Nova Scotia Budget Report 2017

“Opportunities for Growth”

On April 27, 2017, the Honourable Randy Delorey presented his second budget as Nova Scotia’s Finance and Treasury Board Minister.

Highlights

  • Surplus of $41 million projected for 2016-17 fiscal year
  • Surplus of $136 million forecast for 2017-18 fiscal year (net surplus of $26 million)
  • Small business limit increased to $500,000
  • Basic personal amounts increased for low and middle income taxpayers
  • No income tax or HST rate increases

As projected, the 2016-17 fiscal year will finish in a surplus, and a surplus is also projected for 2017-18.

With an election around the corner, this budget includes new spending on infrastructure, healthcare and education.

After several years of deficits, the surplus of $41 million for 2016-17 is higher than the previously estimated net surplus of $17 million.

This budget allocates significant spending towards infrastructure development including $390 million over 7-years to make major improvements to certain highways. 

Infrastructure spending also includes improving high-speed internet throughout rural Nova Scotia.

Increased healthcare spending will provide improved access to health care teams, including greater access to orthopedic surgeons and mental health programs. 

Assistance will also be provided to aging Nova Scotians. One way this will be accomplished is by increased access to home care.

Education spending increases focus on early learning programs, as well as incentives to help new post-secondary graduates find work and provide tuition support to technical apprentices.

The government also plans to help businesses by investing to revitalize key tourism sites and provide greater access to funds that will support innovation initiatives and exports of Nova Scotia agricultural products.

As announced previously ... the budget proposes to increase the small business deduction limit to $500,000 (from $350,000) effective January 1, 2017. 

Low and middle income Nova Scotia residents will benefit from an increase in certain personal tax amounts starting in 2018, including:

  • Basic Personal Amount
  • Spousal Amount
  • Eligible Dependant Amount
  • Age Amount

No personal or corporate tax rate increases were announced in the budget.

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

 

2016

2017

Interest and regular income

54.00%

54.00%

Capital gains

27.00%

27.00%

Eligible dividends

41.58%

41.58%

Non-eligible dividends

46.97%

46.97%

 

Nova Scotia Personal Tax Rates

Bracket

2017

$0 to $29,590

8.79%

$29,591 to $59,180

14.95%

$59,181 to $93,000

16.67%

$93,001 to $150,000

17.50%

Above $150,001

21.00%

Combined Federal and Nova Scotia Personal Taxes

Bracket

Ordinary income*

Eligible dividends

Non-eligible dividends

$142,354 to $150,000

46.50%

31.23%

38.19%

$150,001 to $202,800

50.00 %

36.06 %

42.29 %

Above $202,800

54.00 %

41.58 %

46.97 %

Non-Refundable Credit Amounts increase to Low and Middle Income Earners

The budget announced an enhancement to certain non-refundable credit amounts for 2018 and subsequent tax years. 

The basic personal amount, spousal amount and eligible dependant amount will increase by $3,000 from $8,481 to a maximum amount of $11,481, for those taxpayers with taxable income less than $25,000. 

The enhanced benefit will be phased out for those with taxable income between $25,000 and $75,000, at a rate of 6 cents for every dollar of taxable income, and with taxpayers with taxable income over $75,000 will not receive any benefit from the enhancement.

The maximum age amount will increase $1,465, from $4,141 to $5,606, for the 2018 and subsequent taxation years. 

Similar to the above, the maximum benefit from this enhancement will be realized by taxpayers with taxable income of less than $25,000, and will be phased out between taxable incomes of $25,000 to $75,000.

Non-Refundable Tax Credits

The government confirmed today that personal tax credits for 2017 will be indexed by 1.0%.

The maximum tax credits amounts and actual Nova Scotia tax credits for 2016 and 2017 are set out below.

Nova Scotia Non-Refundable Tax Credits

 

2016

2017

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

2,480

218

2,564

225

EI Contributions

931

82

836

73

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%

Harmonized Sales Tax

The budget does not include any changes to harmonized sales tax rates.

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, 2017 remain as follows:

Corporate Income Tax Rates — As of January 1, 2017

 

Nova Scotia  

Combined Federal and Nova Scotia

General

16%

31%

M&P

16%

31%

Small business*

3%

13.5%

*On first $500,000 of active business income

Small Business Threshold Increased

On March 28, 2017, the provincial government announced that it would increase the small business threshold from $350,000 to $500,000. 

The budget confirmed this increase, and announced that it would be effective January 1, 2017.  

Other Measures

(Not related to income tax)

Motive Fuel Tax

Effective 1 April 2017, the province will provide an exemption from motive fuel tax for equipment used in the mining and quarrying sector.

Currently, motive fuel exemptions are available for such purposes as:

  • Fishing, Farming and Logging Operations
  • Commercial Vessels and Ferries
  • Provincial, Municipal, School Board and Public Works Vehicles
  • Equipment used for Firefighting
  • Motive Fuel Purchased by Status Indians on a Reserve
  • Locomotives

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 27, 2017.

 

 

2017 Corporate Tax Rates

 

 

Top 2017 Personal Rates

General
%

M&P
%

Small Business
%

2017 Prov. Sales Tax

B.C.

47.70

26.00

26.00

12.50(2)

7.00

Alta.

48.00

27.00

27.00

12.50

-

Sask.

47.75

27.00(1)

25.00(1)

12.50

6.00(7)

Man.

50.40

27.00

27.00

10.50

8.00

Ont.

53.53

26.50

25.00

15.00

8.00(8)

Qué.

53.31

26.80

26.80

18.50(3) 

9.975(9)

N.B.

53.30

29.00 

29.00

13.50(4)

10.00(8)

N.S.

54.00

31.00

31.00

13.50

10.00(8)

P.E.I.

51.37

31.00

31.00

15.00

10.00(8)

N.L.

51.30

30.00

30.00

13.50

10.00(8)

Yukon(5)

48.00

30.00

17.50

13.50(6)

-

N.W.T.

47.05

26.50

26.50

14.50

-

Nunavut

44.50

27.00

27.00

14.50

-

  1. The general business rate will decrease to 26.5% and the M&P tax rate will decrease to 24.5% effective July 1, 2017.
  2. The small business tax rate will decrease to 13% effective April 1, 2017.
  3. Quebec provides a rate reduction from the small business rate eligible manufacturing small and medium-size enterprises (SMEs).  Where certain conditions are met, the maximum reduction available is 4%, for a combined rate 14.5%.  Note that a lesser reduction from the small business rate may be available to certain manufacturing SMEs where some, but not all conditions are met.
  4. The small business tax rate will decrease to 14% effective April 1, 2017.
  5. Rates do not reflect changes in tax rates announced April 27, 2017.
  6. The tax rate for M&P profits eligible for the small business deduction is 12%.
  7. The PST increased from 5% effective March 23, 2017.
  8. As part of the HST (combined rates are 15% in New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland & Labrador and 13% in Ontario).
  9. The QST system is harmonized with the GST, though two separate tax systems remain – the GST and the amended QST.  The combined rate is 14.975%.

(Source: Nova Scotia Government)

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