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March 2010 – 2010 Tax Guide
March 03, 2010
Outline Welcome Home Renovation Tax Credit Tax Savings for Canadians
Welcome Dear Constituents, Our Conservative Government is helping you pay less tax. Since first taking office in 2006, we have:
Please do not hesitate to contact me or the Canada Revenue Agency at 1-800-959-8281 or online at www.cra-arc.gc.ca for more information. Sincerely, Gord Brown Member of Parliament Home Renovation Tax Credit You have just finished the basement to give the kids more room to play or put in a new bathroom. Now that you’ve hung up your tool belt or said goodbye to your contractor, there’s just one last thing to do: Save money! Canadian homeowners who carried out home renovation projects are eligible to save up to $1,350 on their taxes this year thanks to our Conservative Government’s Home Renovation Tax Credit (HRTC), a key part of Canada’s Economic Action Plan. The HRTC can help Canadian families save on all kinds of home renovation projects by providing a temporary non-refundable 15-per-cent income tax credit for work performed, or goods acquired, after January 27, 2009 and before February 1, 2010. Eligible renovations carried out on a homeowner’s house, condo or cottage, include projects like renovating the kitchen, paving a driveway or laying new sod. Meanwhile, it doesn’t matter whether you carried out the work on your home yourself or hired a local contractor to do it for you, what’s important is that you keep the receipts for all materials purchased or work done over the course of the renovations in order to be eligible to receive the tax credit. Tax Savings for Canadians Tax-Free Savings Account (TFSA) Canadians have many reasons to save for their future. From purchasing a new car, taking on a home renovation, or going on that dream vacation, the Tax-Free Savings Account (TFSA) can help all Canadians work towards their financial goals. Our Conservative Government’s TFSA is a flexible, registered savings account that allows Canadians to save for their future. Investment income, including capital gains, earned within the account is not taxed and withdrawals are tax free. No matter what your income level, the TFSA can help you save money. Canadians who are 18 and older can contribute up to $5,000 every year, with unused room being carried forward. Whether you’re just starting out, or thinking about retirement, the TFSA is a great way to save money and keep your hard-earned dollars in your pocket. Public Transit Tax Credit Our Conservative Government believes that Canadians who choose public transit for work or recreation deserve extra help. By choosing public transit, you are making a choice that’s good for your wallet and for the environment. Our Government is helping you save even more with the Public Transit Tax Credit. The Public Transit Tax Credit allows Canadians to claim a non-refundable tax credit of 15% of the cost of their monthly or yearly public transit passes. This means that if you buy transit passes that cost $85 per month, you could save over $150 per year. That’s like getting almost 2 months for free. In addition to helping our environment and easing congestion on our roads, the Public Transit Tax Credit can help you see real savings on your tax bill this year. Retain your receipts as proof of purchase – because whether you’re going to work, taking your children to daycare, or heading to the movies, our Public Transit Tax Credit will make it more affordable to get you where you need to go while helping our environment at the same time. Tax Savings for Families Children’s Fitness Tax Credit Our Conservative Government is taking action to help families make ends meet. At the same time, we are working to help parents teach their kids leadership, sportsmanship and healthy lifestyles. Through the Children’s Fitness Tax Credit, our Conservative Government is helping more parents enrol their kids in sports and fitness programs. The Children’s Fitness Tax Credit allows parents to claim a 15% tax credit on up to $500 per child under 16 against the fees for programs like ballet, hockey and soccer. Additionally, parents of children with disabilities can claim a credit on an additional $500 per child, provided they meet the eligibility requirements. Programs that help encourage our kids to be fit and stay active will pay off for their entire lives. With the Children’s Fitness Tax Credit, our Conservative Government is helping Canadian families put their kids on the right track for the future. The Child Disability Benefit & The Registered Disability Savings Program Our Conservative Government is working hard to support families. Through measures like the Child Disability Benefit and the Registered Disability Savings Plan, we are taking action to help Canadian families facing unique challenges. Since taking office in 2006, our Conservative Government has