If you are financial fanatic like myself, you may have already heard all about the 2009 budget.  This federal budget was meant to spur spending due to the tough economic times that we are going through.  And spend is what they did!  We now have our first deficit in 12 years, $34 billion worth, and we’ll remain in the red until 2012-2013 or so.

Unfortunately, I missed the official speech, but I did catch up via the GlobeInvestor.com highlights.  Even though there wasn’t a big announcement like the Tax Free Savings Account (TFSA) of last year, there were a few bright spots.

Here are the budget highlights that stood out for me:

Personal Tax Cuts

  1. Basic Personal Amount Increased.  In 2009, you can now make more money tax free, it’s not a lot, but every bit counts.  The basic personal amount will be $10,320 (from $9,600).
  2. Personal Tax Cuts. In addition to raising the basic personal amounts, they have also raised the ceiling on the first two tax brackets.  This will allow more money to stay in the 15% (raises to $40,726) and 22% (raises to $81,452) tax brackets.  This is great news as I plan on making more money in 2009. ;)

Home Buyers/Owners

  1. Home Renovations. Tax credit towards a home renovation with minimum spending of $1,000 and maximum of $10,000.  This basically amounts to 15% cash back, up to a maximum of $1,350 (the first $1,000 gets no tax credit).  I guess 2009 is a perfect year to fully develop my basement!
  2. First Time Home Buyers. This lucky group has a couple of doozies in this federal budget.  First, they get a tax credit on up to $5,000 worth in expenses on their first home.  Since this is a federal tax credit, they would get 15% back which is up to $750 cash back. In addition to this, the withdrawal ceiling on the RRSP Home Buyers Plan (HBP) has increased to $25,000 from $20,000.

Small Business

  1. Lower Taxes for Small Business.  I’ve written about private corporations and their taxation a few times before.  Previously, small business could make up to $400,000/year and pay a reduced tax rate.  This budget has increased this limit to $500,000.  Now, if only I could figure out how to make $500,000/year on a small business. :)
  2. Cheaper Computers.  They have temporarily allowed small businesses to claim 100% capital cost allowance on computers until Feb 1, 2011.  Typically, only a portion of the cost of a computer is claimed every year.  They must have been reading my mind because I really could use a new desktop.

There are also other notables such as increasing the maximum employment benefits claim period from 45 weeks to 50 weeks, higher transparency requirements by credit card lenders, and starting a federal financial literacy program.

If you have a bit of time, you can read about the whole budget speech here.

What part of the budget stands out for you?

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I do like the home reno tax credit, but it would have been nice to see it tied to environmental improvements (I know there was an audit program that got scrapped, but we never got around to taking advantage of it).

Yep – I’ll hopefully be buying my first houst in late August of this year and those new incentives make me a very happy potential first-time home buyer :)!

Now if prices would only crash so I can get a 2 for 1 deal (haha)

The bad news about the budget was the fact that not a huge amount of money was spent on the tax cuts. The reason this is bad is because it looks like will be quite a substantial structural deficit in the future. My understanding of the deficit last week say, was that it was based on a huge stimulus package, but it looks like alot of the deficit is based pure insufficient revenues over expenses.

Leave it to Harper. Way to erase a 10 years of budget surpluses and tight fiscal management to be erased in a few short years.

I have to say I was seriously unimpressed. They tried to do everything, so basically did nothing.

I can’t see so of the measures doing much for people losing their jobs. Five extra weeks on EI don’t mean much when it could be years before you see a recovery. The retraining part was nice, but really it lacked overall.

Not to mention the Liberals need to rubber stamp it still, so I think you are going to see some changes before it gets passed.


I am a little confused over the Home Improvement Tax Credit. If I spend $10,000, do I get $1350 back or do I get a tax credit worth $1350 which would roughly equate to $200 back. I thought that it was the latter but from your post it sounds like I may actually get $1350 back.

well if they can really implement all these then that will be great but if not then that would be very absurd on their part trust me

My financial situation was pretty good so I’m surprised and a bit alarmed to see so much that is to my advantage here.  Hopefully it also helps those who are hurting. 

The infrastructure spending (and union station funding) is good for me, my firm will have a hand in a lot of those ON and AB jobs, meaning hopefully another big bonus in 2009.  We spent a lot on reno last year, so it sucks to miss out by a few months, but are planning some more so will go ahead and take full advantage of that.  I agree with CD that the five weeks is better than a kick in the pants, but probably not life changing.  However, having spent a week in deeply depressed (in every sense) Ireland, the overall outlook for Canuckistan seems almost rosy.

Any first time buyers who closed over the last month or two must be sick!

