Canadian Income Tax Update For 2009
Income Tax Update for 2009
The Canada employment credit increases from $1019.00 TO $1044.00. This credit is available to all tax payers that have employment income. This is a non-refundable credit equal to the amount of the claim times the lowest tax rate. Personal amounts and other Non – refundable Tax Credits are indexed to inflation so that most credits are increased by 2.5%.
The Basic personal amount and spouse or common-law partner amount were increased from $9,600.00 to $10,320.00. The Federal Tax brackets have been increased so that you can make more and pay less in 2009 than 2008. The lowest bracket on which 15% tax is paid was increased from $37,885 to $40,726, and 22% payable on $40,726 to $81,452, 26% on $81,452 to $126,264 and 29% on income in excess of $126,264.
Canada Child Tax Benefit – The net income level at which the Child Tax Benefit, and Disability Benefit Supplement begins to be phased out was increased to$40,726 for the July 2009 to June 2010 benefit year. Because the amount of the benefit is based on income, taxpayers must file returns in order to receive it. If a person is married or living common law, both spouses must file returns. The basic Canada Child Tax Benefit for July 2009 to June 2010 is $1,340 for each child plus an additional $93.00 for the taxpayers third and each additional child. These payments are not included in income and are thus not taxable.
Universal Child Care Benefit – This is a benefit of $100.00 per month for each child under the age of 6 years and is paid for the purpose of reducing child care costs. This is a taxable benefit and must be reported by the Spouse or Common law partner with the lower net income.
Employment Insurance Clawback – The net income threshold at which EI benefits must be paid back is increased from $51,375 to $52,875. An exception is made for first time claimants who are defined as having received less than one week of EI Benefits in the last 10 years. The clawback is equal to the lesser of 30% of regular benefits and 30% of net income in excess of $52,875.
Home Buyers Plan- The maximum that first time home buyers can withdraw from their RRSP under the Home Buyers Plan has been increased from $20,000 to $25,000. The change applies to withdrawals made after Jan 27 2009. The maximum repayment period remains at 15 years.
First Time Home Buyers Tax Credit- New for 2009 for first time home buyers on homes with a closing date after Jan 27 2009 a personal amount of $5,000 may be claimed. This is a non-refundable tax credit and therefore results in (5000 x 15%) a tax credit of $750.00.
Age Amount- This credit was increase by an additional amount of $1000 above the inflation indexed amount and is $6,408 for 2009. Repayment of Old Age Security Benefits- The net income threshold at which the tax payer becomes subject to the clawback is increased from $64,718 to $66,335 for 2009. This is a summary of the major changes for 2009.
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Canadian Income Tax FAQ:
Question: How many days can a British citizen spend in Canada before they have to pay Canadian income tax?
How many days can I ,a British citizen spend each tax year as a non resident in Canada before the Canadian Tax Authourites judge me to be liable to pay Canadian Income Tax.I am a tax exile from Britain..Also when does the Canadian tax year begin and end.
Answer: Individuals resident in Canada are required to report and pay income tax on their world wide income earned for the portion of the year (calendar) that they were so resident. This period could be a matter of days, weeks or months, there is no minimum or maximum time consideration. The only consideration is the individual’s status as a resident which is a matter of fact to be determined based on the particular circumstances surrounding that person’s presence in Canada.
If as you say, you are a tax exile of Britain and this has caused you to sever all ties to the UK prior to arriving in Canada, you may well have become a resident of Canada at the time you arrived here. In most cases, persons emigrating to Canada are taxed on the income they earned for the portion of the year that they were present in the country.
Individuals who spend an aggregate of 180 days or more in Canada during a calendar year are deemed to be resident in Canada “through out the entire year” and are required to file a tax return for that year and report income for the year from all sources both inside and outside of Canada. Double taxation of income taxed in other jurisdictions is avoided through the foreign tax credit mechanism provied for under the Canadian Income Tax Act in concert with an array of bilateral income tax treaties between Canada and various countries of the world.
