Budget Bulletin Tax Changes for Nova Scotians

first_img -30- NOTE: For further 2009-10 budget information, see the Department of Finance website at www.gov.ns.ca/finance . introduction of Tax-Free Savings Accounts announced in the 2008–09 federal budget (the province will also allow investments made under the Equity Tax Credit Act to be held in Tax Free Savings Accounts.) increasing the maximum amount that can be withdrawn from an RRSP under a Home Buyers Plan to $25,000 carrying back decreases in value from a deceased annuitant’s RRSP or RRIF to be deducted against year-of-death income accelerated Capital Cost Allowance for computers acquired after Jan. 27, 2009 accelerated Capital Cost Allowance for manufacturing and processing equipment (announced in the 2007–08 federal budget, extended in the 2008–09 federal budget, and adjusted to reflect straight-line accelerated CCA in 2010 as part of the 2009–10 federal budget). The Department of Finance is continuing its comprehensive review of the tax system in 2009–10. The government will engage the public and seek input about the best ways in which the tax system can be used to achieve long-term fiscal, economic, social, and environmental objectives. New Tax Measures—Details Small Business Tax RateNova Scotia’s small and medium-size businesses are important sources of job creation. Over three years starting in 2011, the government will cut the small business tax rate in half. The rate will remain at five per cent in 2009 and 2010, drop to four per cent in 2011, three per cent in 2012 and 2.5 per cent in 2013. In 2007, the small business rate of five per cent saved Nova Scotia’s smaller and medium sized companies $119 million in taxes relative to the general corporate rate of 16 per cent. On full implementation, this measure is expected to save small and medium-sized businesses an additional $25 million to $30 million per year. About 12,000 companies are expected to benefit from this tax reduction, overwhelmingly among companies based entirely in the province. Tobacco Taxes Effective at midnight on budget day, the tobacco tax rate will increase by five cents per cigarette, five cents per pre-proportioned tobacco stick, and five cents per gram of fine-cut tobacco. This measure will increase tobacco tax revenues by $29.6 million in 2009–10. Healthy Living Tax Credit The 2008–09 budget announced the extension of the Healthy Living Tax Credit to all Nova Scotians effective Jan. 1, 2009. The extension of this credit to adult recreation expenses has been temporarily deferred. Extension of the Healthy Living Tax Credit to adults will be revisited at a later date. This credit enhancement would have cost $5.3 million in 2009–10. For the 2009 and subsequent taxation years, up to $500 in expenses for children’s sport and recreation registration fees are still eligible for a tax credit. Transit Tax Credit The 2008–09 budget announced a new Transit Tax Credit starting in 2009. The implementation of this credit has been temporarily deferred and will be revisited at a later date. This tax credit would have cost $1.5 million in 2009–10. Previously Announced Tax Measures The government remains committed to legislated reductions in the tax burden on individuals and businesses. These measures were previously legislated and will take effect in the 2009 or 2010 taxation years. Basic Personal Amount and Other Non-refundable Credits As announced in the 2006–07 budget, the province is increasing the basic personal amount exempted from personal income taxes by $250 per year over a four-year period. This represents an increase of $1,000 or 13.83 per cent. The province’s other non-refundable credits will also grow by 13.83 per cent over this period. The basic personal amount will increase from $7,731 to $7,981 effective Jan. 1, 2009, and to $8,231 in January 2010. Other non-refundable tax credit amounts will grow by 3.23 per cent in 2009 and 3.13 per cent in 2010. Relative to tax credit amounts in 2006, Nova Scotians will pay more than $50 million less in personal income taxes in 2009–10. Increases in credit amounts in 2009 and 2010 will save Nova Scotians $19.1 million relative to 2008 amounts this budget year. Volunteer Firefighters Tax Credit For the 2009 tax year, the Volunteer Firefighters and Ground Search and Rescue Tax Credits will increase from $375 to $500 as announced in the 2007–08 budget. Increasing this refundable tax credit will provide an additional $900,000 to volunteers who keep Nova Scotia communities safe. Large Corporations Tax As announced in the 2006–07 budget, the province’s Large Corporations Tax on capital of non-financial institutions will decline from 0.2 per cent to 0.15 per cent on July 1, 2009. That tax rate will continue to decline on an annual basis until its elimination in 2012. The tax reduction from 0.2 per cent to 0.15 per cent on July 1, 2009, will save large Nova Scotia companies an estimated $9.1 million in taxes. Manufacturing and Processing The province announced the elimination of the Manufacturing and Processing Tax Credit in 2000. As announced in the 2006–07 budget, the use of credits accumulated under this program will cease on Dec. 31, 2009. Government Fee Increases There will be three per cent increases in certain fees legislated under the following acts: Companies Act, Corporations Registration Act, Motor Vehicle Act, Personal Property Security Act, Probate Act, Summary Proceedings Act, and Trust and Loan Companies Act. These and other fee increases announced earlier will provide additional revenues of $5.2 million to help cover the rising costs of government services. Other Tax Adjustments The government is implementing other adjustments to ensure that the tax system meets expected outcomes and functions smoothly. Graduate Tax Credit The period in which Nova Scotians can claim the Graduate Tax Credit will be extended from three years to five years. The Graduate Tax Credit was introduced in 2006. For 2006 and 2007, graduates from eligible post-secondary programs were able to reduce their taxes by up to $1,000. For those who graduated in 2008 and beyond, the graduate tax credit could reduce their taxes by up to $2,000. Some Nova Scotians were not able to use their entire graduate tax credit in the year of graduation. They could carry these unused credits forward to reduce their taxes in two taxation years after graduation. For example, a 2006 graduate could use the graduate tax credit to reduce taxes in 2006, 2007, and 2008. With a longer period, Nova Scotians will be able to claim graduate tax credits in the year of graduation as well as the four subsequent years. For example, a 2008 graduate could use the graduate tax credit in 2008, and any unused portion in 2009, 2010, 2011, and 2012. Equity Tax Credit and Labour-Sponsored Venture Capital Tax Credit The Equity Tax Credit and the Labour-Sponsored Venture Capital Tax Credit were scheduled to expire on Dec. 31, 2009. These credits will be extended by one year and reviewed as part of the government’s ongoing comprehensive tax review. Federal Tax Changes Changes to federal legislation can result in different calculations of taxable income. The province maintains a common tax base with the federal government for personal income taxes, corporate income taxes, Large Corporations Tax (even though the federal government eliminated its capital tax in 2006), and Harmonized Sales Tax. In 2009, federal amendments to tax bases altered taxable income and sales tax bases on which Nova Scotians pay provincial taxes, including the following: The province of Nova Scotia is maintaining personal income, corporate income and sales tax rates for Nova Scotians in 2009 and 2010. Tax relief from changes to the Basic Personal Amount and other non-refundable personal tax credits will proceed in 2009 and 2010 as planned. Previously announced reductions in the large corporations tax will also continue as legislated. The province will position itself for economic recovery by cutting the small business tax rate in half over three years, starting in 2011. The province is implementing other tax and fee changes to maintain revenues. These include: Tobacco taxes will increase by five cents per unit ($10 per carton of cigarettes) at midnight on budget day. Implementation of the previously announced extension of the Healthy Living Tax Credit to cover expenses for recreation registration fees for adults in 2009 will be temporarily deferred. Implementation of the previously announced introduction of a Transit Tax Credit for 2009 will be temporarily deferred. There will be a three per cent increase in certain legislated fees to reflect cost increases for these services.last_img read more

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