Business Digests Provincial Budget in NS

The 2015 Nova Scotia provincial budget was tabled on April 9, 2015, to significant controversy from the film industry in that province and with negative implications for retiring business owners. 

Specifically, the film industry tax credit  will become 25% refundable; 75% non-refundable as of July 1, 2015.  For films that are not profitable and therefore pay no provincial taxes, this amounts to a 75% decrease in the credit they can collect.  Critics fear that will result in a decrease in opportunities for those who work in the industry, causing an exodus to other parts of the country.

In addition, the dividend tax credit for other than eligible dividends will be reduced from 5.87% to 3.5% for 2015.  The government felt that the existing tax credit was too generous in light of recent reductions to corporate tax rates for small business.

Because of the changes to gross-ups announced in the Federal Budget, we can expect additional changes to the provincial dividend tax credit rates over the next few years as well.

However, these changes put small  business owners who rely on small business dividends to fund their retirements at another disadvantage:  pension income splitting is not available on RRSP contributions until age 65. Advisors who work with business owner clients will want to review and discuss options for retirement income layering and averaging in light of these changes.

Healthy Living Tax Credit

The Sport and Recreational Expenses for Children tax credit, or Healthy Living tax credit is eliminated because it is not helping low-income residents. According to the Chronicle Herald, even if the Healthy Living tax credit was used to its' maximum, parents would only find a  savings of $43.95 per child.

Tobacco

Tobacco taxes will increase by two cents per cigarette, two cents per gram of fine-cut tobacco and two cents per tobacco stick.

Recent federal and provincial budgets and their effect on Real Wealth Management will be discussed in detail at the Distinguished Advisor Workshops June 17 in Winnipeg, June 18 in Calgary, June 19 in Vancouver and June 22 in Toronto.  Early registration opportunities are now available until May 31.