Finance
March 29, 2010
Seniors, Small
Business and Others to Benefit from Tax Relief Measures
In Budget 2010, the Williams Government continues to
ensure that Newfoundland and Labrador maintains a
competitive tax regime. Today, the Honourable Tom
Marshall, Minister of Finance and President of Treasury
Board, announced additional tax relief for seniors and
further reductions to personal and small business income
tax rates. These measures will result in Newfoundland
and Labrador having the lowest rates in Atlantic Canada.
In addition, an increase in taxes on tobacco will help
act as a deterrent to potential new smokers.
"Budget 2010 further solidifies our commitment to
reduce taxes for the people of our province," said
Minister Marshall. "Since 2007, our government has made
significant progress in reducing the tax burden,
especially for those in the lower income bracket. Tax
reductions this year will put an additional $48.5
million back into the hands of residents of this
province, providing $1.2 billion in cumulative tax
savings for Newfoundlanders and Labradorians since 2004.
These measures work to improve the lives of our citizens
and continue to make our province an attractive place to
live, work and invest. These reductions also fulfill our
government�s commitment to maintain the lowest tax rates
in Atlantic Canada."
Benefits for Seniors
Budget 2010 builds upon measures initiated by the
Provincial Government to support seniors in the
province. The Age Amount tax credit is a non-refundable
tax credit that reduces the tax payable. For individuals
aged 65 years or older the Age Amount will increase from
$3,681 to $5,000 and the upper income threshold for
eligibility will rise from $51,940 to $60,733, which
increases not only the amount of the credit, but also
the number of people eligible for the credit. There are
more than 73,000 eligible seniors that will receive a
benefit of up to $102.
In addition, Budget 2010 will further enhance the
Low-Income Seniors� Benefit Program, with the maximum
amount under the program increasing from $803 to $900.
This will result in eligible seniors receiving up to an
additional $97 in October 2010 when payments are issued.
The Low-Income Seniors� Benefit is available to anyone
with family net income less than $33,884 who is at least
65 years at any time during the tax year. It is expected
that approximately 42,500 seniors will be eligible for
this increase.
Since 2006, the Provincial Government has made
significant enhancements to the Low-Income Seniors�
Benefit. The benefit has been expanded to include more
married seniors and the maximum benefit available for
single seniors increased from $376 to $900.
Personal Income Tax
Effective July 1, 2010, the provincial personal
income tax rate for individuals with income between
$31,278 and $62,556 will be reduced from 12.8 per cent
to 12.5 per cent. The tax rate for the third income tax
bracket, which starts at $62,556, will decrease from
15.5 per cent to 13.3 per cent. Changes in these income
brackets will mean Newfoundland and Labrador will have
one of the lowest top marginal rates in Canada, in
accordance with the Williams Government Bluebook
commitment to maintain the lowest tax rates in Atlantic
Canada.
Earlier tax reductions brought relief to taxpayers in
all tax brackets, but particularly low income.
Currently, Newfoundland and Labrador has the lowest
income tax rate in the first bracket in Atlantic Canada.
Additionally, over 47,000 people have benefited from the
elimination of provincial personal income tax through
the Low Income Tax Reduction. The measures announced
today increase the fairness of the tax system by
providing additional relief to those who pay a
disproportionate share of the tax burden. At the same
time, the �ability to pay� principle is retained so that
the tax system progressively taxes higher income persons
at greater rates than lower income persons.
"Recruitment and retention of professionals and
skilled trades people is a priority for our government,"
said Minister Marshall. "Through years of strategic
investments and planning by our government and the
development of our natural resources, our province is
well positioned for growth in 2010 and beyond. These tax
initiatives will assist in the attraction of these
individuals who are needed to keep the economic momentum
in the province moving forward."
Reduction for Small Businesses
Budget 2010 will enhance support for small business
in the province. For fiscal periods beginning on or
after April 1, 2010, the small business income tax rate
will be reduced from five per cent to four per cent
resulting in a benefit of $4.4 million for 4,800 small
businesses in the province.
Dividend Tax Credit Increase
The Dividend Tax Credit rate on eligible dividends
will increase from 9.75 per cent to 11 per cent. This
change will improve the competitive position of the
province within Canada and encourage investment. The
change is effective July 1, 2010 and will reduce taxes
by $1 million annually.
Tobacco Tax
"Promoting healthy living is also a key component of
this government," said Minister Marshall. "Increasing
taxes on cigarettes will not only help to serve as a
deterrent, it will generate an additional $6 million in
revenue that will assist existing programs and
services."
The tax per cigarette will increase by one cent and
the tax per gram of fine-cut tobacco will increase by
two cents per gram or the equivalent of one cent per
rolled cigarette. The increase is effective 12:01 a.m.
March 30, 2010.
"Our government has steadfastly developed and
implemented a plan for prosperity," said Minister
Marshall. "While these tough economic times have had an
impact on our economy, and the global recovery is
fragile, these tax measures will help continue to
stimulate economic activity and benefit the people of
our province."