More information on the issue of Canadian income tax liability and residential status can be obtained at the Canada Revenue Agency website.
Question: Paying Canadian income tax on income made from the USA?
Kinda of two questions:
1) Do I have to pay Canadian income tax on income made and taxed by the USA?
2) Are American companies required (or do they even do it) to report earnings to the Revenue Canada or is it up to the Canadian citizen to report it?
Answer: If your a Canadian resident, you have to report your world income (income from within and outside Canada).
1) If your US income has been taxed there, the Canada Revenue Agency (CRA) will provide a foreign tax credit for your US income to be reported on your cdn tax return.
2) American companies are not required to report (and they don’t) report their earnings to the CRA. However, the IRS & CRA do have automatic information exchange under the tax treaty that may allow the IRS to provide to the CRA the earnings of Canadians made in the US, and vice versa.
Question: Do I have to pay Canadian income tax if I work and live abroad but own a house in Canada which is used.
Answer: You have to pay cdn tax for your world income if you are considered a cdn resident. You would be a cdn resident if you have a cdn home, have cdn economic and social ties. For example, if you are paid by a cdn employer for temporarily outside canada, and your wife and kids are still in canada living in your cdn house.
On the other hand, if you have cut off all your cdn social and economic ties, and you are paid by a foreign employer, you may be considered as a non resident of canada. In that case, you only pay cdn taxes on your following sources of cdn income: employment income, business income and disposition of taxable cdn property. If you have rented out your cdn home, you also need to pay taxes on the rental income.
Question: Do I pay Canadian income tax on selling a painting that was given to me as a gift?
I am about to auction a painting for alot of money. Initially it was given to me as a present by a friend who is now 20 years later a famous artist. Do I need to pay tax on the money I make selling that painting at auction?
Answer: Yes, it is considered “listed personal property”.
Question: When was the Canadian income tax first introduced and why was it introduced?
Answer: Income tax was introduced in 1917 as a temporary measure to pay for World War One.
Question: I have a canadian income tax questions?
Does anyone know how many years you can go back to claim medical prescription costs for income tax in Canada. I have never claimed my out of pocket expenses on my taxes. I have health insurance which covers 80% but the 20% I pay out of pocket and I am only now finding out that those expenses could be claimed. How far back can I go?
Answer: You may file the medical claim if the payment is within 3 prior years from the earliest date of the notice of assessment to you, i.e., the normal reassessment period for an individual. Claiming beyond the 3 years requires you to have an excuse, i.e., circumstances beyond your control, for example, you were on a extended sick leave, natural disaster had misplaced your medical records, etc. Another opportunity to claim for a tax return beyond the 3 yrs is that the taxable income for that prior yr is NIL, and you have not requested a “loss determination” from the CRA for that tax return.
Note also that for your “unclaimed” 20% medical expenses your medical expenses must total more than $1,926, or 3% of your net income, whichever is less.
Question: Can my ex and I each declare a child on our canadian income tax return?
My wife and I have been seperated for three years now and I was just wondering if each of us can claim a dependant. My son (4) lives with me and my daughter (5) lives with my ex. because of this neither of us pay child support. I have always done my taxes but i’m unsure this year about whether we can each claim for the eligible dependant. The past couple years only my ex has declared a child.
Answer: Yes if you were the primary caregiver of a child that you supported at some time during the year you may claim the eligible child amount Only one person can claim the child so if there was two children and they each lived with one of you then it is possible for each of you to claim a child. Remember though the eligible dependent can only be claimed if you do not have a spouse if you do have a spouse than only the child amount can be claimed on line 367 and not the eligible dependent amount on line 305.
Question: How much can a single guy earn before he has to start paying Canadian income tax?
Answer: The previous amount was $9,600 federally. However, the system does not work such that you make the first $9,600 and pay no tax. If you are paid $400 a week you will be taxed as that amount will be pro-rated (400 x 52 weeks = about $20K) so they will start to deduct taxes from your first paycheque.