Using your Personal Exemptions

Every tax paying Canadian has a Personal Exemption, called the Basic Personal Amount on the Tax Return. The Federal Personal Exemption for 2009 is $10,320 and the Provincial Personal Exemption for 2009 is $16,775. This means you can make up to $10,320 without paying any Federal Tax and $16,775 without paying any Provincial Tax. If one spouse makes less than either personal exemption then the higher income earning spouse can claim the other spouses’ unused portions of the exemptions. In the case where one spouse has no income, the other spouse may claim the full exemptions of the other spouse. Also for single parents, you may claim your child as an “equivalent to spouse” and claim double exemptions both provincially and federally. Using the Personal Exemption is key in tax savings, and if the couple has a corporation that is the main source of income then there is flexibility on how much income and what type of income each spouse is given.