June 2, 2021
Canada: Newfoundland and Labrador issues budget 2021–22
On 31 May 2021, Newfoundland and Labrador Finance Minister Siobhan Coady tabled the province’s fiscal 2021–22 budget. The budget contains several tax measures affecting individuals and no changes affecting corporations.
The Minister anticipates a deficit of CA$826 million1 for 2021–22 and projects deficits for each of the next four years.
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) 2021 corporate tax rates are summarized in Table A.
Table A – 2021 NL corporate tax rates
* Rates represent calendar-year rates unless otherwise indicated.
Personal income tax rates
The Minister proposes to increase personal tax rates for individuals earning more than $135,974 beginning on 1 January 2022. The Minister also proposes to add new tax brackets, which will impact individuals that earn in excess of $250,000. The new rates and tax brackets are outlined in Table B.
Table B – 2021 and 2022 NL personal tax rates
* Individuals resident in NL on 31 December 2021 with taxable income up to $19,444 pay no provincial income tax as a result of a low-income tax reduction. The low-income tax reduction is clawed back for income in excess of $20,619 until the reduction is eliminated, resulting in an additional 16% of provincial tax on income between $20,620 and $26,007.
** Accordingly, the proposed combined federal and NL 2021 and 2022 top marginal personal tax rates on income above $1,000,000 are as follows:
Personal tax credits
This budget proposes changes to the following personal credits/amounts:
Other budget measures
For additional information with respect to this Alert, please contact the following:
Ernst & Young LLP (Canada), St. John’s