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31 May 2022

Canada | Nunavut issues budget 2022/23

Executive summary

On 26 May 2022, Nunavut Finance Minister Lorne Kusugak tabled the territory’s fiscal
2022/23 budget. The budget contains no new taxes and no tax increases.

The Minister anticipates an operating deficit of CA$31.0 million1 for 2021/22 and projects an operating surplus of $40.3 million for 2022/23.

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.

Nunavut’s 2022 corporate income tax rates are summarized in Table A.

Table A – 2022 Nunavut corporate income tax rates*

2022

Nunavut

Federal and
Nunavut combined

Small-business tax rate**

3%

12%

General corporate tax rate** ***

12%

27%

* 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 8 April 2022 for details.

Personal tax

Personal income tax rates

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

The 2022 Nunavut personal income tax rates are summarized in Table B.

Table B – 2022 Nunavut personal income tax rates

First
bracket rate

Second
bracket rate

Third
bracket rate

Fourth
bracket rate

$0 to $47,862

$47,863 to $95,724

$95,725 to $155,625

Above $155,625

4%

7%

9%

11.50%

For taxable income in excess of $100,392, the 2022 combined federal-Nunavut personal income tax rates are outlined in Table C.

Table C – Combined 2022 federal and Nunavut personal income tax rates

Bracket

Ordinary income*

Eligible dividends

Non-eligible dividends

$100,393 to $155,625

35%

19.97%

26.87%

$155,626 to $221,708**

40.88%

28.09%

33.63%

Above $221,708

44.50%

33.08%

37.79%

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

** The federal basic personal amount comprises two elements: the base amount ($12,719 for 2022) and an additional amount ($1,679 for 2022). The additional amount is reduced for individuals with taxable income in excess of $155,625 and is fully eliminated for individuals with taxable income in excess of $221,708. Consequently, the additional amount is clawed back on taxable income in excess of $155,625 until the additional tax credit of $252 is eliminated; this results in additional federal income tax (e.g., 0.38% on ordinary income) on net income between $155,626 and $221,708

_________________________________________

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

Ernst & Young LLP (Canada), Toronto

Ernst & Young LLP (Canada), Quebec and Atlantic Canada

Ernst & Young LLP (Canada), Prairies

Ernst & Young LLP (Canada), Vancouver

_________________________________________

Endnotes

  1. Currency references in this Alert are to the CA$.

Document ID: 2022-5525

 
 

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