Benefits of a recession

[Dan02]

Originally Posted by Dion

This might help you

http://www.budget.gc.ca/2009/pamphle...liant3-eng.asp

in thread fata!!!

that was in Bobbleheads post i quoted, I just parsed it out. The only problem is roofing is not explicitly listed there as permiited and some people are worried that replacing their roof might be considered maintainence. I was attempting to allay those concerns

[Devils'Advocate]

I know I'm bumping a very old thread, but I hate making new ones.

I'm trying to understand this home renovation tax credit.

You get the max tax credit of $1,350 if you spend $10,000 ($10,000 - $1,000 = $9,000; $9,000 x .15 = $1,350).

However, that is just a tax CREDIT which means that it reduces my net income. So let's say I make $91,350 and have no other credits whatsover, it reduces my income to $90,000.

Now since that tax bracket is taxed at 26%, I actually save $351 in actual taxes.

So I just spent $10,000 to get back $351 on my taxes? I mean, I realize that $351 is better than a kick in the balls, but really, in the big scheme of things, it's not a huge incentive for me. Or maybe I'm not reading this thing right.

[Reaper]

It's a tax credit meaning that if you owe $1350 in taxes and you've spent the 10K on home renos then you owe nothing.

[Peanut]

So if you don't owe any taxes, you wouldn't get a refund of $1350? Am I understanding that right?

[BlackArcher101]

If you don't owe taxes, then I'm guessing your tax balance becomes $-1350, resulting in a refund.

[Peanut]

Originally Posted by BlackArcher101

If you don't owe taxes, then I'm guessing your tax balance becomes $-1350, resulting in a refund.

That's what I thought too. Good, considering we've done a bunch of crap that qualifies towards the $10,000. If I misunderstood it was going to be a FFFFFUUUUuuuu moment.

[Jordan!]

a $140,000 house in AZ that would've cost me $400,000+ in Calgary, if not more. Thanks George W. Bush!

[4X4]

Originally Posted by Bouw N Arrow

a $140,000 house in AZ that would've cost me $400,000+ in Calgary, if not more. Thanks George W. Bush!

Why didn't George W. Bush buy me a house, too? Am I missing something here?

[Jordan!]

Is that a joke? Without the Iraq War, there'd be no recession.

[4X4]

Originally Posted by Bouw N Arrow

Is that a joke? Without the Iraq War, there'd be no recession.

I really wish I could find a youtube clip of the maitre'd in Ferris Bueller saying "you can't be shneerious".

[Cowboy89]

Originally Posted by Bouw N Arrow

Is that a joke? Without the Iraq War, there'd be no recession.

If anything the Iraq war kept the economy limping along by providing government stimulus. The credit crunch was the end game of a 30-40 year cycle of the average consumer lowering their savings rate into negative savings. The low rates after september 11th just put off the recession until now.

Sure there are plenty of reasons to dislike the Iraq war and George W Bush's decisions in office but economically he was just one stop on the road to ruin.

[Jordan!]

Fair enough, but the money on Iraq could've been spent elsewhere, or not spent at all.

[Bobblehead]

Originally Posted by BlackArcher101

If you don't owe taxes, then I'm guessing your tax balance becomes $-1350, resulting in a refund.

Nope - it is a non-refundable tax credit.

http://www.cra-arc.gc.ca/tx/ndvdls/s...cltng-eng.html

[jtfrogger]

Originally Posted by Bobblehead

Nope - it is a non-refundable tax credit.

http://www.cra-arc.gc.ca/tx/ndvdls/s...cltng-eng.html

Assuming the person has a reasonable job and paid at least $1350 in federal income taxes in the year, you would get a refund of the tax paid.

[Rerun]

I was able to buy a new house at an extremely attractive price ($110,000 below what it was appraised at last summer) and finance it at a killer low rate (3.74% 5 year fixed)

[Rerun]

Originally Posted by Reaper

It's a tax credit meaning that if you owe $1350 in taxes and you've spent the 10K on home renos then you owe nothing.

Are you sure? I always assumed that this would reduce the income claimed on your tax form by $1350, not reduce taxes owed by $1350.


Can any accountants on here confirm this?

[Bobblehead]

Originally Posted by jtfrogger

Assuming the person has a reasonable job and paid at least $1350 in federal income taxes in the year, you would get a refund of the tax paid.

Yeah, but the person said "if you don't owe any taxes....."

That can mean a couple different things, but literally if they don't owe any taxes they aren't going to get any additional money back because of this program.

[yads]

It doesn't reduce your income, it reduces your federal tax. You add the $9k to all the other non refundable tax credits: EI/CPP/Bus Passes/etc.

[return to the red]

nm got an answer to my own question

[Devils'Advocate]

Originally Posted by fotze

So to sum up the question in dumbed down fashion.

If you paid lots of taxes and would have at least 1350 of tax to reduce with this credit, would you get an additional $1350 back on your return?

That's the crux of my question. I'd get the driveway repaved and the roof redone this year if I would get $1,350 back on my taxes. Money would be tight this year, but I could get it done. But I'd hold onto my money and save a bit more if it was only $350.

Okay, here is what I found as a general statement about non refundable tax credits:
"As with any non-refundable tax credit, anyone who applies does not receive the money in the form of a refund. Instead, the amount claimed is multiplied by the lowest personal income tax rate for the year (15% for 2007) and then is deducted from the amount of tax owed for that year."

So at the max, the claim is for $10,000. The tax credit is $10,000 x the lowest tax rate. Which is cut from the amount owing on your taxes.

Looks like it's time to tighten the belt and get the roof/driveway redone.