Report Card: Inter-Provincial Tax Havens 2009

With the release of the Alberta Budget, Canadians may be interested to take a good close look at the tax advantages offered by our various provincial governments and how they rate with each other, as per the Alberta Budget Papers.

There are a variety of tax perks 　 for various income and family profiles, depending on your province of residence ó all very worthwhile reviewing if you are thinking of a move in 2009. Remember it is your province of residence as at December 31, 2009 which determines your provincial taxation for the whole year.

Below, The Knowledge Bureau offers its Top Marks for Inter-Provincial Personal Tax Havens for 2009:

1. TAX FREE ZONES: TAXATION OF NON-DISCRETIONARY INCOME. When it comes to tax free zones, Alberta wins for both couples and singles. With a personal amount of $16,775 and an identical spouse amount, the first $33,550 of taxable income earned by a working couple in Alberta is free of provincial tax. To be meaningful from an equity point of view, the cost of living for each province (in both urban and rural areas) requires assessment. The desired result is that income below the poverty line not be taxed as all earnings are required for food, clothing and shelter; and there is likely no non-discretionary income. Provincial refundable tax credits may make up the difference, however, to stimulate both spending and saving, having more after tax dollars at hand throughout the year is a more immediate way to stimulate both.

   Provincial Rank	Personal Amount	Spousal Amount	Couples Tax Free Zone
   1. Alberta	$16,775	$16,775	$33,550
   2. Sask.	$13,269	$13,269	$26,538
   3. Quebec	$10,455	$10,455	$20,910
   4. BC	$9,373	$8,026	$17,399
   5. Ontario	$8,881	$7,541	$16,422
   6. Manitoba	$8,134	$8,134	$16,268
   7. New Brunswick	$8,605	$7,307	$15,912
   8. Nova Scotia	$7,981	$6,778	$14,459
   9. PEI	$7,708	$6,546	$14,254
   10. NL	$7,778	$6,356	$14,134
   FEDERAL	$10,320	$10,320	$20,640

2. LOWEST INDIVIDUAL TAX RATES. If you are low income earner, it pays to live in BC; next to Quebec, (which features an abatement of 16.5% of basic federal tax in lieu of federal cash transfers), it is low income earners in Saskatchewan that pay the highest taxes and high income earners in Nova Scotia that pay the most.

   Provincial Rank	Tax Rate: Low income Bracket	Tax Rate: Highest income bracket	Top combined federal and provincial rate
   1.	BC 5.06%	AB 10%	AB 39%
   2.	ON 6.05%	ON 11.16% & Surtax	BC 43.70%
   3.	NL 7.70%	BC 14.70%	SK 44%
   4.	NS 8.79%	SK 15%	NL 44.5%
   5.	NB 9.65%	NL 15.50%	NB 46%
   6.	PEI 9.80%	PEI 16.70% & Surtax	MB 46.40%
   7.	AB 10.0%	NB 17.0%	ON 46.41%
   8.	MB 10.8%	MB 17.4%	PEI 47.37%
   9.	SK 11%	NS 17.5% & Surtax	PQ 48.22%
   10.	PQ 16%	PQ 24%	NS 48.25%

3. LOWEST COMBINED FEDERAL/PROVINCE TAX RATES: The winner is Alberta at 39% and the Loser is Nova Scotia at 48.25%.

Next time: Comparing Interprovincial Tax and Health Care Insurance Premiums and the Inter-Provincial Business Tax Environment