NLIS 59
March 27, 2003
(Youth Services and Post-Secondary Education)

 

Tax incentives for post-secondary students

Youth Services and Post-Secondary Education Minister Anna Thistle says government will launch a new tax initiative for the 2003 tax year, to encourage post-secondary students and graduates to work and stay in the province.

"This initiative will be designed to provide individuals with a non-refundable tax credit for a portion of the payment on their Newfoundland and Labrador Student Loans," said Minister Thistle.

This program will apply to provincial residents who are repaying their Newfoundland and Labrador student loans. Interest paid on student loans is currently eligible for a non-refundable tax credit. The new non-refundable tax credit could provide even greater tax relief for those students and graduates who choose to live and work in the province.

Details on this initiative will be finalized following a roundtable with students and stakeholders, a decision-making process that will include members of the province�s Youth Advisory Committee who provided valuable input into the re-design of the provincial student loan program.

"This government has made changes to the student loan program aimed at reducing student debt and making post-secondary education more affordable," said Minister Thistle. "This initiative, combined with our new debt reduction grants and enhanced interest relief, ensures our students can shed their student debt faster. These initiatives also ensure that Newfoundland and Labrador maintains its position as the most progressive province in the country in providing assistance to post-secondary students."

Media contact: Kathy Dicks-Peyton, Communications, (709) 729-6573.

BACKGROUNDER
Tax incentive for post-secondary students:
Newfoundland and Labrador student loan tax credit

Government will implement a new tax credit related to payments on the principal portion of Newfoundland and Labrador student loans. Effective for the 2003 tax year, a non-refundable tax credit would apply to principal payments on Newfoundland and Labrador student loans. This initiative will be considered at a roundtable with students and stakeholders, a decision-making process that will include members of the province�s Youth Advisory Committee who provided valuable input into the re-design of the provincial student loan program.

Individuals with taxable income less than $30,000 would be eligible for a tax credit amounting to 20 per cent of principal payments made in that year. As taxable income increases from $30,000 to $50,000, the tax credit rate would gradually reduce from 20 per cent to five per cent. The tax credit would not apply at taxable income greater than $50,000.

The following table illustrates the income tax savings for various levels of taxable income, if an individual repaid $1,000 of the principal portion of a Newfoundland and Labrador Student Loan.

Taxable

Income

Tax Credit Rate

Tax Savings at

$1,000 of Principal Repaid

$30,000

20%

$200.00

$35,000

16.25%

$162.50

$40,000

12.5%

$125.00

$45,000

8.75%

$87.50

$50,000

5%

$50.00

>$50,000

0%

$0

 

If a person with a taxable income of $40,000 repaid $1,000 of the principal of his or her Newfoundland and Labrador Student Loan, the tax credit for 2003 would be $125.

This tax credit would be unique in Canada. It is designed to help relieve the debt load of students who have graduated and are working in the province. The measure would apply only to the Newfoundland and Labrador portion of student loans.

This measure would see tax savings estimated at $3 million annually passed on to individuals repaying student debt.

2003 03 27                                         4:35 p.m.


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