Tax Measure Highlights 

Personal Income Tax Measures

1. Non-refundable tax credits
   
   
   • Increase to the basic personal amount, the spousal and common-law partner amount and the eligible dependant amount to $10,320 for 2009
   • Increase upper limits of the two lowest tax brackets by 7.5 per cent; upper limit for the lowest income bracket increased to $40,726 (taxed at 15 per cent) and the second income tax bracket to $81,452 (taxed at 22 per cent).
   • The amount on which the Age Credit is based will be increased by $1,000 to $6,408 effective for 2009 with no change to the net income level at which the credit begins to be phased out.
   • These amounts will be indexed for inflation in subsequent years.
2. Home renovation tax credit (HRTC): 15 per cent of renovation costs not exceeding $10,000 incurred prior to February 1, 2010. The maximum credit of $1,350 would be claimed on the 2009 tax return. Family members would be subject to a single limit.
   
   
   • Eligible expenditures would include kitchen renovations, additions, decks, painting, new carpeting and hardwood floors. Routine maintenance, furniture and appliances would not be eligible.
   • The taxpayer’s principle residence would be eligible. In the case of condominium and co-operative housing, the individual’s share of eligible expenditures on common areas would be included.
   • The HRTC will not be reduced by other tax credits or grants.
3. First-time home buyers will be able to withdraw a maximum of $25,000 from a Registered Retirement Savings Plan under the Home Buyers’ Plan, an increase of $5,000.
   
   
   • Non-refundable tax credit for first-time home buyers, based on the amount of $5,000, who acquire a qualifying home after January 27, 2009. Individuals eligible for the disability tax credit can claim this credit when a home is purchased that is more accessible or better suited to their personal and care needs. The individual’s spouse or common-law partner can claim any unused portion.
4. RRSP/RRIF losses after death but before the proceeds are distributed to beneficiaries can be carried back and deducted against the year-of-death RRSP/RRIF income.
5. Eligibility for the Mineral Exploration Tax Credit extended by one year for flow-through share agreements entered into on or before March 31, 2010.

Business Income Tax Measures

1. Temporary 100 per cent capital cost allowance (CCA) rate for investment in eligible computers and software acquired before February 2011. This 100 per cent CCA rate is not subject to the half-year rule.
2. Two-year extension of the temporary 50 per cent straight-line accelerated CCA for investment in manufacturing and processing machinery and equipment acquired prior to 2010. The half-year rule continues to apply.
3. Increase in the amount of income eligible for the small business tax rate to $500,000 from $400,000
4. Section 18.2 of the Act, which limited the deductibility of interest where a Canadian corporation uses borrowed funds to finance a foreign affiliate, is to be repealed. This section was to come into force in 2012.
5. Amend the deeming rule regarding the timing of an acquisition of control of a corporation to ensure that it does not affect the CCPC status of a corporation; this would normally qualify the gains on the disposition for the $750,000 Lifetime Capital Gains Exemption.
6. Corporations that have annual gross revenues in excess of $1 million for a taxation year will be required to file their income tax returns in electronic format for taxation years that end after 2009. As well, taxpayers will be required to file electronic income tax information returns when the number of these returns is 50 or more. This is a reduction from the current 500 returns. This would apply most often in filing T4 information returns for employment income.
7. Although these requirements apply to returns filed after 2009, no penalties will be introduced for failing to comply until 2011. The penalty for not filing corporate income tax returns in electronic format will be set at $250 for taxation years that end in 2011, $500 for taxation years that end in 2012 and $1,000 for subsequent tax years.
8. Penalties for filing information returns late or in the incorrect format will be reduced from those penalties currently charged to no more than $2,500 for returns filed in the incorrect format. The penalty late-filed returns will be based on the number of late returns and the number of days late (maximum 100 days) and ranges from $10 per day to $75 per day.

Customs Tariff Measures

1. Permanent elimination of tariffs on a range of machinery and equipment when imported from outside North America. Currently these tariffs vary from 2.5 per cent to 11 per cent.

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