Articles
Budget 2009: A Package Aimed At Stimulating Spending - Page 1
First Posted: February 5, 2009
By Bennett Gold LLP, Chartered Accountants
The Conservative government averted a vote of confidence over its 2009 budget which contains several tax changes for businesses and individuals aimed a stimulating the stalling economy.
The government projects budget deficits of $85 billion over five years and says its stimulus plan should boost gross domestic product (GDP) 1.4 per cent this year. The country's debt-to-GDP ratio is expected to rise to 32.1 per cent by 2010-11 from an estimated 28.6 per cent in 2008-09. The ratio is then expected to return to current levels.
Ottawa said it forecasts a return to a budget surplus of $700 million in 2013-2014.
Here are highlights of the personal and business tax changes in Budget 2009:
Business Taxes
- Small business tax rate threshold: Small business income that is eligible for the 11 per cent tax rate rather than the usual 19 per cent corporate rate increases 25 per cent to $500,000 from $400,000, effective Jan. 1, 2009.
- Capital cost allowances: The budget extends for two years the 50 per cent accelerated capital cost allowance (CCA) rate on manufacturing and processing machinery and equipment purchased in 2010 and in 2011.
The budget also proposes a two-year, 100 per cent CCA rate for computers and software acquired between Jan. 27, 2009 and Feb. 1, 2011. The computer tax shelter property rules, which prevent investors from using CCA deductions to shelter other income, will apply under the new rate.
- Scientific Research and Experimental Development (SRE&D): The phase-out range for the $3 million annual expenditure limit for claiming SR&ED investment tax credits for rise to $500,000 - $800,000 from $400,000 - $700,000. This change applies to 2010 and subsequent tax years.
- Mineral exploration credit: The budget extends the 15 per cent tax credit for flow-through share investors by one year, to March 31, 2010.
- Eliminating tariffs: The federal government plans to permanently eliminate tariffs on a range of imported machinery and equipment. The move affects companies in such sectors as forestry, energy and food processing, which must purchase specialized equipment from overseas to modernize their operations and enhance competitiveness.
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