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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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