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February 21, 2023
2023-5220

Canada: Northwest Territories issue budget 2023/24

  • The Northwest Territories budget for 2023/2024 has been issued.

  • The budget contains no new taxes and no income tax increases.

  • This Alert summarizes the key tax measures.

Executive summary

On 8 February 2023, Northwest Territories Finance Minister Caroline Wawzonek tabled the territory’s fiscal 2023/24 budget. The budget contains no new taxes and no income tax increases.

The Minister anticipates an operating surplus of CA$40 millioni for 2022/23 and projects an operating surplus of $178 million for 2023/24.

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.

The Northwest Territories 2023 corporate income tax rates are summarized in Table A.

Table A – 2023 Northwest Territories (NWT) corporate income tax rates1

 

NWT

Federal and NWT combined

Small-business tax rate 2

2%

11%

General corporate tax rate 2, 3

11.50%

26.50%

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

2 The corporate income tax rates for manufacturers of qualifying zero-emission technology are reduced 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.

3 An additional tax applies to banks and life insurers at a rate of 1.5% on taxable income (subject to a $100 million exemption to be shared by group members), effective for taxation years ending after 7 April 2022 (prorated for taxation years straddling this effective date)

Personal tax

Personal income tax rates

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

The 2023 Northwest Territories personal income tax rates are summarized in Table B.

Table B – 2023 Northwest Territories personal income tax rates

First bracket rate

Second bracket rate

Third bracket rate

Fourth bracket rate

$0 to $48,326

$48,327 to $96,655

$96,656 to $157,139

Above $157,139

5.90%

8.60%

12.20%

14.05%

For taxable income in excess of $157,139, the 2023 combined federal–Northwest Territories personal income tax rates are outlined in Table C.

Table C – Combined 2023 federal and Northwest Territories personal income tax rates

Bracket

Ordinary income1

Eligible dividends

Non-eligible dividends

$157,140 to $165,430

40.05%

18.67%

28.77%

$165,431 to $235,6752

43.37%

23.25%

32.59%

Above $235,675

47.05%

28.33%

36.82%

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

2 The federal basic personal amount comprises two elements: the base amount ($13,521 for 2023) and an additional amount ($1,479 for 2023). The additional amount is reduced for individuals with net income in excess of $165,430 and is fully eliminated for individuals with net income in excess of $235,675. Consequently, the additional amount is clawed back on net income in excess of $165,430 until the additional tax credit of $222 is eliminated; this results in additional federal income tax (e.g., 0.32% on ordinary income) on net income between $165,431 and $235,675.

Other tax measures

Property tax

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

Carbon pricing

The Northwest Territories will be debating increasing its carbon tax in line with the upcoming federally mandated carbon tax rate increase to $65 (from $50) per carbon-equivalent tonne of greenhouse gas emissions. If, on 1 April 2023, the Northwest Territories raises its carbon tax, it will also increase the Northwest Territories cost of living offset amounts.

On the other hand, if the Northwest Territories decides not to raise its carbon tax, the federal backstop system will apply and carbon tax revenues generated in the territory will be distributed through federal programs.

_________________________________________

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

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Endnotes

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

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