Monday, February 02, 2009

If you spend $10,000... Flaherty will give you coffee money. CORRECTED

Updated and corrected below:

First, re-read the CBC item reporting Flaherty's much touted home renovation tax credit scheme.
A home renovation tax credit would give up to $1,350 in tax relief on home improvement projects. Eligible expenses would have to total 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.
Tax credit... not Tax Refund.

Now read this.

A quick number crunch. If you spend a full $10,000 on home renovations... in the specified 12 month period... (that means NOW!)... you will get a non-refundable tax credit (not a refund) which means you might reduce your annual income tax bill by about $200. (About $16 a month).

If you spend the minimum ($1,000), and hand over your Home Depot receipts to the government, you will reduce the total amount of your annual federal income tax payable by about $20. (About $1.66 a month).

Oh yes... and don't forget... the amounts required to be spent to qualify are before any sales taxes are applied.

Now what have you saved?

May the power of Annette Verschuren be with you.

Personal Safety Violation: The fat little egotist really needs to have someone read him the safety instructions that come with every power tool sold in Canada. As Charles, JimBobby, Sven, Boris and Niles noticed.

MY BAD... Correction: Jim and Aaron in comments point out that I have seriously misread the information in the budget document.

On closer examination, it would appear that they are quite correct. As they point out the calculation, according to the Budget Plan, is the actual amount of eligible expenditures, minus $1,000 then multiplied by 15 percent. The resultant figure would be the actual credit subtracted from federal tax owing. (Checked and verified with TGB accounting dept.)

That's significant and, if it all actually happens as advertised, the actual maximum credit would indeed be the full $1,350.

So, two items: First, an apology to Flaherty for suggesting he was operating from his usual dishonest position.
Second, there were other comments which have disappeared. I didn't disappear them but who knows what destruction haloscan hath wrought? In any case one keyed the words "tax deduction" and it simply isn't that. This program does not reduce a taxpayer's taxable income - it reduces the amount of federal tax payable.

I'll add another comment. You've got to be prepared to spend $10,000 to get the maximum tax credit. Given that people are worried about the stability of their incomes, unless someone had actually scheduled a renovation prior to the announcement of this idea or has a spare bank account sitting around doing nothing the assumption that 4.6 million taxpayers will be able to take advantage in 2009 seems more than a little optimistic. I suspect in this economic environment the idea of carrying out a major renovation on credit isn't viewed as a palatable option by many.

Given that this idea is being handled through income taxes there is a marginal chance that it won't turn into the fiasco that was the now defunct Harper green-automobile rebate program.

In any case, thanks to Jim and Aaron for a sharp tug on the stern-sheets.

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