Budget 2009: Highlights

Finance
Minister Jim Flaherty delivered a much anticipated federal budget on Tuesday
in Ottawa.

This budget has many items that could affect your business and present
additional savings and opportunities.

Small Business

• Small business tax relief:The budget increases
  the amount of small business income eligible for the reduced federal
  tax rate of 11 per cent to $500,000 from the current limit of $400,000
  as of January 1, 2009.

1. Increased access to credit for
   small business through proposed amendments to the Canada Small Business
   Financing Program and the Business Development Bank of Canada.

• Funding for small business: The budget
  proposes $30 million over two years for the Canada Business Network
  and $10 million to the Canadian Youth Business Foundation. It would
  also allocate $200 million over two years to the National Research
  Council’s Industrial Research Assistance Program to enable it
  to temporarily expand its initiatives for small and medium-sized businesses.

Personal Lines

• Increase in home premiums: Homeowners will
  get a 15% tax credit—up to $1,350 in tax relief—on home
  improvement projects undertaken in the next 12 months. The client can
  claim the tax credit on their home, cottage or condo unit as long as
  the property is owned and used for personal use. However, the renovation
  cannot exceed the maximum of $10,000 per family. Your client will need
  to undertake and complete these renovations before Feb. 1, 2010, keep
  their receipts and claim the credit on their 2009 tax return, but remind
  them that the renovation will add value to their home.
• Potential increase in home policies: The
  budget offered tax relief for first-time home buyers. They can borrow
  up to $25,000 per person from a registered retirement savings plan
  without paying tax or interest and as long as the money is repaid within
  15 years. This is the first time the Home Buyers Plan’s withdrawal
  limit was increased since it was first introduced in 1992 (with the
  $20,000 per person limit).
• New home tax credit: First-time buyers
  will get a tax credit, which could amount to $750 worth of savings
  on closing costs for anyone purchasing a new home.

1. A new $12 billion Canadian Secured Credit
   Facility initiative will help to improve credit availability for consumers
   to purchase and lease new vehicles.

• Insurance
industry optimistic
• Business Benefits from Budget

• “Temporary” deficit to reach $85 billion
• Budget proposes increased powers for feds

• Highlights
• Quotes

• Client Template Letter

Back to Budget main page

Commercial Lines:

• A new $4 billion Infrastructure Stimulus Fund to
  provide funding to provincial, territorial and municipal infrastructure
  rehabilitation projects. Funding will be available for two years for
  projects that will begin construction during the 2009 and 2010 construction
  seasons. Under the proposed fund, provinces, municipalities and territories
  can apply to have up to 50% of eligible project costs covered for “shovel-ready” projects.
• Employment insurance premium rates will
  be frozen in 2009 and 2010. A reduction in Employment Insurance premium
  rates to $1.73 per $100 of insurable earnings, their lowest level since
  1982.
• Computer hardware and systems software
  purchases will get a temporary 100% capital cost allowance rate for
  acquisitions after January 27, 2009 and before February 1, 2011.
• For manufacturers, the budget proposes
  to extend measures announced in the 2007 and 2008 budgets; these prior
  measures gave business in manufacturing and processing sectors a 50%
  straight line accelerated rate for eligible assets acquired during
  a certain period of time. Budget 2009 proposes to extend the rate to
  investment in machinery and equipment undertaken in 2010 and 2011 as
  well.

• A repeal of section 18.2 of the Income
  Tax Act, scheduled to come in to force in 2012 will affect businesses
  by constraining the deductibility of interest in certain situations
  where a Canadian corporation uses borrowed funds to finance a foreign
  affiliate.
• Energy and mining businesses will get a
  break with a new extension to exploration tax credits, the establishment
  of a new Clean Energy Fund to support research, development and demonstration
  projects, possibly in areas of interest to “green” investors.
• Brokers involved in solvency protection may
  be pleased at plans to extend the Wage Earner Protection Program to
  cover severance and termination pay. The program currently provides
  guaranteed and timely payment of wages and vacation pay owed to eligible
  workers if employers fail to pay after declaring bankruptcy. Currently
  the assistance is worth $3,254.

 

This story was originally published by Canadian Insurance Top Broker.