Budget 2009

Discussion in 'Reality Check' started by Twopoops, Jan 27, 2009.

  1. Twopoops

    Twopoops
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    Hidey Ho

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    Is anybody following it?

    This is only the second year I've really paid any attention to it. Like everything, there are pro's and con's.

    I have to laugh at things like the $1350 tax relief for home renovations, or $750 for first time home buyers. I don't think this is going to push people to renovate/buy when they are worried about having a job next week.
     
  2. watcha

    Born Killer

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    As usual the government offers tax incentives that mean nothing and provide for no real benefit.
    it's more interesting to see how the voting goes.
     
  3. Twopoops

    Twopoops
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    Hidey Ho

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    They also raised the personal exemption by $7xx, and increased the income for the two lowest tax brackets. That is something everybody will benefit from.
     
  4. Muricane

    MY AV IS ME

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    Is the latter retroactive to Jan 1? I know the exemption limit is, but I didn't see anything about the brackets.
     
  5. Twopoops

    Twopoops
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    Hidey Ho

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    I'm not sure to be honest.
     
  6. watcha

    Born Killer

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    to someone on the bubble for exemption it's nothing,
    I wasn't expecting anything drastic really,
    they needed to lower the rate of tax you pay, not the amount you pay tax on at a level.
    it's always teh middle class that gets nailed with taxes though, not the lowest income people, since they don't pay tax to begin with.

    anyway....hopefully it will get through....:rolleyes:
     
  7. Jentay

    Active Member

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    Here are some of the points from the budget:

    "Tax and Related Proposals - The Rates

    - The basic personal exemption for 2009 will be increased to $10,320 from the previously planned $10,100 (a 7.5% increase). The married and eligible dependent credits follow automatically. That’s a $33 tax savings for every individual.

    · The two lowest tax brackets will also be increased by 7.5%, so the 15% rate will apply to income to $40,726, and the 22% rate will apply to $81,542. For individuals earning $81,542 or more, that’s another $287.70 of taxes saved.

    · The phaseout of the child tax benefit supplement 2009 - 2010 will begin at a slightly higher income level such that it will be eliminated at family income levels of $40,726 rather than $38,832, and the income at which the regular benefit will be reduced is increased in the same manner. Lower income clients with the ability to manage their incomes (typically including farmers) will want to incorporate these new breakpoints into their 2008 tax planning as 2008 income will dictate 2009 - 2010 child tax benefit eligibility.

    · The Working Income Tax Benefit will be enhanced, with payouts expected to double. Details are limited, as the government proposes to allow the provinces a voice in customizing the benefit to harmonize with provincial work incentives. It is still expected the benefit will be phased out at fairly low income levels ($16,667 for individuals and $25,700 for families). These benefits are available to the working poor .

    · The age credit will be increased $1,000 for 2009, providing up to $150 of tax savings. It will still be phased out at a rate of 15% of net income over $32,312 (it’s gone at net income of $75,032).

    Tax and Related Proposals

    · Effective January 1, 2009, the small business deduction limit is increased to $500,000.

    · Computers are presently eligible for CCA at the rate of 55%. As a temporary measure, computers acquired from January 28, 2009 to January 31, 2011 will be eligible for full writeoff in the year of acquisition (no half year rule; 100% CCA).

    These will impact only clients in specific industries or circumstances. Some are fairly broad, while others are much narrower (especially within our client base!).

    · Manufacturers/Processing: The accelerated CCA for M&P assets acquired to the end of 2009 has been extended to assets acquired to the end of 2011 (this replaces the previous enhanced CCA rate for 2010 and 2011). Anyone in a manufacturing or processing business will likely welcome this extension.

    · Home Renovators/Home Owners (Condo Associations?): A one-time credit will be available for home renovations. The credit will be 15% of renovation costs in excess of $1,000, to a maximum $1,350 credit reached at renovation costs of $10,000. This cap will be per family. The credit will only apply in 2009, to renovations (goods or services) from Jan 28/09 - Feb 1/10, but not for renovation agreements entered into before January 28/09.

