Newfoundland and Labrador Provincial Budget

The Newfoundland and Labrador provincial budget was presented on March 27. The budget contained a number of tax changes.

Tobacco Tax Increase

The tobacco tax increased by three cents per cigarette and six cents per gram of tobacco, effective March 28.

Corporate Small Business Tax Rate Reduction

As of July 1, 2014 the provincial corporate tax rate for small businesses will be reduced from 4% to 3%.

Dividend Tax Credits

As of July 1, 2014 the dividend tax credit rate for eligible dividends will be reduced from 11% of the taxable amount to 5.4%. Effective the same date, the dividend tax credit rate for small business dividends will be reduced from 5% of the taxable amount to 4%. A reduction in the credit rate means an increase in the provincial taxes payable on dividends.

Low-Income Tax Reduction

Effective for 2014, the threshold for the Newfoundland and Labrador Low-Income Tax Reduction is increased by $1,000 for individuals (to $18,547) and by $2,000 for families (to $31,362).

Newfoundland and Labrador Seniors Benefit

This benefit, which is paid with the GST, will be enhanced effective for the October 2014 benefit.

Other Tax Changes

Like most provinces, the provincial tax brackets and most provincial personal amounts are indexed annually. The indexation factor for 2014 is 1.015 (i.e. an increase of 1.5%). The basic personal amount for 2014 is indexed to $8,578 – among the lowest of all the provinces.