A week ago, the federal government unveiled the long awaited 2009 budget. Last year, with the introduction of the Tax Free Savings Account, the government was all about encouraging us to save — this year’s message, however, is the opposite.
But before you run out and spend, spend, spend, read on to learn more about what this year’s budget means to your bottom line.
With $40 billion in economic stimulus over the next two years, Canadians will now have more money in their pockets.
Tax breaks are being introduced across the board: The largest ones for Canadians who have the least, including low-income families and seniors. And for many Canadian families who have or will experience layoffs, the government has added an extra five weeks to the number of weeks an individual can receive in employment insurance and $1.5 billion is also being injected into job retraining programs.
The government estimates that 190,000 jobs will be created or saved, and the economy will grow by one per cent over the next two years, because of these and other initiatives.
We’ve also seen incentives for higher income families, which along with the aforementioned income tax breaks, include credits such as the home renovation tax credit. This year, a $1,350 credit is being offered to those who spend between $1,000 and $10,000 on home improvements.
Although we have seen dips in the real estate market, Smart Cookies still feel that real estate is one of the best investments you can make (provided you have the money for the down payment, can cover the monthly expenses and plan to stay in your home for at least three to five years).
This is why we are impressed to hear about incentives for first time homebuyers. The proposed budget includes a new first time homebuyers tax credit of $750 and an increase of $5,000 on what you can borrow from your RRSP for your down payment (taking to total up to $25,000).
What does all this mean to you? At the end of the day, a small tax credit is not going to make that much of a difference to your bottom line.
While it is great that Canadians will have more money in their pockets, we still have to be cautious as to where we are spending our money. Although it might help the economy if you go out and shop, renovate or purchase property, it’s not going to advance you personally unless you can truly afford it.
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