worked to help low and moderate-income families of children with disabilities by increasing the Child Disability Benefit. As well as increasing the value of the benefit that Canadian families can receive, we have also taken action to ensure that more families will be able to access the Child Disability Benefit. Our Conservative Government has also created the Registered Disability Savings Plan (RDSP). Like the Registered Education Savings Plan (RESP), this action by our Government provides Canadian families a new option to save for the future. We took this action on the recommendation of our Expert Panel on Financial Security for Children with Severe Disabilities. Depending on family income, eligible families who contribute to an RDSP will have their contributions matched with government grants up to a maximum lifetime total of $70,000 per beneficiary. As well, for low and –moderate-income families, Canada Disability Savings Bonds will be provided up to a maximum total of $20,000 per beneficiary. Finally, the investment interest earned by an RDSP is tax-free as long as it remains in the account. Our Conservative Government is taking real action to support families of children with disabilities. Universal Child Care Benefit Being a parent is about making choices. Our Conservative Government believes that, when it comes to children, parents know best. That’s why we created the Universal Child Care Benefit (UCCB). The UCCB provides families with $100 per month for each child under the age of 6. That’s $1,200 per child, per year. The UCCB allows parents to decide what is best for their kids. Rather than try to apply a ‘one size fits all’ approach, the UCCB lets parents choose. Whether that choice is daycare, staying with a relative or having Mom or Dad stay home, the decision rests with parents, as it should. Our Conservative Government is working to give Canadian families real choice in child care. Tax Savings for Seniors Doubling the Pension Income Amount Our seniors have worked hard and paid their dues. That’s why our Conservative Government is delivering real tax savings for them. But not only have seniors paid taxes, they have also saved for their retirement. Years ago, the Canadian government introduced a non-refundable pension income credit to apply to the first $1,000 of eligible pension income. This measure had been left unchanged for almost 20 years. And a lot has changed in 20 years. To provide greater tax support for those who have saved for their retirement, we increased the maximum amount of eligible pension income that could be claimed to $2,000. This results in even more savings that will make a real difference for pensioners. Increasing the Age Amount Canadian seniors have worked hard to put aside money for their retirement throughout their working lives. When every dollar counts, an increase to the Age Amount in 2009 will help low and middle-income seniors keep more money in their own bank accounts. The Age Amount helps seniors aged 65 and over claim up to $6,408 in allowable income, saving seniors as much as $961 on their taxes this year. Since taking office, our Conservative Government increased this allowable amount by $2,000, providing even more support to Canadian seniors. To be eligible for the tax credit, seniors must have an income less than $75,032 during the 2009 tax year. To benefit from the tax credit, seniors can ask their pension providers to reduce the amount they withhold for taxes. They can immediately reduce this amount of their monthly tax instalments or they can claim it on their income taxes at year end. Any unused portion of the tax credit can be transferred to a senior’s spouse or partner. After a lifetime of saving for their retirement, our Conservative Government is helping seniors hold onto more of their money. Pension Income Splitting Through our Tax Fairness Plan, our Conservative Government has introduced Pension Income Splitting to help ease the tax burden on Canadian pensioners. Our current tax system generally has each individual Canadian paying taxes on their full income earned. Pension Income Splitting allows any Canadian resident who receives qualifying pension income to allocate to their spouse (or common-law partner) with whom they reside, up to one-half of that income. In doing so, a pensioner and their family can dramatically reduce their tax load. With Pension Income Splitting, our Conservative Government is helping to keep more money in the pockets of retired Canadians. Increasing the Age Limit for Converting RRSPs to RRIFs Registered Retirement Savings Plans (RRSP) provide one of the best opportunities for Canadians to save for the future. Because RRSP contributions are not taxable, they provide an ideal way to plan for retirement. However, some Canadians are held back by the way RRSPs are structured right now. Even though they choose to continue working past 69, they have been required to