Newsletter Page 4 - Dean Constand - Toronto Certified General Accountant

       Newsletter Page 4 - Toronto Certified General Accountant

      Newsletter March 2009

                                 Tax Planning and the Proposed 2009 Federal Budget

Personal Income Tax (Page 4)

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

      Given the current economic downturn, however, your RRSP values may have fallen dramatically,
      and you may not want to pull money out of RRSPs and realize your paper losses that could rise in
      value again in the future. In spite of the tax-free Home Buyers’ Plan withdrawal, it may not make
      economic sense for you now to use this tax incentive. Don’t let tax incentives take your attention
      away from making sound economic decisions, or “don’t let the tail wag the dog”.

       Budget Introduces Home Buyers’ Tax Credit
       Tax Plan: Allows First-Time Home Buyers a Personal Tax Credit

      For 2009 and subsequent years, first-time home buyers who complete a purchase of a home after
      January 27, 2009 can claim a personal tax credit based on an amount of $5,000. In 2009 this tax
      credit translates to $750 in tax savings federally (15% x $5,000), or enough for your closing costs.
      Similar to the Home Buyers’ Plan, you or your spouse or common law partner cannot own a home
      in any of four preceding years before the year of purchase, and if you are disabled, you don’t
      have to meet the first-time home buyer condition to get the credit.

       Budget Introduces Deduction for Fall in RRSP and RRIF Values After Death
       Tax Plan: Executor can Request To Carry Back Deduction to Final Return

      Currently, the value of an individual’s RRSP or RRIF (Registered Retirement Income Fund) at the
      time of death is generally included in the deceased individual’s income for the year of death. Any
      increases in these investments since death is generally included in the income of the beneficiaries
      upon distribution.

      For final distributions that occur after 2008, from a deceased individual’s RRSP or RRIF, the budget
      proposes to allow a deduction on the deceased individual’s year-of-death or final return for the
      amount of post-death decreases in these investments up until the final distribution.

      Following the final distribution, the deceased individual’s executor or legal representative can
      request a reassessment to carry back the deduction to the individual’s final return.

      In closing, we will all need to stay tuned to the media to see if the proposed federal budget
      receives final approval.

      Stay Tuned….

      My next letter will discuss the topic of death and taxes.

         Dean Constand C.G.A. publishes this newsletter for informational purposes only.
       Although the material contained within this document has been carefully prepared,
                                        it is not a substitute for professional advice.

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