Minister announces roundtable meeting for new tax incentive

Youth Services and Post-Secondary Education Minister Anna Thistle will meet with student groups, on Tuesday, May 27, to discuss details of a provincial tax incentive program designed for post-secondary students. The meeting will take place at Memorial University�s Student Centre.

The new tax incentive proposes to provide post-secondary students and graduates with a non-refundable tax credit for the principal payment on their Newfoundland and Labrador Student Loan.

"This tax credit will be unique in Canada, and is designed to help relieve the debt load of students who have graduated and are working in this province," said Minister Thistle. "Students and graduates who are repaying their Newfoundland and Labrador student loans will be able to take advantage of this incentive on their 2003 income tax returns."

Those invited to attend the roundtable include representatives from the Newfoundland and Labrador Youth Advisory Council, Canadian Federation of Students, Memorial University of Newfoundland Student Union, Memorial Graduate Student Union, the College of the North Atlantic, private career colleges and former graduates of Memorial University.

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.

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.

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

2003 05 22                                     11:15 a.m.