I just finished $30k of renovations in the summer. It seems I keep missing all of the perks by a few months. I missed the Ontario land transfer tax refund by a few months as well.

The home reno tax credit is 15% of spending so you would get back $1350 if you did $9000+ in renos.

DBennett – those years of big gov surplus were nothing more than over taxation by the liberals. The libs kept the money as a reserve (or distributed it to thier friends). The cons used the “extra” money to get aggresive on the national debt.

Mike, since paying national debts is not considered an expense (i.e. would not reduce surpluses), I don’t get your point.

As usual, single people who rent get screwed. At least we got some tax relieves, even if it’s just $300 worth.

The reno tax credit is soooo open to abuse. What if I make a $10,000 purchase at HD, make a copy of the receipt and then return everything I bought. We already got tons people abusing the child care credits, the government never seems to learn.

I missed the Ontario land transfer tax refund by a few weeks :(

I wonder how the reno credit will work for do-it-yourself-ers… I guess I’ll be keeping track of my Home Depot receipts.

Thanks for the summary. I couldn’t find a point form article anywhere yesterday. I’m glad to hear about the $5000 increase to the HBP. I’m planning to use that this year.

I wonder what department will be developing the financial literacy program? That might be an interesting job to be involved in that.


@steve- that’s what I’m waiting to see as well. I’m also interested to see if people demanding receipts from their contractors is going to increase reported income for those who had previously liked to deal in cash. This credit may actually pay for itself!

It’s a little annoying that the $5000 tax credit for new home buyers really means $750 in my pocket. It’s like when you see airfares for $99 but when you actually go to pay you get a bill for $400. Well, in reverse!

$750 is better than nothing, don’t get me wrong, but it’s not going to make me go out and buy a house.

Overall I’d say it is a pretty darn good budget!

Lori – What audit program are you talking about, that was scrapped? Do you know about the current one, which provides up to $5000 in incentives for energy-saving renos? It’s here:


Depending which province you are in, some match the federal rebates and provide a credit toward the initial audit as well (Ontario does — we got our rebate for the audit in the fall). It’s definitely worth looking into.

On topic, I would have preferred less in the way of tax cuts for me, and more towards helping those who have lost or can’t get jobs. Also it’s a bit shady to promise lots of money for infrastructure when you attach so many strings that (a) desperately-needed public transit projects really aren’t eligible, and (b) the money depends on the municipalities (who CANNOT run a deficit, by law) coughing up a big chunk of cash. So either the projects don’t go forward or my tax “refund” gets handed over to the city.

Hmmm, I wonder if you can get both the ecoEnergy rebate AND the home reno tax credit.

Very impressed with the budget. Low income earners will be much more likely to spend the extra cash than the highest tax bracket.

And I love the extra $5,000 in the HBP! Will definitely be putting that to use in a year’s time, if I can max out my RRSP enough

Here’s hoping that this Liberal budget is approved by the party who basically wrote it :)

#12 Archanfel;

I assume CRA would want to see the actual receipts and not copies of them. You could still return things without a receipt, but you’d only get a store credit, so I guess you still spent the money.

I like the home reno plan. I spent 15K on the house last year, and will do the same this year. Unfortunately, I expect it will keep residential trades and reno workers busy in AB again. Just when it was starting to slow down, they’ll get deluged again. Prices will return to stupid levels, and the 15% discount will be wiped out.

It must be a good budget, it doesn’t do anything for me beyond putting an extra $1,200 into my pocket

I’m alays suspicious of these, spend and get a rebate programs. Aren’t the renovations guys just going to up their prices on small jobs and say “well you’re getting 15% back from the gov’t”. I understand its designed to keep people employed who would otherwise be unemployed due to the contraction of the housing market.

Its wishful thinking, but I’d still like to see couples file taxes jointly and the government tax family income like they do in the US. So I’ll have to send my annual letter of disappointment to the ministers involved.

Politically it’s a masterful budget. All these use it or lose it programs mean that the spending won’t be nearly as high as projected. They’ve difused the coalition of idiots, prentended to go Keynesian for the rubes who believe that will work and gave tax cuts to the base. When this turns around it’s a simple matter of eleminating all these programs no one takes advantage of in some end of session bill.

However, I wish they had introduced a hardcore conservative budget of government spending cuts and tax cuts.

I must say I am unimpressed in general. Although I like that I get to keep a bit more money this year, I don’t think that the small amounts that each person saves is really worth the deficit. An extra $300 a year (http://www.nationalpost.com/news/canada/budget/story.html?id=1223523) is not going to make people drastically change their spending habits, while as a whole we are piling on debt, without any assurance that it will speed up the recovery process at all.

I’m not too clear on tax credits like the home reno one.

