Income Tax Update for 2009

The Canada employment credit increases from $1019.00 TO $1044.00. This credit is available to all tax payers that have employment income. This is a non-refundable credit equal to the amount of the claim times the lowest tax rate.

Personal amounts and other Non – refundable Tax Credits are indexed to inflation so that most credits are increased by 2.5%.

The Basic personal amount and spouse or common-law partner amount were increased from $9,600.00 to $10,320.00

The Federal Tax brackets have been increased so that you can make more and pay less in 2009 than 2008. The lowest bracket on which 15% tax is paid was increased from $37,885 to $40,726, and 22% payable on $40,726 to $81,452, 26% on $81,452 to $126,264 and 29% on income in excess of $126,264.

Canada Child Tax Benefit – The net income level at which the Child Tax Benefit, and Disability Benefit Supplement begins to be phased out was increased to$40,726 for the July 2009 to June 2010 benefit year. Because the amount of the benefit is based on income, taxpayers must file returns in order to receive it. If a person is married or living common law, both spouses must file returns. The basic Canada Child Tax Benefit for July 2009 to June 2010 is $1,340 for each child plus an additional $93.00 for the taxpayers third and each additional child. These payments are not included in income and are thus not taxable.

Universal Child Care Benefit- This is a benefit of $100.00 per month for each child under the age of 6 years and is paid for the purpose of reducing child care costs. This is a taxable benefit and must be reported by the Spouse or Common law partner with the lower net income.

Employment Insurance Clawback- The net income threshold at which EI benefits must be paid back is increased from $51,375 to $52,875. An exception is made for first time claimants who are defined as having received less than one week of EI Benefits in the last 10 years. The clawback is equal to the lesser of 30% of regular benefits and 30% of net income in excess of $52,875.

Home Buyers Plan- The maximum that first time home buyers can withdraw from their RRSP under the Home Buyers Plan has been increased from $20,000 to $25,000.  The change applies to withdrawals made after Jan 27 2009. The maximum repayment period remains at 15 years.

First Time Home Buyers Tax Credit- New for 2009 for first time home buyers on homes with a closing date after Jan 27 2009 a personal amount of $5,000 may be claimed. This is a non-refundable tax credit and therefore results in (5000 x 15%) a tax credit of $750.00.

****Also note our previous Blog on the Home Renovation Tax credit – new for 2009

Age Amount- This credit was increase by an additional amount of $1000 above the inflation indexed amount and is $6,408 for 2009.

Repayment of Old Age Security Benefits-  The net income threshold at which the tax payer becomes subject to the clawback is increased from $64,718 to $66,335 for 2009.

This is a summary of the major changes for 2009. To sign up for our no hassle income tax preparation service for 2009 click here or for more information click here.



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