April 11, 2022
Canada | Newfoundland and Labrador issues budget 2022/23
On 7 April 2022, Newfoundland and Labrador Finance Minister Siobhan Coady tabled the province’s fiscal 2022/23 budget. The budget contains several tax measures affecting individuals and corporations.
The Minister anticipates a deficit of CA$400 million 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 income tax rates
No changes are proposed to the corporate income tax rates or the $500,000 small-business limit.
Newfoundland and Labrador’s (NL) 2022 corporate income tax rates are summarized in Table A.
Table A – 2022 corporate income tax rates*
* Rates represent calendar-year rates.
** The 2021 federal budget proposed to temporarily reduce the federal corporate income tax rate for qualifying zero-emission technology manufacturers by 50% (i.e., to 7.5% for eligible income otherwise subject to the 15% general corporate income tax rate or 4.5% for eligible income otherwise subject to the 9% small-business corporate income tax rate), applicable for taxation years beginning after 2021. The reduced tax rates are proposed to be gradually phased out for taxation years beginning in 2029 and fully phased out for taxation years beginning after 2031.
*** The 2022 federal budget proposed an additional tax on banks and life insurers. See EY Global Tax Alert, Canada’s Federal Budget 2022/23 focuses on growing a more resilient economy, dated 11 April 2022 for details.
Other business tax measures
The Minister also proposed the following business tax measures as part of Budget 2022:
Personal income tax rates
The budget does not include any changes to personal income tax rates.
The 2022 Newfoundland and Labrador personal income tax rates are summarized in Table B.
Table B – 2022 Newfoundland and Labrador personal income tax rates
Individuals resident in Newfoundland and Labrador on 31 December 2022 with taxable income up to $19,987 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 $21,196 until the reduction is eliminated, resulting in an additional 16% of provincial tax on income between $21,197 and $26,734.
For taxable income in excess of $250,000, the 2022 combined federal-Newfoundland and Labrador personal income tax rates are outlined in Table C.
Table C – Combined 2022 federal and Newfoundland and Labrador personal income 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:
Other personal tax measures include:
For additional information with respect to this Alert, please contact the following:
Ernst & Young LLP (Canada), St. John’s