 2010. There are some
made-in-Ontario components proposed:
Books, children's clothing and
footwear, diapers, children's car seats and car booster
seats, and feminine hygiene products would be exempt
from the 8% provincial portion of the tax.
Purchasers of newly constructed homes under $400,000
would not be subject to an additional tax burden.
Buyers of new homes valued between $400,000 and $500,000
could claim a proportional rebate.
Up to $400 million in one-time sales tax credits would
be provided to help small businesses make changes to
point-of-sale and accounting systems.
Provincial portion of the tax rate on transient
accommodation, such as hotel rooms, would rise from 5%
to 8%. Approximately $40 million a year would be
allocated to support destination marketing in Ontario
tourism regions once these are established. |
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