Ottawa, December 31, 2008
Archived - Canada's Government Provides Individuals, Families and Businesses Important New Tax Relief for 2009
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Finance Minister Jim Flaherty today took the opportunity to inform Canadians of new tax relief measures that will benefit them in 2009.
"New tax relief coming into effect in 2009 builds on our Government's record of tax relief for individuals and businesses," said Minister Flaherty. "The tax reduction measures implemented by this Government since 2006 mean that, in 2009-10, Canadians and Canadian businesses will pay $31 billion less in taxes – the equivalent of nearly two per cent of gross domestic product (GDP)."
The following measures come into effect in 2009:
- The introduction of the Tax-Free Savings Account, which will allow Canadians to set money aside in eligible investments and watch those savings grow tax-free throughout their lifetimes;
- The reduction of the general corporate income tax rate to 19 per cent from 19.5 per cent. Overall, the general corporate income tax rate is being reduced from 22.12 per cent (including the corporate surtax) in 2007 to 15 per cent by 2012;
- The extension of accelerated capital cost allowance treatment for three years for investment in manufacturing or processing machinery and equipment; and
- As part of the fifth Protocol to the Canada-U.S. Tax Treaty, the reduction in the rate of withholding tax on interest payments from Canada to non-arm's length U.S. lenders from 7 per cent to 4 per cent. The withholding tax on non-arm's-length interest paid between Canada and the United States will be completely eliminated as of 2010.
In addition, in the 2008 Economic and Fiscal Statement, the Government proposed a one-time change that will allow Registered Retirement Income Fund (RRIF) holders to reduce their required minimum withdrawal by 25 per cent for 2008. RRIF holders who withdraw more than the reduced 2008 minimum amount will be permitted to re-contribute the excess (up to amount of the 25-per-cent reduction) to their RRIFs until the later of March 2, 2009 and 30 days after this proposal is enacted. Re-contributions will be deductible for the 2008 taxation year. Similar rules will apply to those receiving variable benefit payments under a money purchase Registered Pension Plan.
"The Canadian economy is facing challenges," said Minister Flaherty. "But this Government has a plan, and we will come out of this stronger than ever. Canadians can be fully confident that we will work tirelessly to overcome whatever hardships may lie ahead in 2009 and beyond."
A backgrounder detailing federal tax relief in 2008 and 2009 is attached.
For further information, media may contact:
Office of the Minister of Finance
Department of Finance
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