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2009 Federal Budget
Canadian Tax and
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C-51, the Economic
Recovery Act was introduced in the House of
Commons. See the September
30th news release. The bill received Royal Assent
on December 15, 2009. As well as introducing the HRTC and Home
Buyers' Tax Credit, and changes to the WITB, Bill C-51 includes other
Act s. 46.1(3)(a) to increase the borrowing limit of the Canadian
Broadcasting Corporation (CBC) from $25 million to $220 million
November 3, 2009
C-56, the Fairness
for the Self-Employed Act, was introduced in Parliament and passed
first reading. The
bill received Royal Assent on December 15, 2009. This legislation allows self-employed persons to
pay EI premiums on a voluntary basis, in order to qualify for EI special
benefits. For details, see our article on EI
for self-employed persons.
Basic personal exemption increased from $10,100 to
$10,320 for 2009. The spousal amount, and equivalent to spouse
amount will also increase to $10,320.
2009 Tax bracket threshold increases for lowest 2
from $38,832 to $40,726
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 paycheques starting April 1, 2009. Canada Revenue Agency (CRA)
has now published new
payroll deduction tables which are effective April 1.
Normal indexation will apply to the above amounts in
These changes are now in effect, as they were included
in Bill C-10, which received Royal Assent on March 12, 2009.
Enhanced Working Income Tax Benefit
The revisions to enhance the WITB will not be finalized
until the government consults with the provinces and territories, as the
WITB is not the same for all provinces and territories.
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
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
See our WITB page for more information on the
WITB, and for 2008 rates.
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.
RRSP/RRIF losses after death
When an individual dies, the fair market value of their
RRSPs or RRIFs are generally included in income for the year of
death. Sometimes, there are losses from a decrease in value of these
plans after the death of the holder. It is proposed to allow these
losses to be carried back and deducted against the amount included in
income in the year of death. This will apply where the final
distribution from the RRSP or RRIF occurs after 2008.
Mineral exploration tax credit
The mineral exploration tax credit is available to
individuals who invest in flow-through shares. It is 15% of
specified mineral exploration expenses incurred in Canada and renounced to
flow-through share investors.
This credit was scheduled to expire at the end of March
2009. It is proposed to extend eligibility for the mineral
exploration tax credit for one year, to flow-through share agreements
entered into on or before March 31, 2010.
National Child Benefit supplement (NCBs) and Canada
Child Tax Benefit (CCTB)
The new upper limit of of the 15% tax bracket, which is
now $40,726 for 2009, will be used for income testing for the NCBs and the
CCTB. This will provide low-income families with up to an additional
$1,894 per year. The increased payments will take effect for the
2009-10 benefit year, which begins in July 2009.
The 2010 rate for EI premiums will remain at the 2009 level of $1.73. See
our tables of EI premium rates.
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.
Business Income Tax Changes
Corporate small business deduction
The budget proposes to increase the amount of small business income eligible for
the reduced small business tax rate to $500,000 from $400,000, effective January
Capital cost allowance
The 50% straight-line accelerated CCA rate for investment in manufacturing or
processing machinery and equipment will be extended to 2010 and 2011.
Businesses will be allowed 100% CCA for computers in the first year that CCA
deductions are available. This is a temporary two-year measure for
purchases after January 27, 2009 and before February 2011.