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A Summary
On January 27, 2009 Finance Minister Jim Flaherty released the 2009 Canadian budget. To help boost the economy, many new tax incentives and cost-saving measures were announced.
Below are some of the key points announced in the 2009 budget:
(Unless noted, these changes are active as of January 1, 2009)
Changes to basic personal ammount and tax brackets
- Federal basic personal amount increased to $10,320 (from $9,600 in 2008)
- Upper limit on lowest tax bracket increased to $40,726 (from $37,885 in 2008)
- Upper limit on second lowest tax bracket increased to $81,452 (from $75,769 in 2008)
Key Corporate Tax Proposals
- Active business income subject to low tax rates is increased to $500,000 (from $400,000), retroactive January 1, 2009
Home Buyer’s Plan and the First Time Home Buyers Credit
- After January 27, 2009, first time home buyers can withdraw $25,000 tax-free from an RRSP to help finance the purchase of a new home (Up from $20,000 in 2008)
- After January 27, 2009, there is a new non-refundable tax credit for first time home buyers equal to $5,000 multiplied by the lowest personal income tax rate for the year (15% in 2009, for a max of $750)
Home Renovation Tax Credit (HRTC)
- For goods acquired and services performed between January 27, 2009 and February 1, 2010, a 15% tax credit will be available for home renovation costs ranging from $1,000 to $10,000, with the credit maxing out at $1,350 ($9,000 x 15%)
Age Credit (for those 65 and older)
- Increased to $6,408 (from $5,408 in 2008) and the income at which this credit is eliminated is increased to $75,032 (from $68,365 in 2008)
- After 2008, the amount of the post-death decrease in RRSP/RRIF value can be carried back and deducted against the deceased year-of-death, which previously was not possible.
Mandatory year-end electronic filing provisions:
- Requirement for any type of income tax information return (ex. T4s) to be filed electronically is reduced to 50 (from 500). This will apply to returns filed after 2009.
Penalties for incorrect format:
• $250 for more than 50 but less than 251 returns
• $500 for more than 250 but less than 501 returns
• $1,500 for more than 500 but less than 2,501 returns
• $2,500 for more than 2,500 returns
Penalties for lateness*:
• $10 per day for less than 51 returns
• $15 per day for than 50 but less than 501 returns
• $25 per day for more than 500 but less than 2,501 returns
• $50 per day for more than 2,500 but less than 10,001 returns
• $75 per day for more than 10,000 returns
* Penalties limited to 100 days, capped at between $1,000 and $7,500 (depending on the number of returns that are required to be filed).
For more detailed information about the 2009 budget, please visit the Canadian Government’s budget website below:
http://www.budget.gc.ca/2009/index.html
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