NLIS 28
March 22, 2001
(Finance)
BACKGROUNDER
Health and Post-Secondary Education (payroll) Tax increase in exemption
threshold
General Overview
- The 2001 budget announces an increase in
the exemption threshold to $500,000.
- The net impact of this measure will be a
revenue reduction of $2 million annually. This revenue will be put back
into the hands of employers.
Details
- Beginning April 1, 2001, the annual
exemption threshold will be increased from $400,000 to $500,000. As the
tax is an annual tax paid monthly, the effective tax exemption threshold
for the year is calculated as 9/12ths of the increased amount of
$100,000 plus the total of the previous tax free threshold of $400,000.
Consequently, for the 2001 taxation year, the effective tax free
threshold is $475,000.
- On January 1, 2002, the annual tax free
remuneration will be $500,000.
- Some employers may be required to adjust
previous remittances in order to reflect the new threshold.
- This measure will remove just over 200
taxpayers from the tax roll leaving a total of about 900 taxpayers. The
following table summarizes the threshold increases since 1997.
Taxation
Year |
Threshold
Amount |
Annual Cost
($ millions) |
Number of
Employers
Dropped from Tax Roll |
1997 |
100,000 |
- |
- |
1998 |
120,000 |
1 |
225 |
1999 |
150,000 |
1.5 |
300 |
2000 |
400,000 |
4.1 |
1,300 |
2001 |
500,000 |
2 |
200 |
Total |
|
8.6 |
2,025 |
- Substantially, all small businesses no
longer pay this tax.
Media contact: Paula Dyke, Communications,
(709) 729-0329.
2001 03 22
3:50 p.m.
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