Newsletter Page 3 - Dean Constand - Toronto Certified General Accountant

       Newsletter Page 3 - Toronto Certified General Accountant

      Newsletter March 2009

                                 Tax Planning and the Proposed 2009 Federal Budget

Personal Income Tax (Page 3)

       Budget Raises Ceilings for Two Tax Brackets
       Tax Plan: Anticipate Reduction in Tax Withheld from April to December 2009

      The chart below shows the different tax brackets for Ontario taxpayers for 2008 and 2009. All tax
      brackets have been inflation adjusted for 2009. The proposed 2009 Federal Budget has raised the
      ceilings for two tax brackets asterisked in the chart below. For example, in 2008, once your income
      reached $37,885, your tax rate increased to 31.15% from 24.15% for each additional dollar earned.
      Under the proposed budget, your income must be $40,726 in 2009 before you start to pay tax at
      31.15% for each additional dollar earned.

      If you fall into the two raised tax brackets, you should see a reduction in tax withheld starting in
      April 2009. The amount of the reduction in tax withheld over the remaining nine months of 2009
      will be the same as if these measures had been in place for the entire year.

Income
Range

2008
Personal Income
Tax Rate %

Income
Range

2009
Personal Income
Tax Rate %

$36,020

24.15

$36,848

24.15

$37,885

31.15

$40,726

31.15

$63,430

32.98

$64,889

32.98

$72,041

35.39

$73,698

35.39

$74,721

39.41

$76,440

39.41

$75,769

43.41

$81,452

43.41

$123,184

46.41

$126,264

46.41

                                       * Proposed budget raises ceilings for these tax brackets

       Budget Raises Age Amount, Spouse Amount and Amount for Eligible Dependant
       Tax Plan: File a Revised TD1 Form with Employer to Reduce Tax Withholdings

      Please refer to my September 2008 and December 2008 newsletters that discuss claiming personal
      tax credits early at work by filing a TD1 Form with your employer.

       Budget Raises Home Buyers’ Plan (HBP) Withdrawal Maximum
       Tax Plan: Allows First-Time Home Buyers to Withdraw More RRSP Tax-Free

      The Home Buyers’ Plan introduced in 1992 is a program that allows you, as a first-time home buyer,
      to withdraw funds from an RRSP tax-free to buy or build a home for yourself or for a related person
      with a disability. If you are disabled you don’t have to meet the first-time home buyer condition, as
      long as you acquire a home that is more accessible or better suited to your needs. In addition,
      “first-time” home buyer is a misnomer because you or your spouse or common-law partner cannot
      own a home in any of four preceding years before the year of withdrawal. Those who wish to
      withdraw in 2009, for example, could have owned a home in 2004 or earlier.

      The maximum amount that an individual could withdraw from an RRSP without having to pay tax on
      the withdrawal was $20,000. For 2009 and subsequent years, the budget has raised the maximum
      to $25,000. Withdrawn amounts are repayable to your RRSP in equal sums over 15 years,
      beginning no later than the second year following the withdrawal.

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