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Federal Budget -> 2009 Budget

Federal 2009 Budget - Canada's Economic Action Plan, January 27, 2009

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:

Bill C-10, which includes many of the provisions of the Budget - Royal Assent March 12, 2009Department of Finance Press Release lists the items included.

Notice of Ways and Means Motion and Explanatory Notes tabled in House of Commons February 2, 2009

September 14, 2009

A Notice of Ways and Means Motion was tabled in the House of Commons, to implement remaining tax measures from the January budget, including the Home Renovation Tax Credit (HRTC), First-Time Home Buyers' Tax Credit, and enhancements to the Working Income Tax Benefit (WITB).

September 30, 2009

Bill 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 legislation, including:

          - Proposed changes to the Canada Pension Plan

          - Change the Broadcasting 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

Bill 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.

The personal income tax changes from the budget are reflected in our Tax Calculators, Marginal Tax Rates tables, and Non-refundable Personal Tax Credit tables.  However, the tax changes will not actually be in effect until the Federal Budget revisions receive Royal Assent.

Personal Income Tax Changes

Basic personal amount, tax brackets, tax credits

bulletBasic 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.
bullet2009 Tax bracket threshold increases for lowest 2 brackets
bulletfrom $38,832 to $40,726
bulletfrom $77,664 to $81,452
bulletthe 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 future years.

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 (WITB)

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:

bulletfor single individuals, $925
bullet(previously $522 for 2009)
bullet for single parents and couples, $1,680
bullet (previously $1,044 for 2009)

The income amounts above which the WITB is not available is being increased, for most provinces and territories:

bullet for single individuals
bullet from $13,404 to $16,667
bullet for single parents and couples
bullet from $22,108 to $25,700

See our WITB page for more information on the WITB, and for 2008 rates. 


Home renovation tax credit (HRTC)


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.

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.

Employment Insurance Rates frozen

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 1, 2009.

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.

Revised: October 26, 2023


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