Executive summary

On 20 March 2018, Nova Scotia Finance and Treasury Board Minister Karen Casey tabled the province's fiscal 2018-19 budget. The budget contains a few tax measures affecting individuals and corporations.

The Minister anticipates a surplus of CA$¹29.4 million for 2018-19, and projects surpluses for each of the next three years.

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.

Nova Scotia's 2018 and 2019 corporate tax rates are summarized in Table A.

Table A: Corporate tax rates

*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.

Other business tax measures

The Minister did not propose any changes to other business tax measures.

Personal tax

Personal income tax rates

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

The 2018 Nova Scotia personal tax rates are summarized in Table B.

Table B: 2018 Nova Scotia personal tax rates

For taxable income in excess of $144,489, the 2018 combined federal-Nova Scotia personal income tax rates are outlined in Table C.

Table C: Combined 2018 federal and Nova Scotia personal tax rates

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

Personal tax credits

This budget proposes changes to the following personal credits/amounts:

• The province is removing the $10,000 maximum on eligible medical expenses that can be claimed through the Medical Expense Tax Credit for a financially dependent relative effective for the 2018 tax year.
• Effective 1 January 2019, the province intends to introduce a new Innovation Equity Tax Credit, which will be more narrowly focused and will phase out the existing equity tax credit.

Other tax measures

Cannabis tax

In December 2017, the province agreed in principle to enter into a coordinated cannabis tax framework with the Federal Government for a two-year period following the legalization of recreational cannabis.

A federal excise duty of $1 per gram of flowering material in a cannabis product will be imposed, of which $0.75 per gram will be collected on behalf of the province.

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 the following:

Ernst & Young LLP (Canada), Halifax

• Darrin Talbot
  darrin.talbot@ca.ey.com
• Jennifer Palmer
  jennifer.l.palmer@ca.ey.com
• Nathan Priddle
  nathan.priddle@ca.ey.com
• Jacqueline Purcell
  jacqueline.purcell@ca.ey.com
• Nakita Baines
  nakita.baines@ca.ey.com

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ATTACHMENT

PDF version of this Tax Alert