2016 New Brunswick Budget | FBC, Canada's Farm & Small Business Tax Specialist

2016 New Brunswick Budget

2016 New Brunswick Budget

On February 2, 2016, New Brunswick Finance Minister Roger Melanson delivered the province’s 2016 budget.

Highlights

  • Deficit of $347 Million predicted for 2016-17
  • Deficits of $267 and $167 million for 2017-2018 and 2018-2019 respectively
  • Increase to HST by 2% from 13% to 15%!
  • Increases to corporate income tax by 2% from 12% to 14%
  • Reduce personal income tax for individuals with taxable income over $150,000

Personal Tax Measures

Personal Income Tax Rates – Reduced Tax Brackets and Lower Personal income Tax Rates!

The budget eliminated the top marginal personal income tax rate of 25.75% and lowered the personal income tax rate for individuals with taxable income over $150,000 to 20.3% (from 21%).

These changes are retroactive to January 1, 2016.

In addition, beginning January 1, 2017, the top marginal income bracket will be indexed consistently with all other income brackets in New Brunswick.

As a result, New Brunswick’s personal income tax rates effective January 1, 2016 are as follows:

Personal Combined Federal/Provincial Top Marginal Rates

 

 

New 2016 Top Rate

 

 

Previous 2016 Top Rate (A)

Income from $50,000 to $200,000

Income of more than $200,000 (B)

Top Rate Decrease
(A - B)

Interest and regular income

58.75%

49.30%

53.3%

5.45%

Capital gains

29.38%

24.65%

26.65%

2.73%

Eligible dividends

43.79%

30.75%

36.27%

7.52%

Non-eligible dividends

51.75%

40.69%

45.37%

6.38%

New Brunswick Non-Refundable Tax Credits

The government confirmed today that personal tax credits for 2016 will be indexed by 1.013%.

The maximum tax credits amounts and actual New Brunswick tax credits for 2015 and 2016 are set out below.

 

New Brunswick Non-Refundable Tax Credits

 

2015

2016

Maximum Amount

New Brunswick
Tax Credit

Maximum Amount

New Brunswick
Tax Credit

Basic Personal Amount

$9,633

932

$9,758

945

Spousal Amount

8,180

792

8,286

802

Eligible dependent amount

8,180

792

8,286

802

Age amount

4,704

455

4,765

461

Infirm dependent amount

4,549

440

4,608

446

CPP Contributions

2,480

240

2,544

246

EI Contributions

931

90

955

92

Pension income amount

1,000

97

1,000

97

Disability amount

7,799

755

7,900

765

Disability supplement

4,549

440

4,608

446

Tuition and education amounts

Variable

Variable

Variable

Variable

Adoption expenses

0

N/A

0

N/A

Medical expenses

Variable

Variable

Variable

Variable

Medical expenses (other dependents)

N/A

N/A

N/A

N/A

Caregiver amount

4,550

440

4,609

446

Interest on student loans

Variable

Variable

Variable

Variable

Donations & Gifts
-first $200
- over $200


200
75% of income


20
Variable


200
75% of income


20
Variable

In general, credits are multiplied by 9.68% to arrive at the deduction from New Brunswick Tax. In the case of donations and gifts over $200, the credit is 17.95%

Corporate Tax Measures

Corporate Tax Rates

The budget increases the corporate tax to 14% (from 12%), effective April 1, 2016.

As a result, New Brunswick’s corporate income tax rates effective January 1, 2016 are as follows:

Corporate Income Tax Rates – As of January 1, 2016

 

New Brunswick

Combined Federal & New Brunswick

 

2016

2016

General1

12% / 14%%

27% / 29%

M&P

12% / 14%

27% /29%

Small business2

4%

14.5%

1 New Brunswick’s general and M&P tax rates will increase to 14% (from 12%), effective April 1, 2016.

2 on first $500,000 of active business income.

Financial Corporation Capital Tax Rates

The budget also increased the financial corporation capital tax rate for banks to 5% (from 4%), effective April 1, 2016.

Harmonized Sales Tax

The budget increased the HST to 15% (from 13%), effective July 1, 2016.

To offset costs for low and middle income earners, the budget also provided for a refundable provincial HST credit of $300 for individuals, $300 for spouse or equivalent, and $100 per child under the age of 19 will be provided.

Single parent families will receive a $300 credit for their first child.

The HST credit will benefit individuals with incomes of less than $50,000, or a family of two adults and two children with incomes of less than $75,000.

The credit will be reduced on a sliding scale, in accordance with income. On average, households with incomes below $40,000 are expected to receive more money from the credit than they would lose as a result of the HST rate increase.

The provincial government is working with the Canada Revenue Agency to have the credit paid along with the federal GST/HST credit on a quarterly basis either by direct deposit or cheque.

Other Measures (Not related to income tax)

Tobacco Tax

The budget raised tobacco tax to 22.26 cents (from 19 cents) per cigarette or gram of loose or fine cut tobacco effective midnight February 2, 2016.

In addition, New Brunswick has scheduled another increase to the tobacco tax to 25.52 cents (from 22.26 cents) on February 1, 2017.

Real Property Transfer Tax

The budget increased the real property transfer tax to 1% (from 0.5%), effective April 1, 2016.

This tax is a one-time payment on the purchase of a property due when the deed is registered.

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