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Media contact:
Ronalda Walsh
Director of Communications
Department of Finance
709-729-6830, 685-1741
ronaldawalsh@gov.nl.ca
BACKGROUNDER
Tax Measures for Budget 2010
Measures contained in Budget 2010 continue with the
Provincial Government�s plan to improve tax
competitiveness and reduce the tax burden. Overall,
savings for taxpayers from these measures will be
approximately $48.5 million. An increase in tobacco tax
will generate an additional $6 million in revenue.
Tax Relief for Seniors
Age Amount
Effective for the 2010 tax year, changes will be made
to the Age Amount, a non-refundable tax credit for
taxpayers who are 65 or older by December 31 of the tax
year. The Age Amount will increase from $3,681 to
$5,000. As a result of the increase in the
non-refundable tax credit amount, the income at which
taxpayers will be eligible to receive a benefit from the
credit will increase from $51,940 to $60,733. Eligible
seniors that claim the Age Amount will receive a benefit
of up to $102 through a reduction in their provincial
tax payable.
Seniors� Benefit
The Williams Government is further enhancing the
Newfoundland and Labrador Low-Income Seniors� Benefit to
provide additional support to the province�s seniors.
The maximum amount under the Low-Income Seniors� Benefit
will increase from $803 to $900, an additional $97 to be
paid starting in October 2010.
The Newfoundland and Labrador Low-Income Seniors'
Benefit is a refundable tax credit for low income
seniors who are at least 65 years of age at any time
during the tax year. This benefit is paid in October of
each year and is included in the same cheque as the
GST/HST credit. The benefit is paid automatically
without need to apply, and is based on family net income
from the previous year. About 42,500 seniors will
benefit from these changes.
The following table shows the impact of the
announcements for seniors.
Family
Net Income
($) |
Savings from Increase to Age
Amount
($) |
Increase to Seniors� Benefit
($) |
Total
Savings
($) |
15,000 |
15 |
97 |
112 |
20,000 |
102 |
97 |
199 |
25,000 |
102 |
97 |
199 |
30,000 |
102 |
97 |
199 |
33,500 |
102 |
45 |
147 |
35,000 |
102 |
0 |
102 |
40,000 |
102 |
0 |
102 |
45,000 |
102 |
0 |
102 |
50,000 |
102 |
0 |
102 |
55,000 |
66 |
0 |
66 |
60,000 |
8 |
0 |
8 |
Personal Income Tax Reductions
Effective July 1, 2010, at a cost of $36.2 million
annually, the personal income tax rate on the second
bracket, affecting individuals with incomes between
$31,278 and $62,556, will be reduced from 12.8 per cent
to 12.5 per cent. The rate will be reduced from 15.5 per
cent to 13.3 per cent for individuals in the third
bracket, with income beginning at $62,556. These changes
will deliver on the Williams Government commitment to
maintain the lowest personal income tax rates in
Atlantic Canada.
Incidence of Tax Savings |
Taxable |
Savings |
Savings |
Income |
$ |
% |
40,000 |
26 |
1 |
50,000 |
56 |
1.4 |
60,000 |
86 |
1.6 |
70,000 |
258 |
3.8 |
80,000 |
478 |
5.8 |
Previous budgets focused on tax reductions for all
income earners, but particularly those at low income
levels. Newfoundland and Labrador currently has the
third lowest rate among provinces in the lowest tax
bracket.
Rate Reduction for Small Business
Effective April 1, 2010, the small business income
tax rate will be reduced from five per cent to four per
cent. As a result, this province�s small business tax
rate will become the lowest of all the provinces east of
Manitoba, other than Prince Edward Island. This
initiative will put $4.4 million back into the hands of
small businesses. Approximately 4,800 companies will
benefit from this measure. This measure also complements
changes made by the Williams Government over the past
number of years which has raised the small business
income deduction to $500,000.
Dividend Tax Credit Increase
Effective July 1, 2010, the Dividend Tax Credit rate
on eligible dividends will be increased from 9.75 per
cent to 11 per cent. Dividends are paid from a
corporation�s after tax income, and are taxed again in
the hands of the recipient. The Dividend Tax Credit
relieves some of this double taxation. This change will
improve the competitive position of the province within
Canada and encourage investment. The measure will reduce
taxes by $1 million annually.
Tobacco Tax
Budget 2010 brings an increase in the tax for both
cigarettes and fine-cut tobacco. The increase is
effective 12:01 a.m. March 30, 2010, and applies to all
wholesale and retail sales from that time.
For manufactured cigarettes, the tobacco tax will
increase from 18 cents to 19 cents per cigarette, and
the increase for fine-cut tobacco will be from 30 cents
per gram to 32 cents per gram, an increase of about one
cent per roll-your-own cigarette. Through this tobacco
tax increase, government will generate an additional $6
million in revenue.
The new tax rates apply to all retail sales effective
12:01 a.m. on March 30, 2010. Wholesalers and retailers
should adjust their price effective with the coming into
force of the tax increase. An inventory should be
completed, and tobacco tax is required to be remitted to
the Department of Finance at the rate of $2 per carton
of cigarettes, and $2 for each 100 grams of tobacco.
A tax return and inventory form will be mailed within
the next few days. Inventory forms may also be found at
the Department of Finance website at
www.fin.gov.nl.ca/fin/tax_programs_incentives/personal/tobacco.html
For additional 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
2010 03 29 2:35 p.m.
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