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June 30, 2010

New Tax Reductions Take Effect July 1, 2010

New tax reductions that will save Newfoundlanders and Labradorians approximately $37 million annually come into effect July 1, 2010.

Several tax measures were announced in Budget 2010: The Right Investments — For Our Children and Our Future — including reductions to personal income tax rates and enhancements that benefit seniors — which build on the unprecedented tax relief the Williams Government has implemented since 2007.
"The reductions that take effect on July 1 of this year fulfill our ongoing commitment to maintain the lowest rates of personal income tax in Atlantic Canada," said the Honourable Tom Marshall, Minister of Finance and President of Treasury Board. "These are further steps in our government's progressive plan to lower the burden on taxpayers and ensure that Newfoundland and Labrador's taxes remain competitive."

Effective July 1, 2010, the provincial personal income tax rate on income between $31,278 and $62,556 will be lowered to 12.5 per cent (from 12.8 per cent). The tax rate for the top income tax bracket (over $62,556) will decrease to 13.3 per cent (from 15.5 per cent).

These changes will make Newfoundland and Labrador's top marginal rate among the lowest in the country. It also complements tax relief brought in by the Williams Government in previous years targeting low income earners, such as the Low Income Tax Reduction. This province already has the lowest tax rate on the first income bracket in Atlantic Canada.

Also on July 1, the Dividend Tax Credit rate on eligible dividends will increase to 11 per cent, making the province more competitive in this area and encouraging investment activity.

These changes are among several measures introduced in Budget 2010, including tax relief for seniors and lowering the small business corporate income tax rate by one per cent, which came into place earlier this year.

For seniors, the non-refundable Age Amount tax credit for individuals aged 65 years or older increases from $3,681 to $5,000. The income level at which taxpayers become eligible for the credit moves from $51,940 to $60,733, meaning that more seniors now qualify to receive it. Those who claim the Age Amount will receive a benefit of up to $102 through a reduction in their provincial tax payable.

As well, the maximum amount under the Low-Income Seniors' Benefit Program, which is paid out in October, will increase from $803 to $900, providing up to an additional $97 for eligible seniors. The Low-Income Seniors' Benefit is available to seniors with a family net income under $33,884. Approximately 42,500 seniors in Newfoundland and Labrador will be eligible for this increase.

"Budget 2010 taxation measures are directly benefiting our province's seniors, our small businesses and entrepreneurs, and everyday Newfoundlanders and Labradorians," said Minister Marshall. "As a result of our action to improve tax competitiveness, Newfoundland and Labrador is being recognized increasingly as an attractive location to live, work, and do business."

In total, the tax reductions in Budget 2010 will save Newfoundlanders and Labradorians approximately $48.5 million this year. Since 2007, the Williams Government has introduced measures totaling approximately $1.2 billion in cumulative savings for taxpayers.

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Media contact:
Mark King
Director of Communications
Department of Business
709-729-7628, 699-3454

2010 06 30                     11:50 a.m.

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