April 9, 2015
Nova Scotia Finance Minister, Diana Whalen, delivered the 2015-2016 McNeil government’s budget on April 9, 2016. The budget carried through on the Government’s promise to not increase spending. There were no new corporate taxes levied or HST changes.
The main corporate tax change affects the film industry where the Film Industry Tax Credit is changed from one that is fully refundable to one that is 25% refundable. The remainder of the tax credit, 75% will become an eligible tax credit to be used by film companies against the taxes they owe in the province. To help support the creative economy including film, animation, and music, a new program fund will be created in 2016 with 6 million of government funding.
PERSONAL TAX CHANGES
The biggest personal tax change will effect small business owners where the tax rate paid on dividends from an incorporated small business will increase. The dividend tax credit provided by the Nova Scotia government will reduce from 5.87% to 3.5%. This change will increase government revenue by 30 million per year.
Unfortunately for Small Business owners and their investors, the top combined marginal federal and provincial dividend tax rate for non-eligible dividends has been increasing steadily over the past few years from 36.21% (2012) to 39.07% (2014) to 41.87% (2015).
The Healthy Living Tax Credit of $500 will be eliminated for children who are enrolled in qualified activities. According to the Budget only 5% of filers claimed the credit and a large percentage of the filers were high income taxpayers.
Tobacco taxes will be increased by two cents per cigarette and two cents per gram of fine-cut tobacco.
The government promises to establish a tax working group to review tax recommendations and consider credits and exemptions in the future.
The Nova Scotia government is forecasting a deficit of $97.6 million for next year. Spending will include $20 million for public schools and $2 million for orthopaedic surgeries to reduce wait times. The biggest cut will come in the form of 320 full time jobs in the civil service.
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.
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