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February 11, 2019
Canada: Northwest Territories issues budget 2019/20
On 6 February 2019, Northwest Territories Finance Minister Robert C. McLeod tabled the territory’s fiscal 2019/20 budget. The budget contains no new taxes other than the cannabis excise tax and the carbon tax, both of which had already been announced, and contains no increases in the existing taxes.
The Minister proposes operating expenditures of CA$1.8 billion1 and forecasts revenues of $1.9 billion. After adjusting for infrastructure contributions and supplementary reserve requirements, the budget projects an operating surplus of $60 million for 2019/20.
Following is a brief summary of the key tax measures.
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 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.
** The federal small-business rate was reduced from 10% to 9% effective 1 January 2019.
Personal income tax rates
The budget does not include any changes to personal income tax rates.
The 2019 Northwest Territories personal income tax rates are summarized in Table B.
Table B: 2019 Northwest Territories personal tax rates
For taxable income in excess of $140,267, the 2019 combined federal and Northwest Territories personal income tax rates are outlined in Table C.
Table C: Combined 2019 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 2019.
Sugary drinks tax
In January 2019, the Department of Finance released for public consultation a discussion paper on the proposed implementation of a tax on all sugar-sweetened beverages, which was first announced in the 2017–18 budget. The 2019/20 budget indicates that a report detailing the findings on these consultations will be released to the public later in the year.
On 11 July 2018, the Government of the Northwest Territories released its planned approach to implement carbon pricing including introducing a carbon tax on fuels effective 1 July 2019 as well as various full or partial rebates and benefits to return most of the carbon tax revenue into the economy.
The Minister indicated that the legislation to levy this previously announced Northwest Territories carbon tax will be introduced this session.
Out of the $16.2 million in carbon tax revenue expected in 2019/20, the budget estimates that almost $7 million will be returned to residents and businesses through the full rebate of the tax paid on heating fuel and fuel used to generate electricity, and the cost of living offset benefit program for individuals. Large emitters are expected to receive about $5 million in carbon tax partial rebates and through individualized trusts that can be used to make investments that reduce greenhouse gas emissions.
1. Currency references in this Alert are to CA$.
For additional information with respect to this Alert, please contact the following:
Ernst & Young LLP (Canada), Toronto
Ernst & Young LLP (Canada), Montréal
Ernst & Young LLP (Canada), Calgary
Ernst & Young LLP (Canada), Vancouver
Ernst & Young LLP, Canadian Tax Desk, New York