Sign up for tax alert emails    GTNU homepage    Tax newsroom    Email document    Print document    Download document

February 8, 2021
2021-5147

Canada: Northwest Territories issues budget 2020–21

Executive summary

On 4 February 2021, Northwest Territories Finance Minister Caroline Wawzonek tabled the territory’s fiscal 2021–22 budget. The budget contains no new taxes and no income tax increases.

The Minister anticipates an operating deficit of CA$31 million1 for 2020–21 and projects an operating surplus of $69 million for 2021–22, $84 million for 2022-23 and declining surpluses for each of the next two years.

The 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 2021 corporate tax rates are summarized in Table A.

Table A – 2021 Northwest Territories (NWT) corporate tax rates

 

2021

NWT

Federal and NWT combined

Small-business tax rate*,**

2.00%

11.00%

General corporate tax rate*

11.50%

26.50%

* The rates represent calendar year-end rates unless otherwise indicated.

** Northwest Territories reduced its small-business income tax rate from 4.00% to 2.00%, effective 1 January 2021.

Personal tax

Personal income tax rates

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

The 2021 Northwest Territories personal tax rates are summarized in Table B.

Table B – 2021 Northwest Territories personal tax rates

First bracket rate

Second bracket rate

Third bracket rate

Fourth bracket rate

$0 to $44,396

$44,397 to $88,796

$88,797 to $144,362

Above $144,362

5.90%

8.60%

12.20%

14.05%

For taxable income in excess of $144,362, the 2021 combined federal–Northwest Territories personal income tax rates are outlined in Table C.

Table C – Combined federal and Northwest Territories 2021 personal tax rates

Bracket

Ordinary income*

Eligible dividends

Non-eligible dividends

$144,363 to $151,978

40.05%

18.67%

28.77%

$151,979 to $216,511**

43.37%

23.25%

32.59%

Above $216,511

47.05%

28.33%

36.82%

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

** The federal basic personal amount comprises two elements: the base amount ($12,421 for 2021) and an additional amount ($1,387 for 2021). The additional amount is reduced for individuals with net income in excess of $151,978 and is fully eliminated for individuals with net income in excess of $216,511. Consequently, the additional amount is clawed back on net income in excess of $151,978 until the additional tax credit of $208 is eliminated; this results in additional federal income tax (e.g., 0.32% on ordinary income) on net income between $151,979 and $216,511.

Other tax measures

Property tax

In keeping with the existing indexation policy, property mill rates will be adjusted for inflation, effective 1 April 2021.

Carbon pricing

Given the upcoming federally mandated carbon tax rate increase to $40 per carbon-equivalent ton of greenhouse gas emissions effective 1 July 2021, the budget proposes to increase the Northwest Territories cost of living offset benefit to $208 per year for an individual and to $240 per year for a child, effective 1 July 2021.

Endnote

1. Currency references in this Alert are to the 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 (United States), Canadian Tax Desk, New York

ATTACHMENT

 
 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

Copyright © 2024, Ernst & Young LLP.

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.

 

"EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

 

Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct Opt out of all email from EY Global Limited.

 


Cookie Settings

This site uses cookies to provide you with a personalized browsing experience and allows us to understand more about you. More information on the cookies we use can be found here. By clicking 'Yes, I accept' you agree and consent to our use of cookies. More information on what these cookies are and how we use them, including how you can manage them, is outlined in our Privacy Notice. Please note that your decision to decline the use of cookies is limited to this site only, and not in relation to other EY sites or ey.com. Please refer to the privacy notice/policy on these sites for more information.


Yes, I accept         Find out more