What is new for Canada's Federal Tax Filing for 2009?
What is new for Canada's Federal Tax Filing for Tax Year 2009?
Tax Cuts at your Fingertips, Reach out and Claim Yours!!
Claim the new home renovation tax credit (HRTC) administered by the Canada Revenue Agency. Keep all your receipts to prove it! That will give you a a home renovation maximum tax credit of one thousand, three hundred, and fifty dollars ($1,350).
And that's just for starters.
The new maximum for the HBP (Home Buyers Plan), one is able to withdraw twenty-five thousand dollars ($25,000) from your RRSP under the Home Buyers' Plan to put towards the purchase of a new home.
That's good news for the housing market.
And, with the new Home Buyer's Tax Credit, you are also eligible to claim another non-refundable tax credit of $750!
And then, of course, there are increases to many of the non-refundable tax credits that all of us may be able to claim.
For instance, amounts relating to dependents, and spouses or common-law partners.
The site has a ton of information. Just click on "Individuals" and get info that's specific to your tax situation, no matter who you are! Or, click on "Online services" to get all the info about the CRA's quick, easy, and secure services.
And some of the biggest news items are always in the Key Information, Announcements and Highlights sections right on the Home page.
You can file your return using NETFILE-certified software, and just filed it through NETFILE on the CRA Web site.
It is easy, secure, and barely took any time.
And, if you owe money, there's a new way to pay called My Payment.
“Tax Relief” the theme of Federal Budget 2009 –" What is in it for you as a Taxpayer"?
Changes in the Federal Government’s January 2009 budget will help a broad cross-section of Canadians keep more money in their pockets. That’s welcome news amidst the market turmoil we’ve felt over the past year, though most of the savings won’t be realized until 2010 when you file your 2009 tax return.
Here are the most important highlights of some of the changes affecting individuals that in 2009 Federal Budget: however, some of these changes have not yet passed into law. If you want to learn more about how any of these changes may apply to your personal situation, contact your financial advisor for advice and guidance.
Increase in the Basic Personal, Spousal, and Eligible Dependant Amounts –These amounts which were $9,600 in 2008, will all increase from the previously announced $10,100 to $10,320 for the 2009 Taxation Year.
Increase in the Income Tax Brackets – The maximum threshold of the two lowest personal income tax brackets for 2009 will be raised. This increases the income levels at which income testing begins for the base benefit under the Canada Child Tax Credit and the National Child Benefit supplement The current and new tax brackets for 2009 are:
Previous 2009 Revised
15% Up to $38,832 Up to $40,726
22% $38,833 to 77,464 $40,727 to 81,452
26% $77,665 to 126,264 $81,453 to 126,264
29% over $126,264 over $126,264
Age Credit Increase – The amount of age credit that can be claimed by individuals over the age of 65 on their 2009 income tax return will increase. More Canadians will also be able to benefit from the credit as, thanks to the increased amount ($6,408), clawback at 15% starts at $32,312, the net income level at which the age credit is fully phased out will also increase from $68,365 to $75,032.
Home Renovation Tax Credit (HRTC) - This temporary credit will provide a 15% non-refundable income tax credit (maximum credit of $1,350) on certain home renovation expenses incurred after January 27, 2009 and before February 1, 2010. The credit may be claimed in the 2009 tax return for the portion of total eligible expenditure that exceeds $1,000 but are less than $10,000. There are a few limitations, so be sure to carefully review the details of the eligible renovations before you start your renovations.
RSP Home Buyers Plan (HBP) – the maximum withdrawal will increase from $20,000 to $25,000. The HBP allows first-time home buyers to make a withdrawal from their RRSP tax-free, provided that it is repaid within 15 years.
First-Time Home Buyers’ Tax Credit – First-time home buyers will be eligible for a new tax credit of up to $750 on homes acquired after January 27, 2009. This new tax credit will also be available to assist individuals eligible for the disability tax credit to purchase a home that is more accessible or better suited to their needs.
Extended Employment Insurance (EI) Benefits – Employee premium rates for 2010 will be frozen at $1.73 per $100 of insurable earnings; the same rate as 2009. Regular EI benefit entitlements will increase by five extra weeks to a maximum of 50 weeks for the next two years.
Re-Contribution of RRIF Minimums – Up to 25% of a RRIF owner’s 2008 RRIF minimum can be re-contributed to a RRIF (or to an RRSP if the RRIF owner has not yet reached the end of the year in which he or she turns 71). The deadline for the re-contribution was Tuesday April 14, 2009.
RRSPs and RRIFs at death – If there is a loss in value in an RRSP/RRIF after death but before the final distribution of the account, and the final distribution occurs in 2009 or later, then the decrease can be carried back to the deceased’s terminal return so that the deceased reports the lesser of the FMV at death and the FMV at distribution.
Small business limit – The small business limit is increased from $400,000 to $500,000 as of January 1, 2009.
RDSP deadline – The deadline for 2008 Registered Disability Savings Plan contribution is officially extended to March 2, 2009.
This information is written for informational purposes only, and a not a solicitation to buy or sell a financial product. Consult your financial advisor on how these tax changes will affect your specific financial situation.
How will you finance the downpayment of your new home-- Home Buyers Plan (HBP) or TFSA?
Options to Finance the Down Payment for your Home
When you are ready to buy a home. What are the options open to you to finance your downpayment?
You are now thinking seriously about buying your first home. Among your early considerations for this home purchase are: how much home you will be able to afford and how you are going to finance your purchase? You’ve heard about the Home Buyers Plan (HBP) and the new Tax-Free Savings Account (maybe you are among the early adopters who already have a TFSA) and you’re wondering which of these might be the best home financing option for you.
Let’s us take a look at the options:
• The HBP allows a first time homebuyer to make a tax-free withdrawal of up to $20,000 from a Registered Retirement Savings Plan (RRSP) for the down payment (the 2009 Federal Budget proposes to increase this amount to $25,000). There are strict eligibility requirements including meeting the definition of ‘first time home buyer’ and the amounts withdrawn from the RRSP must be repaid over a 15-year period to avoid being taxed on the full amount of the RRSP withdrawal.
• Your RRSP contributions are tax deductible but your TFSA contributions are not, so the funds you need for a down payment can accumulate more quickly in an RRSP than in a TFSA. Here’s an example:
Your marginal tax rate is 30% and you can afford to contribute $4,000 to your RRSP because of the tax deduction you receive but you can afford to contribute only $2,800 to your TFSA in after tax income because your TFSA contribution is not tax deductible and does not create any tax savings.
Assuming your RRSP and TFSA investments both earn a 5% annual return, after five years, you will have accumulated $23,800 in your RRSP and just $16,245 in your TFSA.
• On the other hand, there are no ‘first-time home buyer’ restrictions when you use a TFSA withdrawal to fund your down payment, there are no dollar limits on the amount you can use, and there is no requirement to repay your TFSA withdrawal so you won’t encounter tax issues down the road. Your TFSA withdrawal will create more contribution room in the year following the withdrawal and that could be a benefit.
• If you are able to maximize your RRSP contributions, you might consider using those tax savings to make TFSA contributions and eventually make your down payment using a combination of the HBP and a TFSA withdrawal. But because the TFSA is new, it could take you a number of years to build up enough of a TFSA balance to fund or partially fund your down payment.
These are your choices – whether it’s buying your first home, figuring out how to pay for it … or any other aspect of your financial life, a professional advisor can help you make the right choices for your situation.
This is presented for general information only. Consult your financial advisor for advice on the right choices for your financial situation.
What is new for Canada's Federal Tax Filing for Tax Year 2009?