convert their RRSP into a Registered Retirement Income Fund (RRIF) and begin making withdrawals. Our Conservative Government is taking action for Canadians nearing retirement. We have increased the age limit for converting RRSPs to RRIFs from 69 to 71. Now, more Canadians will have the freedom to choose when they would like to convert their RRSPs. We are delivering tax savings and choice for Canadian seniors. Tax Savings for Home Buyers First-Time Home Buyers’ Tax Credit Anyone who has purchased a home knows first-hand that the fees associated with the purchase can really add up. Saving up for a down payment is challenging, and costs like legal fees and land transfers can cost you plenty. To help Canadians with the costs associated with purchasing a home, our Conservative Government has introduced the First-Time Home Buyers’ Tax Credit. The First-Time Home Buyers’ Tax Credit will allow Canadians to save up to $750 in tax relief on qualifying homes purchased after January 27, 2009. The First-Time Home Buyers’ Tax Credit is also available to existing homeowners who are eligible for the Disability Tax Credit (DTC) who purchase a more accessible or functional home to better suit their needs, or for the benefit of a DTC-eligible person who is related to the individual purchasing the home. A home is arguably the biggest purchase Canadians will make in their lifetime. Our Conservative Government is helping to make buying a home easier for first-time home buyers. Home Buyers’ Plan For many first-time home buyers or builders, saving for a down payment can be the most challenging part, especially during the global recession. To help Canadians afford their first big purchase, our Conservative Government has raised the amount Canadians can withdraw from their Registered Retirement Savings Plan (RRSP) for a down payment on their first home. Through Canada’s Economic Action Plan, our Conservative Government is increasing the maximum Canadians can withdraw from the RRSP for a home purchase to $25,000 with respect to withdrawals made after January 27, 2009. The amount must be repaid over a 15-year period, starting the second year of withdrawal. This is the first time the withdrawal limit has been increased since 1992. Through these important actions, our Conservative Government is helping Canadians realize their dream of buying a new home. Tax Savings for Working Canadians Apprenticeship Job Creation Tax Credit The current economic situation in Canada makes hiring new labourers and apprentices a challenge for employers. However, apprentices depend upon these valuable work experiences in order to learn a new trade. For businesses who are hoping to make the most of every dollar while continuing to employ trades people in training, our Conservative Government has introduced the Apprenticeship Job Creation Tax Credit. Since May 1, 2006, employers who employ an eligible apprentice in a skilled trade like brick laying, hair styling or mechanical repair in the first two years of an apprenticeship contract that is registered with the federal, provincial, or territorial government can be eligible to receive a non-refundable tax credit equivalent to 10% of the salaries and wages paid to the apprentice. This can translate into tax savings for an employer of up to $2,000 per eligible apprentice. A complete list of eligible apprentice trades can be found at: www.red-seal.ca. [www.sceau-rouge.ca for French] Our Conservative Government is helping bring employers and apprentices together, creating jobs and helping Canadians build meaningful, valuable careers. Tradesperson Deduction for Tools Construction and trade workers need tools to carry out their jobs each and every day. But often these hard working Canadians have to pay for these expenses upfront and out of their own pockets. To ease the burden of these expenses on construction and trade workers, our Conservative Government has introduced a tax deduction on tools that will help these workers save money this tax year. You can deduct the cost of eligible new tools purchased during the 2009 tax year when you spend over $1,044, up to a maximum of $500. Construction and trade workers work hard for their money so our Conservative Government is working hard to help them save on their taxes. Benefits for Small Business Owners, Farmers and Fishers When a family farm, small business or fishing enterprise passes from one generation to the next, the property is subject to Capital Gains Tax. In years previous, the first $500,000 of the value was tax-free. Our Conservative Government is helping small business owners, farmers and fishers keep their businesses in the family by increasing this exemption to $750,000. By increasing the Lifetime Capital Gains Exemption, our Conservative Government is taking real action to help keep family farms where they belong: in the family. Working Income Tax Benefit For too long, many Canadians who