I saw the statement about this credit:

“That comes right off taxes owing, but isn’t refundable, so if it exceeds the total tax bill, there’s no refund. ”

So, I usually get a tax refund every year, will this credit give me more refund or doesn’t apply to me at all?

JayJay, as long as you are still paying tax to the government, you will get a refund. Getting a refund just means you paid them too much to begin with.
So say you paid 20K in taxes for 2009. But after doing your RRSP contributions, tuition, etc etc, you found out you only owed the government 18K. You’d get a 2K refund. If you did the reno thing, you’d get a refund of $3350 (2K + max reno refund).
If, however, you managed to get your taxable income below the basic exemption amount (10K i think) through various deductions, etc, and thus owed no tax, you would not get 1350 back from the government for the reno credit.

Think of the 1350 credit as a capital loss. You can apply it against capital gains (taxes owing), but they won’t send you a refund check if you had no capital gains and only losses (non refundable).

I guess where I get stuck is that I always considered taxes owing after I apply the amount I have already paid in taxes from my payroll slips and without any applied deductions.

I wish they would say it as the calculated Fed/Prov taxes instead. Makes it clearer to me.

So, if have Fed/Prov taxes calculated at $10,000 for example. After all applied tax credits, personal exemption, transit, renovations, etc…amount to $5,000, my taxes are then reduced to $5,000.

If my tax credits amount to $11,000, then I just don’t pay any tax and the extra 1,000 in credits is useless and doesn’t get refunded.

So better make sure you have enough room in your tax credits before you decide on spending money on renovations in order to benefit from this credit.

I can imagine many people who make over $50,000/yr will have enough room to apply this credit? I just don’t see that many credits available to most people.

I hope I got this right.

I think a lot of people will be able to take advanatage of the reno credit.
Some will likely borrow from a LOC to pay for it, but I guess that’s good for the economy too.

In your above example, you said you could have 11K in tax credits and 10K in taxes due. It is possible to get that 1K back. It depends how the tax credits split up. Some will be refundable tax credits, some will be non refundable tax credits. You might have 10K in non refundable tax credits and 1K in refundable credits, in which case you would get the extra 1K back as a refund.

Another option you have if you really want to get some renos done and take advantage of this is to delay claiming your RRSP contributions for 2009 and use the reno tax credit instead (if you are getting close in terms of tax credits equaling taxes due). Since the reno credit is a limited time offer.

Thanks nobleea and Frugal.

I have a very simple tax return…income (T4), RRSP’s, some other income like interest. It’s been like that for many years and with Quick tax, I haven’t gone into the line by line items like I used to with paper forms.

So all this tax credits and capital gains seems like new territory for me.

Don’t forget increases to the Canada Child Tax Benefit. From Department of Finance website:

Canada Child Tax Benefit/National Child Benefit Supplement

The income levels on which income-testing of the base benefit under the Canada Child Tax Benefit (CCTB) and the National Child Benefit supplement (NCBs) are based, will be increased in line with the increase in the upper limit of the lowest personal income tax bracket. Specifically, for the 2009–10 benefit year, the income level at which the phase-out of the CCTB begins will increase to $40,726, and the income level at which the phase-out of the NCBs begins will increase by $1,894 such that it is completely phased out by $40,726 for the majority of families.

I found a little more info on the financial literacy program from the Canadian Business Blog: http://blog.canadianbusiness.com/2009-budget-and-investors/

“A task force on financial literacy is to be struck, to make recommendations to the Minister of Finance on a cohesive national strategy for financial literacy. To launch in the spring, representatives will be selected from the business, educational, volunteer, and academic communities. Maybe they’ll pick one or two of Canada’s financial bloggers. They’re doing a fine job already contributing to financial literacy. Thousands of Canadians turn every day for illumination and guidance to bloggers like Canadian Capitalist, Michael James on Money, Canadian Personal Finance, Where does all my money go, and Canadian Financial DIY.”

Hey FT, I’m sure you’d be a good blogger candidate, eh?


Frugal: really enjoy the blog. This is my first post…

Overall, I am unimpressed with the budget. I work in wind energy, and the ecoEnergy and Renewable Power Program, which has been so successful that all funds will have been allocated to projects producing green electricity almost two years ahead of schedule. The cost of renewing for five more years (until a hypothetical North-American cap-and-trade is in place) would have cost $600M representing $6B in PRIVATE investment and over 8000 jobs (see ‘good’ jobs). We already subsidize the industry at less than half the US subsidy…we are going to lose big-time good global investment if this doesn’t change.

That said, the Evergreen rapid transit line in BC looks to be a lock, and since I bought my condo in a strategic location on this route, I am happy that it looks to be a lock to be built. (Mark this one down as a selfish positive).

