News Releases
Government Home Search Sitemap Contact Us  


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."

-30-

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.
 


SearchHomeBack to GovernmentContact Us


All material copyright the Government of Newfoundland and Labrador. No unauthorized copying or redeployment permitted. The Government assumes no responsibility for the accuracy of any material deployed on an unauthorized server.
Disclaimer/Copyright/Privacy Statement