relied on social assistance faced big challenges in joining the workforce. For those low-income Canadians, landing a job could cost them in both higher taxes and reduced income support. This meant that Canadians who found a job could end up with less money in their pockets than before they found a job. Our Conservative Government is taking action with the Working Income Tax Benefit (WITB). This benefit is a refundable tax credit that supplements the earning of low-income workers to make it easier for them to make ends meet and ensure they aren’t penalized for getting a job. What’s more, for low-income working Canadians with disabilities facing even larger barriers to workforce participation, WITB provides an additional disability supplement. As part of Canada’s Economic Action Plan, our Conservative Government went further by doubling the benefits provided by the Working Income Tax Benefit. When first introduced in 2007, the WITB benefited close to one million Canadians. After enhancing the WITB we expect that more than 1.5 million people will benefit from it for the 2009 tax year. Our Conservative Government is committed to making work pay for low-income Canadians. Canada Employment Amount Having a job can mean many different work-related costs. From uniforms and safety gear to home computers, there are some supplies that are a necessity for employees to do their job. Why should work-related expenses limit the rewards of hard-working Canadians? Our Conservative Government believes that Canadians should not be penalized for getting a job. In order to put money back into the pockets of working Canadians, we have introduced the Canada Employment Amount. Every Canadian employee qualifies for a tax credit of up to $1,044 in 2009. This credit increases the amount of income Canadians can earn without paying federal income tax. Our Conservative Government is always working to lower your taxes; and through this credit, we are making it easier for Canadians to keep the returns from their hard work. Meal Exemption For Long-Haul Truck Drivers When your job includes travelling Canada’s roads, extra expenses will occur. From meals to gas, it can really add up. In general, the Canadian tax system limits business-related meal, entertainment, and other expenses to be deductible only up to 50 per cent. For the 2009 tax year, long-haul truck drivers in Canada can claim up to 70 per cent of meal expenses. Now, thanks to action by our Conservative Government, we are raising the deductible portion of meal expenses to 75 per cent for 2010. In 2011 this rate will go up again to 80 per cent. Long-haul truck drivers are getting more money back in their pockets for their time spent on Canada’s roads. Our Conservative Government is delivering real results for hardworking people in Canada. Tax Savings for Students Textbook Amount The costs of post-secondary education can be challenging for Canadian students and their parents. Along with tuition and living expenses, textbooks are a necessary part of post-secondary learning. Our Conservative Government is taking action to help offset the cost of the post-secondary education with the textbook tax credit. The credit is calculated based on the lowest personal income tax rate for the taxation year – 15% for 2009. For a full-time student, the amount that the credit is calculated on will be $65 for each month he or she qualifies for the full-time education tax credit – $20 per month for part-time students. That means a full-time student of 8 months would qualify for a tax credit on $520. Furthermore, if students have unused textbook tax credit amounts, they will automatically be brought forward to the next year. The Textbook Tax Credit is another way that our Conservative Government is helping Canadian students achieve their dreams and their potential. Scholarship & Bursary Exemption Canada’s students work hard to earn good grades while paying for their schooling. Our Conservative Government is helping to ease the tax burden on hardworking students that achieve strong results by exempting scholarships, fellowships and bursaries from their income. For too long, students that were recognized for exceptional results with scholarships and bursaries had to pay taxes on those rewards. Our Conservative Government took swift action when we came to power and had scholarships and bursaries exempted from income taxes. Combined with our textbook tax credit, our Conservative Government is taking real action to help make post-secondary education easier for Canadian students. Getting an education shouldn’t be taxing. Our Conservative Government is helping students and their families make post-secondary education more affordable and more attainable. Questions? For more information about these and other tax measures call CRA at 1-800-959-8281 or visit online at www.cra-arc.gc.ca |
 March 17, 2010
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