    The property must be one eligible for designation as the claimant’s principal residence (ie ordinarily inhabited in the year - this could include vacation properties). Condo owners can claim their pro rata share of common area costs - this may be of interest to our condo association clients. For clients with a home office, they must pro rate eligibility based on costs for the personal component only (CRA will likely issue guidance in this regard).

    Costs must be renovations or alterations of an enduring nature integral to the dwelling. Routine maintenance and repairs, costs of appliances and audio visual electronics will not qualify, and financing costs may not be claimed. Furniture, drapes, tools and other items which can be removed from the home will not qualify. Examples of qualifying items include:

    · Renovating the kitchen or bathroom
    · Finishing the basement
    · New carpet or hardwood floors
    · Building an addition, deck, fence or retaining wall
    · A new furnace or water heater
    · Interior or exterior painting
    · Resurfacing the driveway
    · Laying new sod

    Payments to related parties will qualify only if those persons are GST/HST registrants (ie you don’t get a credit for paying family members to help renovate). Receipts will be required.

    · Home Builders/Home Buyers: The maximum home buyers’ program withdrawal will be increased from $20,000 to $25,000.

    · Home Builders/Home Buyers: A new credit will be available to first-time home buyers. To qualify, the person and his/her spouse cannot have owned a home in the year of purchase or any of the four preceding calendar years. This is the same criteria as for the home buyers program. Like the home buyers program, the credit will also be available if the new residence is purchased to provide better access for a disabled family member. The credit will be based on $5,000, so the tax reduction will be $750. The home purchase must close after January 27/09. Where two or more people acquire the property, they must share access to the credit. Eligibility is conditional on the house being registered in the name of the individual at land titles.

    · Deceased Taxpayers/Estates: Where a deceased person’s RRSP or RRIF declines in value from the date of death to the date of payout, the decline will be permitted as a deduction on the terminal tax return. This will be available for any RRSP or RRIF closed out after 2008 (closeouts which have already occurred in January appear to qualify). The deduction can be denied where the RRSP or RRIF is not closed out by the end of the year following the year of death, or if the RRSP holds a non-qualified investment at any time after the death (CRA has discretion to allow losses in these cases).

    · Employers/Employees: EI rates will be maintained at 1.73% for 2009 and 2010. Commencing 2011, they will be set at a breakeven basis, but the deficits resulting from these budget measures will not be recovered in the near term. The benefit period is being extended 5 weeks to a maximum of 50 weeks. Work sharing benefits will be extended 14 weeks to a maximum of 52 weeks.

    · Apprentice Tradespeople: Apprentices completing their apprenticeship in a Red Seal trade will receive a $2,000 taxable grant on completion. The Budget documents indicate an estimated 20,000 recipients per year. We have some clients who employ apprentices - they claim an investment tax credit in this regard.

    · Flow Through Share Investors: The 15% investment tax credit available to individuals who invest in flow through shares has been extended another year, to flow through share agreements entered into by March 31, 2010. [This has been extended regularly since being introduced in 2000.]

    · Direct Sellers: Changes are also proposed for GST for direct sellers.

    · Foreign Operations: The Budget contains a limited response to concerns regarding various international tax issues, reversing the previously announced, and modified, rules for interest deductibility to finance foreign affiliates and indicating other areas will be reviewed.

    · Business Sales: A court case related to timing of acquisitions of control is being overridden. This case called into question the availability of the CGE on sales to public companies or foreign persons, so this will ensure the CGE is available on such sales. Good news for any client who has made such a business sale, or does in the future.

    Spending

    · $12 billion in infrastructure spending to come.

    · $200 billion to improve access to financing.

    · $8.3 billion for benefits for those most affected by the downturn, including enhanced EI and more funding for skills and training.

    · $7.5 billion for support for sectors, regions and communities, including specific targeting of auto, forestry and manufacturing. Support for farm programs is included.

    What’s Not There

    The anticipated indexation of the capital gains exemption and children’s art tax credit, both promised in the Conservative election campaign, do not appear in the Budget."
     
  8. Big Al

    Resident Redneck

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    Pretty sure the liberals were hardset against this idea.
     

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