October 1, 2020
Canada: Newfoundland and Labrador issues budget 2020–21
On 30 September 2020, Newfoundland and Labrador Finance Minister Siobhan Coady tabled the province’s fiscal 2020–21 budget. The budget contains no new income taxes and no income tax increases.
The Minister anticipates a deficit of CA$1.84 billion1 for 2020–21, a $300 million reduction from the province’s July fiscal update. A multi-year budget forecast was not prepared as part of this budget, due to uncertainties stemming from the COVID-19 pandemic.
The 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.
Newfoundland and Labrador’s (NL) 2020 corporate tax rates are summarized in Table A.
Table A – Corporate tax rates 2020
* The small-business rate is based on a 31 December year-end.
Personal income tax rates
The budget does not include any changes to personal income tax rates.
The 2020 NL personal tax rates are summarized in Table B.
Table B – NL personal tax rates 2020
For taxable income in excess of $150,473, the 2020 combined federal-NL personal income tax rates are outlined in Table C.
Table C – Combined federal and NL personal tax rates 2020
* The rate on capital gains is one-half the ordinary income tax rate.
** The basic personal amount comprises two basic elements: the existing personal amount ($12,298 for 2020) and an additional amount ($931 for 2020). The additional amount is gradually phased out for individuals with taxable income in excess of $150,473 and is fully eliminated for individuals with taxable income in excess of $214,368. Consequently, the additional amount is clawed back on taxable income in excess of $150,473 until the additional tax credit of $140 is eliminated; this results in additional federal income tax (e.g., 0.22% on ordinary income) on taxable income between $150,474 and $214,368.
Other tax measures
1. Currency references in this Alert are to CA$.
For additional information with respect to this Alert, please contact the following:
Ernst & Young LLP (Canada), St. John’s