A Review of Major 2009/2008 Federal and Provincial Changes Still Applicable for 2010

Tax-Free Savings Account (TFSA)
The new tax-free savings account (TFSA) which began in 2009, allows Canadians who are 18 and older to save up to $5,000 per year in a TFSA investment vehicle. Unlike an RRSP, investors cannot deduct contributions to a TFSA for tax purposes; however, investment income, including capital gains earned within the TFSA are not subject to tax, even when the funds are ultimately withdrawn.

New First -Time Home Buyers’ Tax Credit (HBTC)
First-time home buyers who purchase a qualifying home on or after January 28, 2009 are eligible for a non-refundable tax credit of up to 15 per cent on $5,000, or $750.

Land Transfer Tax Refund Program
The province’s December 2007 minibudget expanded the provisions of Ontario’s existing land transfer tax refund available to first-time purchasers of newly constructed homes to encompass first time homebuyers of resale homes as well. Effective December 14, 2007, first time purchasers of both types of homes are eligible for a provincial refund on up to $2,000 of the land transfer tax paid for their new home. Follow this link for additional information HYPERLINK "http://www.rev.gov.on.ca/en/refund/newhome/" \t "_blank" http://www.rev.gov.on.ca/en/refund/newhome/

Seniors’ Homeowners Property Tax Grant
The 2008 provincial budget introduced a new senior homeowners’ property tax grant, beginning in 2009, to assist low- and moderate-income seniors offset their property taxes. This grant increased to $500 in 2010 and for subsequent years; up from $250 in 2009.

Pension Income Splitting
Federally - The first $2,000 of pension income is eligible for the pension credit and taxpayers are now allowed to split pension income with their spouse or partner.

Provincially - The Ontario government announced that it would also allow taxpayers to split up to 50 percent of their eligible pension income with their spouses or common-law partners.

Accounting for Online Income
The CRA announced in July 2009 that online income earned by individual and corporate taxpayers as a result of selling items via electronic sources such as eBay Canada is taxable.

RESP Lifetime Contribution Limit
The lifetime contribution limit to registered education savings plans is restricted to a maximum of $50,000. The maximum annual contribution eligible for the Canada Education Savings Grant (CESG) is $500 (20% of a $2,500 contribution). The annual contribution limit of $4,000 was eliminated.

Public Transit Tax Credits
A federal non-refundable tax credit is available for taxpayers who purchase eligible weekly (involving at least four consecutive weekly passes per month), monthly, or longer transit passes. In some instances, even shorter duration passes or electronic payment cards might be acceptable if they accumulate to allow for equivalent travel over a month or longer. Public transit could include transit of various modes, such as local bus, streetcar, subway, commuter train or bus, or local ferry. This credit applies at the rate of 15 per cent for 2010.