Executive summary

On 8 February 2018, Northwest Territories Finance Minister Robert C. McLeod tabled the territory's fiscal 2018–19 budget. The budget contains no new taxes and no tax increases, although detailed proposals will be developed during 2018–19 to implement a land transfer tax.

The Minister proposes operating expenditures of CA$¹1.71 billion and forecasts revenues of $1.75 billion. After adjusting for infrastructure contributions and supplementary reserve requirements, the budget projects an operating surplus of $23 million for 2018–19.

Following is a brief summary of the key tax measures.

Detailed discussion

Business tax measures

Corporate tax rates

No changes are proposed to the corporate tax rates or the $500,000 small-business limit.

The Northwest Territories' 2018 and 2019 corporate tax rates are summarized in Table A.

Table A: Corporate tax rates

* The small-business rate is prorated based on a 31 December year end.

** On 24 October 2017, the Federal Government tabled a notice of ways and means motion to implement reductions in the small-business corporate income tax rate, which were announced on 16 October 2017. The federal small-business rate is reduced from 10.5% to 10.0% effective 1 January 2018 and will be further reduced to 9.0% effective 1 January 2019.

Personal tax

Personal income tax rates

The budget does not include any changes to personal income tax rates.

The 2018 Northwest Territories' personal tax rates are summarized in Table B.

Table B: 2018 Northwest Territories personal tax rates

For taxable income in excess of $137,248, the 2018 combined federal-Northwest Territories personal income tax rates are outlined in Table C.

Table C: Combined 2018 federal and Northwest Territories personal tax rates

* The rate on capital gains is one-half the ordinary income tax rate.

Other tax measures

Property and education mill rates

In keeping with the existing indexation policy, property and education mill rates will be adjusted for inflation, effective 1 April 2018.

Land transfer tax

Detailed proposals to implement a land transfer tax similar to other jurisdictions will be developed during 2018–19. The tax is anticipated to raise $3.1 million annually. Budget 2018–19 announces that the tax could be structured progressively by levying a smaller percentage on property of lower value.

Sugary drinks tax

The sugary drinks tax first announced in the 2017-18 budget (with the intent to be implemented in 2018-19) will continue to be investigated. Budget 2018–19 states the Government's intention to continue to work with stakeholders on a proposed approach and to get feedback from residents.

Carbon pricing

The Northwest Territories' plans for carbon pricing will be announced later this year, as well as appropriate offsets to mitigate the effects of such pricing on the cost of living and doing business in the territory.

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ENDNOTE

¹ Currency references in this Alert are to CA$.

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CONTACTS

For additional information with respect to this Alert, please contact your EY or EY Law advisor.

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ATTACHMENT

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