I also have a budget question that someone may be able to answer. My wife and I purchased our first home (condo) pre-construction recently. We won’t take possession until around July. Does anyone know if I will be entitled to the tax credit for first-time home-buying expenses since I will be ‘buying’ my home after the budget, or am I out of luck for putting my deposit down pre-budget?


I believe you would be eligible for the first time home buyers special since you don’t actually ‘buy’ it until july when you take posession. A deposit is just that.

I guess you just have to hope that they’ll finish it in time for you to take advantage of the ‘bonus’.

Just a note that the reno credit is only good for 1 year. In other words, if you want to take advantage of this credit, reno your house this year

Is the home reno tax credit per tax payer or is it per household? Can my wife and I both claim this, on say, a $20000 reno, $10k each?

^ per household, based on your primary residence.

Interesting to note that if you live in a condo and the condo board does renos on the common property, you can claim a portion of it on your taxes.


Is the condo you bought on the transit line your first purchase? If yes then like the other poster said you do not actually purchase anything until you close the deal and get the land transfer papers so you would be entitled to the credit.

I’m in Burnaby and hoping to buy a Condo / Townhome this year if possible. Pricing is still near the peak compared to how quickly they appreciated so I am hoping for some more downturn (bit selfish on my part but it’s my money and I like to save where I can).


There are a lot of tax breaks here that will apply to me, this timing is very fortunate for my situation. I am in the negotiation stages of purchasing a new (first) home. I will be implementing the smith manoeuvre on my mortgage for this new home. So I have a couple of questions regarding the tax incentives…

I want to do some reno’s real soon, mostly to convert the basement into a rent-ready space (floor, walls, doors, ceiling). should I hold back $10k of my initial down payment from the market and reno the basement instead? I am not quite sure how well off the reno + FTHB tax credits will compare to the standard SM routine. I don’t really want to miss out on this opportunity either, especially if the two credits will take care of my entire taxes owed for 2009 (even better without contributing to RRSP, save room for next year). Which brings me to another point, the reno credit is good until Feb 1, 2010. does that mean i can do it next year an apply the credit to next year’s tax return?

sorry for all the questions, knowledge quenches my thirst, and I am currently thirsty.

nobleea: Thanks for your feedback; I too hope they finish the condo on time (I take it this tax break expires in Feb. 2010 also?)

Peter: Yes the condo is my first purchase, so I take it I’m eligible. I’m sure you’re going to get a great discount in Bby considering how much further prices should fall this year. I doubt if the budget will do anything to change market conditions. I bought after there was a large price adjustment on a condo I was interested in (just under 10% drop), and now almost regret not waiting a few more months…couldawouldashoulda.

I wonder if anyone here could answer another question:

I will have about 15% down when time for financing, and I of course would like the full 20% to avoid CMHC. I have no debt and access to the other 5% via a line of credit. Can I simply draw the other 5% for my down-payment to avoid paying CMHC, or will the bank consider that a big no-no when assessing my assets and liabilities and not accept that as part of my down-payment? Alternatively, I could ask family for the other 5% short-term, but would rather keep things simple.


In principle, your down payment is not supposed to be with borrowed money.

In practice, if you draw the other 5% from your LOC several months before hand, the bank will not worry about it. When you go to sign the final mortgage papers at the bank, they’ll ask where the downpayment money is, or where it’s coming from. If you have to draw down your line of credit a few weeks before closing, the bank will notice this.

I would have preferred that the government give the 15% tax credit on every dollar with a minimum investment of $1,000. As it stands now, if you spend $1,000 you get nothing. In other words, the tax credit is equal to:
MAX($ spent – $1000, $9000) x 15%.

The renovation credit is a little weak, but I’m hoping to move into a new house this year… If I get an unfinished basement, garage, fence, etc. then I might as well max it out while I can!

Thank you very much for the info. I really appreciated it. I will keep reading for more. Great site.

I purchased my house in Sept 2008, other than the RRSP Home Buyers Plan (HBP) is there any tax credits I am elgible for? Seem to be 2009 purchasers that get all the breaks…

These proposed tax credits will not come into effect until the federal budget receives royal assent which is expected later this spring. Anyway, good news for the home renovators.

Talk about the home renovation ( $1350).Does it include fireplace and chimney replacement?

Just to help clarify the Home Reno tax credits, here’s the link to the Governments site explaining it in more detail;

As a landlord can I use the home improvement tax credit to improve my town homes? I mean really getting back $1,350 on a $9000 investment making my homes more appealing and updated as well as being worth more money seems to good to be true!!!??? Can anyone help me see a dark side to this?