Tax Alert: Federal Economic and Fiscal Statement 2008

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Tax Alert

Federal Economic and Fiscal Statement 2008

On November 27, 2008, Minister of Finance Jim Flaherty presented the Federal government’s Economic and Fiscal Statement. No new taxes or tax increases have been announced.

Temporary Reduction in RRIF Minimum Withdrawals
The Minister announced temporary relief to seniors holding Registered Retirement Income Funds (RRIFs) and variable benefit money purchase Registered Pension Plans (RPPs) that have been affected by the recent global financial market turbulence. The government proposes to reduce the required minimum withdrawal amount for RRIFs by 25% for 2008, so retirees may keep more of their savings in their RRIFs.

This measure will apply to all RRIF holders regardless of age. Holders who have withdrawn more than the reduced 2008 minimum amount will be allowed to recontribute the excess to their plans until the later of March 1, 2009 and 30 days after the proposal is enacted. Recontributions will be deductible for the 2008 taxation year. Similar rules will apply to individuals who receive variable benefit payments under a money purchase RPP.

The proposal to enact the above measures has been included in a Notice of Ways and Means Motion and was tabled on November 28, 2008 in the House of Commons. The proposal must still be passed through the House of Commons and receive Royal Assent before it becomes legislated.

For more information on this topic, please contact the MNP office nearest you or Donna Lee, MBA, CA at 403.444.0150.

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