Provincial Budget Round-up

Taxes are going up on the East Coast, even for low earners, while small businesses pay more in a retroactive tax hike.  Meanwhile small business owners get a tax break in Alberta, despite the red ink there.  In short, Alberta and Newfoundland and Labrador took two very different approaches to dealing with loss of tax revenues from oil and gas last week.

Alberta chose to incur a six to ten billion dollar deficit each year for the next four years and introduced new tax credits for investments in Alberta business, both for individuals and corporations. The small business tax rate will be reduced from 3% to 2% as of January 1, 2017, as well. A new carbon levy will be added to fossil fuels as of January 1, 2017, with an offsetting credit for low- to middle-income taxpayers.

Newfoundland and Labrador, on the other hand, rolled back tax cuts introduced in recent years, citing that they are unsustainable. Taxes will increase across all tax brackets for 2016 and again for 2017. In addition, a new Temporary Deficit Reduction Levy of up to $900 will be added to all taxpayers whose taxable income exceeds $20,000.

Corporate taxes will increase as well with the general corporate tax rate going from 14% to 15% retroactive to January 1, 2016. The HST rate will also increase from 13% to 15% effective July 1, 2016. Other tax increases effective in 2016 include a gas tax increase of 16.5 cents per litre, as well as increases in taxes on diesel and aviation fuel. Tobacco taxes increase as well, and new items subject to the  HST will include used vehicle sales and insurance premiums.

Budgets for Saskatchewan, Nova Scotia, Prince Edward Island and Northwest Territories are still to come. In March, the Manitoba government issued a fiscal update in advance of the provincial election. Manitoba’s most significant announcement was the introduction of a fourth tax bracket for taxpayers with income over $170,000 (rate 20.9%).  The outcomes of yesterday’s provincial election will provide direction on that announcement soon.

BC tinkered with tax credits in its February election but introduced no significant tax changes.

New Brunswick eliminated their tax bracket for income over $250,000 and reduced the rate on income over $150,000 from 21% to 20.3%. However, they increased the corporate tax rate, the HST rate, the land transfer tax rate and the capital tax for banks. To offset the HST rate hike for low-income taxpayers, a refundable HST credit was introduced.

Ontario reduced or eliminated a number of tax credits including the Tuition and Education credit and increased taxes on alcohol and tobacco.

Details about recent federal/provincial tax changes and their effect on personal, retirement and estate planning will be the focus of the Distinguished Advisor Workshops May 24 to 31.  To ensure your registration and 10 CE credits register before May 15.

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