2016 Nova Scotia Budget | FBC, Canada's Farm & Small Business Tax Specialist

2016 Nova Scotia Budget

2016 Nova Scotia Budget

“WORKING TOGETHER FOR A STRONGER NOVA SCOTIA”

On April 19, 2016, the Honourable Randy Delorey presented his first budget as Nova Scotia’s Finance and Treasury Board Minister.

With a focus on economic growth, youth, education and responsible fiscal management, provincial finances have strengthened with surpluses predicted for each year of the government’s 4-year fiscal plan.

The deficit reported for 2015-16 is $71 million, coming in a little lower than the deficit of $98 million that was forecast last year.

Highlights

  • Deficit of $71 million projected for 2015-16 fiscal year
  • Surplus of $127 million forecast for 2016-17 fiscal year (net position of $17 Million)
  • Amount for Young Children tax credit maintained
  • No income tax or HST rate increases

The 2016-17 surplus includes a one-time revenue amount of $110 million made up of federal and municipal contributions for the convention centre in Halifax.

This surplus amount will be used towards provincial debt, providing the fiscal capacity to launch a multi-year redevelopment of the QEII Health Sciences Centre.

Excluding this one-time revenue amount, the budget's net position is $17 million for 2016-17.

Personal Tax Measures

Personal Income Tax Rates

The budget does not make any changes to the province’s personal tax rates.

As a result, Nova Scotia’s combined federal and provincial top marginal rates for income, capital gains and dividends remain as follows:

Personal Combined Federal/Provincial Top Marginal Rates

 

2015

2016

Increase

Interest and regular income

50.00%

54.00%

4.00%

Capital gains

25.00%

27.00%

2.00%

Eligible dividends

36.06%

41.58%

5.52%

Non-eligible dividends

41.87%

46.97%

5.10%

Note: changes noted above relate to changes to the Federal rates from 2015.

Amount for Young Children Tax Credit

As a consequence of changes arising from the 2016 federal budget, the UCCB will be eliminated and replaced with the non-taxable Canada Child Benefit, effective July 1, 2016.  

Despite this change to the federal benefits program, today’s budget confirmed that Nova Scotia will maintain the Amount for Young Children.

The Amount for Young Children is a non-refundable tax credit which is intended to help offset the provincial portion of income taxes arising from the receipt of the federal Universal Child Care Benefit (UCCB). 

This credit entitles eligible families to claim $100 per month in respect of each dependant child under the age of 6, and must be claimed by the lower-income spouse.

Non-Refundable Tax Credits

The government confirmed today that personal tax credits for 2015 will be indexed by 1.0%.   The maximum tax credits amounts and actual Nova Scotia tax credits for 2014 and 2015 are set out below.

Nova Scotia Non-Refundable Tax Credits

 

2015

2016

Maximum Amount

Nova Scotia
Tax Credit

Maximum Amount

Nova Scotia Tax Credit

Basic Personal Amount

$8,481

$745

$8,481

$745

Spousal Amount

8,481

745

8,481

745

Eligible dependent amount

8,481

745

8,481

745

Age amount

4,141

364

4,141

364

Infirm dependent amount

2,798

246

2,798

246

CPP Contributions

2,426

213

2,480

213

EI Contributions

914

80

931

80

Pension income amount

1,173

103

1,173

103

Disability amount

7,341

645

7,341

645

Disability supplement

3,349

294

3,349

294

Tuition and education amounts

Variable

Variable

Variable

Variable

Adoption expenses

0

0

0

0

Medical expenses

Variable

Variable

Variable

Variable

Medical expenses (other dependents)

N/A

N/A

N/A

N/A

Caregiver amount

4,898

431

4,898

431

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 8.79% to arrive at the deduction from Nova Scotia Tax.  In the case of donations and gifts over $200, the credit is 21%

Trusts and Estates

The budget announced that Nova Scotia will parallel the recent federal changes to the taxation of trusts and estates. 

