Resource Centre
Major 2009 Federal and Provincial Changes
Affecting Individuals
CPI Adjustment to Income -Tax Brackets and Non -Refundable Tax Credits
The taxable income thresholds in all four federal tax brackets were increased by 2.5 per cent in 2009 to mirror changes in the consumer-price index (CPI). Furthermore, all indexed non-refundable tax credits also increased by 2.5 per cent in 2009 in order to reflect the CPI adjustment. Please see the chapter on Federal and Ontario non-refundable tax credits, as well as Appendices I & III, for further details
Increase in Basic Personal, Spousal & Eligible Dependant Amounts
The 2009 federal budget increased the basic personal, spousal and eligible dependant amounts beyond the projected CPI increase. The new amounts for all three non-refundable tax credits in 2009 is $10,320 (up from the CPI projected $10,100).
Increase in Threshold for Lower - and Middle -Income Tax Brackets
The 2009 federal budget increased the lower and middle tax bracket threshold beyond the projected CPI increase. The new level for the lowest tax bracket is $40,726 (up from the CPI-projected $38,832) and for the middle tax bracket it is $81,452 (up from $77,664). These increases will also affect the Canada child tax benefit (CCTB), child disability benefit (CDB), and national child benefit (NCB) supplement.
Increase in Age Tax Credit
The 2009 federal budget increased the age tax credit for taxpayers 65 and over to $6,408. This is $1,000 more than the projected CPI increase for 2009 to $5,408.
Increase in RRSP Withdrawal Limit from Home Buyers’ Plan
Commencing January 28, 2009, first-time home buyers can temporarily withdraw, without tax consequences, a maximum of $25,000 from their registered retirement savings plan (RRSP). This is up from the previous limit of $20,000.
Tax-Free Savings Account (TFSA)
The 2008 federal budget introduced a new tax-free savings account (TFSA) which, beginning in 2009, allows Canadians who are 18 and older to save up to $5,000 per year in the 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income, including capital gains earned within the TFSA are not subject to tax, even when the funds are ultimately withdrawn.
Increase in RRSP Annual Contribution Limit
The annual RRSP contribution ceiling was raised to $21,000 in 2009, from $20,000 in 2008. It is scheduled to rise to at least $22,000 in 2010, after which the annual maximum contribution rates will be indexed to reflect increases in average wage growth.
Increase in RPP Annual Contribution Limit
Money-purchase plan registered pension plan (RPP) contribution limits
increased in 2009 to $22,000, from $21,000 in 2008; in future, they will be indexed annually to account for the average wage growth.
The maximum annual contribution limit for defined-benefit RPPs also
increased in 2009 to $2,444 per year of service, up from $2,333 in 2008; in future they will be indexed on an annual basis to reflect increases in average wage growth.
Canada Child Tax Benefit Payments (CCTB)
Beginning July 2009, CCTB national child benefit (NCB) supplement payments to Canadians rose to $2,076 for the first child (from $2,025), $1,837 for the second child (from $1,792) and $1,747 for each subsequent child (from $1,704).
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.
Introduction of Temporary Home Renovation Tax Credit (HRTC)
The 2009 federal budget proposed a temporary home renovation tax credit (HRTC) of 15 per cent on eligible expenditures in excess of $1,000, and up to $10,000 for work performed or goods acquired in relation to certain home (including cottage) renovations of an enduring nature incurred between January 28, 2009 and January 31, 2010, inclusive. This credit, worth up to a maximum $1,350, will only apply to the 2009 taxation year.
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.
Increase in Ontario Child Benefit
The Ontario child benefit (OCB) maximum increased to $1,100 on July 1, 2009 (up from $600), reduced by eight per cent of adjusted family net income in excess of $20,000.
The OCB payment timetable has been accelerated by two years. It was originally supposed to rise to an annual maximum of $1,100 per child by July 2011. The government has committed to increasing the OCB annual maximum to $1,310 per child by approximately the end of 2013.
New Harmonized Sales Tax
The Ontario government announced in its 2009 budget that it intends to adopt a harmonized sales tax (HST) on July 1, 2010. The HST will be 13 per cent, combining the provincial retail sales tax of 8 per cent, with the federal goods and services tax (GST) of 5 per cent.
Reduction in Lowest Personal Income Tax Rate in 2010
The Ontario government announced its intention to reduce the rate in the lowest provincial tax bracket by one percentage point, from 6.05 per cent, to 5.05 per cent, effective January 1, 2010.
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 is worth up to $250 in 2009; and will increase to $500 in 2010 and subsequent years.
