2014-2015 Newfoundland and Labrador budget highlights
Canadian tax alert
March 28, 2014
On Thursday, March 27, 2014, the Minister of Finance and President of the Treasury Board, Charlene Johnson, presented the 2014 Newfoundland and Labrador budget. The following is a summary of the tax highlights from the budget.
Overall fiscal position
The government is forecasting a $538 million budget deficit and will, for the first time since 2004, borrow money to fund capital and operational programs. Approximately 2/3 of the province’s net debt is accounted for by unfunded pension obligations and that estimate is to rise to 85% (or $9 billion) by March 2017. Consultations with public sector employees aimed at reviewing pension and other post-employment benefits are ongoing.
Measures concerning business
Effective July 1, 2014, the government will decrease the small business corporate income tax rate to 3 percent. The 3 percent tax rate will apply to active business income up to the current threshold of $500,000. This will match the low income tax rate for Nova Scotia and together with Nova Scotia will represent the lowest small business corporate tax rate in Atlantic Canada.
Measures concerning individuals
- To be consistent with changes made by the federal government, effective July 1, 2014, the Newfoundland and Labrador government will reduce the dividend tax credit for non-eligible dividends from 5 percent to 4.1 percent and reduce the dividend tax credit rate for eligible dividends from 11 per cent to 5.4 percent. This change will restore integration for non-eligible dividends and will also ensure that the effective tax rate on eligible dividends is equivalent to the effective tax rate on non-eligible dividends.
- The Low-Income Tax Reduction income thresholds will be increased from $17,547 to $18,547 for individuals and from $29,362 to $31,362 for families, effective for the 2014 taxation year. The increase will eliminate provincial income tax for individuals with net income up to $18,547 and for families with net income up to $31,362.
Other tax measures
- The 2014 Budget brings an increase in the tax for both cigarettes and fine-cut tobacco. Effective 12:01 a.m. March 28, 2014, the tax will increase by 3 cents per cigarette and by 6 cents per gram of fine-cut tobacco.
For further details, we refer you to the Ministry of Finance website.
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