Government Announces 2009 Automobile Deduction Limits and Expense Benefit Rates for Business
The automobile expense deduction limits and prescribed rates for the automobile operating expense benefit that applied in 2008 will apply in 2009. Specifically:
· The ceiling on the capital cost of passenger vehicles for capital cost allowance (CCA) purposes will remain at $30,000 (plus applicable federal and provincial sales taxes) for purchases after 2008. This ceiling restricts the cost of a vehicle on which CCA may be claimed for business purposes.
· The limit on deductible leasing costs will remain at $800 per month (plus applicable federal and provincial sales taxes) for leases entered into after 2008. This limit is one of two restrictions on the deduction of automobile lease payments. A separate restriction prorates deductible lease costs where the value of the vehicle exceeds the capital cost ceiling.
· The maximum allowable interest deduction for amounts borrowed to purchase an automobile will remain at $300 per month for loans related to vehicles acquired after 2008.
· The limit on the deduction of tax-exempt allowances paid by employers to employees using their personal vehicle for business purposes for 2009 will remain at 52 cents per kilometre for the first 5,000 kilometres driven and 46 cents for each additional kilometre. For the Yukon Territory, Northwest Territories and Nunavut, the tax-exempt allowance will remain at 56 cents for the first 5,000 kilometres driven and 50 cents for each additional kilometre.
· The general prescribed rate used to determine the taxable benefit relating to the personal portion of automobile operating expenses paid by employers for 2009 will remain at 24 cents per kilometre. For taxpayers employed principally in selling or leasing automobiles, the prescribed rate will remain at 21 cents per kilometre. The additional benefit of having an employer-provided vehicle available for personal use (i.e., the automobile standby charge) is calculated separately and is also included in the employee’s income.
Tuesday, January 27, 2009
FEDERAL BUDGET 2009 highlights
Budget 2009 supports small businesses by:
· increasing the amount of small business income eligible for the reduced federal tax rate of 11% to $500,000 from the current limit of $400,000 as of January 1, 2009.
· Introducing a temporary 100% capital cost allowance rate for computers acquired after January 27, 2009 and before February 1, 2001.
For individual taxpayers:
the government will boost the basic personal amount – which would allow people to earn more before they have to pay federal tax. The basic amount would go from $9,600 to $10,320, retroactive to Jan. 1.
The government also plans to raise the upper limits on the two lowest income tax brackets. The upper limit for the 15 per cent bracket would go to $40,726, while the upper income limit for the 22 per cent bracket would rise to $81,452.
A new home renovation tax credit would give up to $1,350 in tax relief on home improvement projects. The eligible expenses must be at least $1,000, but not more than $10,000, and the work would have to be done between Jan. 27, 2009, and Feb. 1, 2010.
For Canadians hit by layoffs, the government plans to extend maximum EI benefits by five weeks, bringing it up to a maximum of 50 weeks. The measure would be in effect for the next two years, at a cost of $1.15 billion.
· increasing the amount of small business income eligible for the reduced federal tax rate of 11% to $500,000 from the current limit of $400,000 as of January 1, 2009.
· Introducing a temporary 100% capital cost allowance rate for computers acquired after January 27, 2009 and before February 1, 2001.
For individual taxpayers:
the government will boost the basic personal amount – which would allow people to earn more before they have to pay federal tax. The basic amount would go from $9,600 to $10,320, retroactive to Jan. 1.
The government also plans to raise the upper limits on the two lowest income tax brackets. The upper limit for the 15 per cent bracket would go to $40,726, while the upper income limit for the 22 per cent bracket would rise to $81,452.
A new home renovation tax credit would give up to $1,350 in tax relief on home improvement projects. The eligible expenses must be at least $1,000, but not more than $10,000, and the work would have to be done between Jan. 27, 2009, and Feb. 1, 2010.
For Canadians hit by layoffs, the government plans to extend maximum EI benefits by five weeks, bringing it up to a maximum of 50 weeks. The measure would be in effect for the next two years, at a cost of $1.15 billion.
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