Federal Budget -> 2008 Budget
For complete details see the Department of Finance Economic and Fiscal Statement.
It is proposed that the minimum annual withdrawal from a Registered Retirement Income Fund (RRIF) would be reduced, on a one-time basis, by 25% for 2008 withdrawals. For those taxpayers who have already withdrawn more than the reduced minimum amount, the excess (up to the original minimum amount) would be allowed as a contribution to an RRSP or RRIF, and deducted on the 2008 tax return. The contribution would be required to be made by the later of March 1, 2009, or 30 days after the legislation receives Royal Assent. Similar rules would apply to variable benefit payments received under a money purchase Registered Pension Plan (RPP). If an in kind contribution is made to the RRSP or RRIF, do not transfer investments which are in a loss position, as the loss will be disallowed.
Changes have been made to our RRIF Withdrawal Calculators to reduce the 2008 minimum withdrawal by 25%. Canada Revenue Agency (CRA) announced in a December 11, 2008 news release that the proposed changes can be administered by financial institutions before the law is passed. However, if a taxpayer withdraws the reduced amount and the proposed reduction is not passed into law, the taxpayer may have to subsequently withdraw the remaining 25%.
See also our article on making in kind withdrawals from a RRIF.
Federal 2008 Budget - February 26, 2008
For complete details see the Department of Finance Budget 2008 website, as well as
Subsequent motions, bills and explanatory notes:
March 11, 2008 - Notice of Ways and Means motion tabled to implement most of the Budget 2008 measures.
March 14, 2008 - These measures are now included in Bill C-50.
April 23, 2008 - Explanatory notes relating to this draft legislation were made available.
June 18, 2008 - Bill C-50 received Royal Assent.
Personal tax changes
Tax-free savings account (TFSA)
Life income funds (LIF)
The following three provisions are included in Budget 2008, and will apply to federally-regulated LIFs:
The threshold of $22,450 in #'s 1 and 3 will increase with the average industrial wage.
See the Department of Finance Budget 2008 item on locked-in pensions.
Other changes relating to personal income tax and GST/HST:
Business tax changes
See Business Income Tax Measures on the governments Budget 2008 website.
The Guaranteed Income Supplement (GIS) is an income-tested benefit, and is reduced by 50% of other income received, except for employment earnings. The exemption for employment earnings is 20% of earned income up to $2,500, providing a maximum exemption of $500. The budget proposes to increase this exemption, and fully exempt all employment earnings up to $3,500 per year.
Canada Student Grant Program
See the Canada Student Grant Program information on the Department of Finance Budget 2008 website.
Canada Student Loans Program will be streamlined and modernized. See the Canada Student Loans Program information on the Department of Finance Budget 2008 website.
Canada Graduate Scholarship Program will provide up to 500 annual scholarships worth $50,000 per year each for up to three years. See the Canada Graduate Scholarship Program information on the Department of Finance Budget 2008 website.
The Canada Millennium Scholarship Program is proposed to be terminated in 2009. Transitional grants will be provided to ensure that students who receive Canada Millennium Scholarship bursaries in 2008-09 will be unaffected by the wind-down of the program. See the Students information on the Department of Finance Budget 2008 website.
Revised: April 09, 2019
Copyright © 2002 Boat Harbour Investments Ltd. All Rights Reserved. See Reproduction of information from TaxTips.ca