Effective for tax years ending after December 31, 2015, graduated personal income tax rates will only apply to trusts that are “graduated rate estates” or “qualified disability trusts” as announced in the 2014 federal budget. 

The top marginal personal income tax rate of 21% will apply to all other trusts and estates in Nova Scotia.

These changes effectively maintain graduated rate taxation for eligible estates for the first 36 months after an individual’s death. 

They also maintain graduated rate taxation for testamentary trusts that are for the benefit of individuals who are eligible for the federal disability credit.

Business Tax Measures

Corporate Tax Rates

The budget did not announce any changes to the corporate tax rate!  

As a result, the corporate income tax rates effective January 1, 2016 remain as follows:

Corporate Income Tax Rates — As of January 1, 2016

 

Nova Scotia  

Combined Federal
and Nova Scotia

General

16%

31%

M&P

16%

31%

Small business*

3%

13.5%

*On first $350,000 of active business income

Food Bank Tax Credit for Farmers

The budget introduced a food donation credit for individuals and corporations that carry on a farming business.  

Effective January 1, 2016, these taxpayers will be eligible for a nonrefundable tax credit equal to 25% of the fair market value of qualifying agricultural products that are donated to a registered charity that provides food to families in need.

Other Measures (Not Related To Income Tax)

Tobacco Tax

The budget increases tobacco tax by $0.02 per cigarette, per gram of fine-cut tobacco, and per pre-proportioned tobacco stick.

In addition, the tax on cigars will increase to 60% of the suggested retail selling price of a cigar (from 56%).

These measures are effective at 12:01 am on April 20, 2016.

How Nova Scotia Compares

The following chart compares top personal and corporate tax rates and sales taxes for all provinces and territories, as announced to April 19, 2016.

 

 

2016 Corporate Tax Rates

 

 

Top 2016 Personal Rates

General
%

M&P
%

Small Business
%

2016 Prov. Sales Tax

B.C.

47.70

26.00

26.00

13.00

7.00

Alta.

48.00

27.00

27.00

13.50

-

Sask.

48.00

27.00

25.00

12.50

5.00

Man.

50.40

27.00

27.00

10.50

8.00

Ont.

53.53

26.50

25.00

15.00

8.00(5)

Qué.

53.31

26.90

26.90

18.50(3) 

9.975(6)

N.B.

53.30

29.00(1) 

29.00(1)

14.00(1)

8.00(7)

N.S.

54.00

31.00

31.00

13.50

10.00(5)

P.E.I.

51.37

31.00

31.00

15.00

9.00(8)

N.L.

49.80

30.00(2)

30.00(2)

13.50

8.00(7)

Yukon

48.00

30.00

17.50

13.50(4)

-

N.W.T.

47.05

26.50

26.50

14.50

-

Nunavut

44.50

27.00

27.00

14.50

-

  1. Effective April 1, 2016, the general corporate tax rate increased from 27% and the small business tax rate decreased from 14.5%
  2. Effective January 1, 2016, the general corporate tax rate increased from 29% and the M&P rate increased from 20% due to the elimination of the Manufacturing and Processing Profits Tax Credit.
  3. Quebec provides a rate reduction for manufacturing SMEs.  Where certain conditions are met, the maximum reduction available is 4%, for a combined rate of 14.5%.  Note that a lessor reduction may be available to certain manufacturing SMEs where not all conditions are met.
  4. The tax rate for M&P profits eligible for the small business deduction is 12%.
  5. As part of the HST (combined rates are 15% in Nova Scotia and 13% in Ontario).
  6. The QST system is harmonized with the GST, though two separate tax systems remain – the GST and the amended QST.
  7. Effective July 1, 2016, the provincial portion of the HST in New Brunswick and Newfoundland & Labrador will increase to 10%, which will increase the combined HST rate from 13% to 15%.
  8. Effective October 1, 2016, the provincial portion of the HST in Prince Edward Island will increase to 10%, which will increase the combined HST rate from 14% to 15%. 

(Source: Nova Scotia Government)

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