Announced changes are effective July 1, 2008. However, personal income tax is based upon annual income from January 1 to December 31. Rates shown below reflect the effective annual tax rate for the full calendar year, resulting from implementation on July

The cumulative savings from Budget 2007 and Budget 2008 are illustrated below:

Enhancements to the Newfoundland and Labrador Seniors� Benefit will improve the fairness of program benefits for single seniors. Effective for 2008, a single senior with net income of up to $25,275 is eligible to receive a benefit of $776. The amount of the benefit will be phased out at net income between $25,275 and $31,930.

In 2007, a single senior with net income of up to $15,333 was eligible to receive a benefit of $384.

The program enhancements for single seniors recognized that the costs of operating a household are not significantly different for a single senior than a married senior couple. As a result of these changes, the Seniors� Benefit payment and qualifying income threshold is the same for a single senior as a senior couple.

The Newfoundland and Labrador Seniors' Benefit is a refundable tax credit for low income seniors who are at least 65 years of age at any time in the tax year. This benefit is paid in October of each year and is included in the same cheque as the GST/HST credit. The benefit is paid automatically without need to apply, and is based on family net income from the previous year. A single senior includes a person who has been widowed, divorced or legally separated. About 31,500 seniors will benefit from these changes, including those receiving a higher amount or receiving the Seniors� Benefit for the first time.

The following table shows the impact of the announcement for single seniors, compared to 2007.

The increased benefit amount is also available to a married senior whose spouse is less than 65 years old. The maximum benefit is available where the senior�s net income and the net income of his/her spouse is $25,275 or less.

On April 22, 2008, government announced the elimination of the provincial 15% Retail Sales Tax (RST) on insurance premiums, effective January 1, 2008.

RST had been applied to insurance premiums for property and casualty insurance policies (mainly vehicles, homes and business locations). It did not apply to life, sickness, or health insurance premiums. The tax had applied to consumers, businesses, municipalities and the not for profit sector.

The tax was payable at the time of purchasing or renewing a contract of insurance. While it has been common practice among insurers, agents or representatives to extend payment terms to customers over a number of months, the insurer was required to levy and remit the tax upon the full premium amount at the time of the purchase or renewal of insurance, regardless of the payment terms.

The following is an overview of the key administrative issues related to the elimination of sales tax on insurance premiums:

Effective April 22, 2008, insurers/insurers� agents must no longer charge Retail Sales Tax on the purchase or renewal of premiums for contracts of insurance. For contracts of insurance that commenced or were renewed on or after January 1, 2008, a refund of tax will apply. The insurer or the insurance agent, as the case may be, who collected the tax from the client, is responsible to refund the tax.

For contracts of insurance that were entered into or renewed before January 1, 2008:

• No refund of tax shall be paid on cancellations, deletions or other reductions in premiums with an effective date of April 22, 2008 or later.
• Where there was an increase, effective January 1, 2008 or later, in the premium payable resulting from additions, endorsements or other changes in the contract of insurance, and tax was payable at that time, the tax may be refunded relative to the amount of the increased premium.
• If prior to April 22, 2008, an insured person received a refund or credit of premium with respect to a cancellation, deletion or other reduction in premium, a refund of the tax applies. In most cases, the insured person would have already received a credit note/invoice and a refund or adjustment in installment payments.
• Where the effective date of a transaction giving rise to a reduction in premium is prior to April 22, 2008, and a credit note/invoice is issued subsequently, a refund of tax shall apply.

The registrant (the insurer or insurance agent that collected the tax) is responsible to ensure clients receive the appropriate refund. The tax refund may be processed as a direct payment to the client, a reduction in monthly installments, or a credit against an account receivable.

A credit note or invoice shall be provided to the client which clearly shows the amount of the tax refund, and the disposition of the amount.

It is anticipated that most refunds will be paid within 60 to 90 days. This amount of time is required by insurance companies and brokers to change computer systems and process claims.

The annual benefit to taxpayers of removing RST on insurance premiums will be about $94 million this fiscal year, and $75 million annually thereafter.

This measure will remove 308 employers from the tax rolls and will provide relief for another 578 employers. Employers who are associated within the meaning of the Income tax Act (Canada) share the $1 million payroll exemption.

Effective May 1, 2008, government is reducing motor vehicle registration fees at a cost of $10.0 million. Fees will be reduced:

In Budget 2008, the Government has allocated $1.6 million to apply a road equivalency standard to ferry rates for commercial vehicles, freight and other cargo, which is Phase II of the Ferry Rate Review. Commercial ferry rates are expected to decline by as much as 60 � 70% in some cases, with no increase in rates. This builds upon Phase I of the Ferry Rate Review which provided road equivalency rates to passenger vehicles.

For more information about any of these tax and fee measures, please contact:

Department of Finance
P.O. Box 8700
St. John's, NL
A1B 4J6
Telephone: (709) 729-6830