Trent Henry of Ernst & Young discusses personal and corporate tax measures in the 2009 federal budget. Personal tax measures were modest, but there were some.
Mr. Henry is the Tax Managing Partner for Ernst & Young and is based in Toronto. Prior to that, he was the leader of the firm's international tax practice for Ernst & Young. While in New York, he was a Partner at Ernst & Young's Canadian Tax Desk, part of Ernst & Young's recognized Foreign Tax Desk program.
Read the firm's tax alert here.
He provides tax consulting services with a particular focus on international taxation, including mergers and acquisitions, structuring, and financing. Join the Conversation with Mr. Henry for a discussion at noon Wednesday. Or get a jump on the queue by submitting your question here.
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Cathryn Motherwell, deputy editor, Report on Business: First off, I'd like to know your general thoughts on the tax provisions in this budget?
Trent Henry: There weren't a lot of changes. The personal tax cuts were not all that deep and not bound to save tax payers a lot of money. On the business side, some of the changes were welcome. The interest deductibility for Canadian multinational companies is a welcome change. As are the changes to enhancing the small business deductions - that's a good measure from a business perspective. Same goes for the accelerated capital cost allowance incentives for the purchasing of manufacturing and processing equipment, computer equipment and software.
Jit Pat from Sorel-Tracy asks: Does it make sense to recontribute 25 per cent of RRIF withdrawal, as one would need to draw a higher percentage of the RRIF, which would result in higher tax?
Trent Henry: The strategy in December would have been to withdraw the full amount and recontribute. First of all, this allows you to reduce your tax in 2008 by the amount of the recontribution. Secondly, it's going to reduce the net assets at the beinning of the year in which your 2009 withdrawal is based. In fact, it appears you can actually make a withdrawal in January and still recontribute, because the legislation has not yet been passed. You also have to take into account any differences in tax brackets between the two years.
Mark Dip from Ottawa asks: Mr. Henry, do you think the home renovation refund will have a retroactive date? I've been at it for over a year, so it would be nice to recoup some old expenses (although I think I know what your answer will be (so much for taking the initiative).
As well, will the refund only apply if you generate employment by bringing in a contractor? I've been doing almost all of it myself.
Trent Henry: No, I don't think there is any hope that the Department of Finance will amend the proposal given their goal is to stimulate spending and in this regard the focus is expenses incurred after January 27, 2009 and before February 1, 2010.
To the extent you are doing the work yourself you may still be able to claim the cost of eligible expenditures including building materials, fixtures, equipment rentals and permits. It remains unclear what the CRA may require to demonstrate the expenses were for eligible expenditures. Eligible expenditures must be supported by receipts of course.
BJ Homes from Ontario asks: Is the government attempting to hoodwink seniors with this example?