2009 Federal Budget – Personal Tax Prospects

  • Effective in 2009, the basic personal amount, the amount for a spouse, common-law partner or fully dependent relative will increase to $10,320 from $9,600 in 2008.
  • The upper limit of the first personal income tax bracket (15%) will rise to $40,726 in 2009 from $37,855 in 2008.
  • The upper limit of the second personal income tax bracket (22%) will rise to $81,452 in 2009 from $75,769 in 2008.
  • For 2010 and subsequent years, the increased amounts and bracket limits will be indexed to inflation.
  • A new Home Renovation Tax Credit (HRTC) has been introduced.  The HRTC is a 15% non-refundable tax credit available to homeowners for home improvements to a principal residence. Eligible expenditures include building materials and labour expenditures in excess of $1,000 and up to $10,000 for a renovation that is of an enduring nature, made after January 27, 2009 and before February 1, 2010. The maximum tax credit is $1,350. The credit is not available for agreements dated prior to January 28, 2009.
  • The withdrawal limit from an RRSP under the Home Buyers’ Plan increases from $20,000 to $25,000 for withdrawals made after January 27, 2009.
  • A new First-Time Home Buyers’ Tax Credit has been introduced which is based on an amount of $5,000 for first time home buyers who acquire a qualifying home after January 27, 2009. The lowest personal tax rate for the year is used to calculate the non-refundable tax credit. The credit is also available for certain acquisitions of a home by or for the use of an individual who qualifies for the disability tax credit. This will produce a one-time tax savings of $750.
  • The budget proposed that $580 million be added to the Working Income Tax Benefit program for 2009 and the following years.
  • For 2009, the age amount for Canadian taxpayers 65 and older has been increased by $1,000 from $5,408 to $6,408. For subsequent years, the age amount will be indexed. The income level at which the Age Credit is completely phased out rises to $75,032 from $68,365. The income-tested credit begins to be phased out at $32,312.
  • The Canada Child Tax Benefit (CCTB) and the National Child Benefit Income supplement (NCBs) are based on income. The income levels have been increased to match the rise of the upper limit of the lowest personal tax bracket. The proposed level at which the CCTB starts to be phased out increases to $40,726 while the income level at which the NCBs begin to phase out rises by $1,894 and will be fully phased out at $40,726.

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