April 19, 2016
On April 19, 2016, Honorable Minister of Finance Randy Delorey delivered the 2016-2017 Budget for the Province of Nova Scotia. In contrast to many of the other provinces which are projecting deficits, this Nova Scotia budget is reporting a very slim $17.1 million surplus. The main reason behind this surplus is due to modest increases in personal tax revenues while maintaining expenditures at the same level as the prior year.
The Budget documents discuss various items which have been maintained by the province; such as previously announced personal and corporate tax rates, and various tax relieving programs aimed at low income seniors. In addition to maintaining these and other tax credits announced in prior budgets, the 2016-2017 Budget introduces the following:
Amount for Young Children
Nova Scotia introduced this tax credit to offset the tax impact of the Federal Universal Child Care Benefit (UCCB). The UCCB was a taxable benefit received by parents with young children and this credit was intended to help reduce the provincial taxes on this income. Nova Scotia is maintaining this tax credit even though the Federal government is eliminating the UCCB payments effective July 1, 2016.
Trusts and Estates
Nova Scotia will follow along with recent Federal tax changes announced for the taxation of trusts and estates. These changes effectively allow the graduated personal tax rates for trusts on the first 36 months after the individual’s death if the trust is eligible as a “graduated rate estate.” Beyond this 36 month period, the province’s top tax rate of 21% will apply to the income of a trust which results in a combined federal and provincial tax rate of 54%.
Food Bank Tax Credit
Effective January 1, 2016, a farming business may claim a non-refundable tax credit equal to 25% of the FMV of the agricultural products donated to registered charities providing food to families in need. This tax credit must be claimed in the same year as the donation tax credit or deduction is claimed for the same donation.
As mentioned previously, there are no corporate tax rate changes. The province has continued with their assistance to small businesses by maintaining the 3% small business tax rate on the first $350,000 of active business income.
A PDF version is available here
The comments made in this article are provided for information purposes only and are not intended to be used for tax planning purposes.
Please contact a WBLI advisor to discuss any of the items mentioned above and the implications these may have on you or your business.