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11 April 2022

Canada | Newfoundland and Labrador issues budget 2022/23

Executive summary

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.

Detailed discussion

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*

 

2022

NL

Federal and
NL combined

Small-business tax rate**

3%

12%

General corporate tax rate** ***

15%

30%

* 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:

A 10% Manufacturing and Processing Investment Tax Credit will support the manufacturing, fishery, farming and forestry sectors to invest in capital equipment. The credit will be up to 40% refundable for Canadian-controlled private corporations (CCPCs).1

A new 20% green technology tax credit for CCPCs that invest in equipment for energy conservation and clean energy generation, use fuels from waste, or make efficient use of fossil fuels. The maximum credit is $1 million annually, of which 40% is refundable.2

An All Spend Film and Video Production Tax Credit. The 30% tax credit will apply to total qualified production costs, with a maximum credit of $10 million annually per project.

Personal tax

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

First
bracket rate

Second bracket rate

Third bracket
rate

Fourth bracket rate

Fifth
bracket rate

Sixth bracket rate

Seventh bracket rate

Eighth bracket rate

$0 to $39,147

$39,148 to $78,294

$78,295 to $139,780

$139,781 to $195,693

$195,694 to $250,000

$250,001 to $500,000

$500,001 to $1,000,000

Above $1,000,000

8.70%

14.50%

15.80%

17.80%

19.80%

20.80%

21.30%

21.80%

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

Bracket

Ordinary income*

Eligible dividends

Non-eligible dividends

$250,001 to $500,000

53.80%

44.82%

47.81%

$500,001 to $1,000,000

54.30%

45.51%

48.38%

Above $1,000,000

54.80%

46.20%

48.96%

*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:

  • Continuation of the Physical Activity Credit, a refundable tax credit of up to $2,000 per family.

Other personal tax measures include:

Elimination of the 15% retail sales tax on home insurance, effective budget day for a period of one year.

A 50% reduction in registration fees for passenger vehicles, light-duty trucks and taxis, also for a period of one year

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For additional information with respect to this Alert, please contact the following:

Ernst & Young LLP (Canada), St. John’s

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Endnotes

  • Ibid.

    Document ID: 2022-5387

     
     

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