Tax highlights from the 2020 Newfoundland and Labrador budget
Finance Minister, Siobhan Coady, tabled the 2020 Newfoundland and Labrador provincial budget on September 30, 2020. The budget reports a revised surplus of $1.1 billion for the recently completed 2019-20 fiscal year, due in large part to an Atlantic Accord agreement with the federal government. A deficit of $1.84 billion is projected for 2020-21, primarily due to COVID-19 related spending. The province’s net debt is projected to reach $16.4 billion this year.
On the income tax side, there were no increases or decreases to personal or corporate income tax rates for 2020. The budget did propose tax increases for tobacco and vaping products, a reduction to the provincial portion of the gasoline tax and an increase to carbon taxes.
The following pages are a summary of the changes announced in the budget. Please note that these changes are proposals until passed into law by the provincial government.
Personal Tax Matters
Personal income tax rates and tax brackets
The 2020 budget leaves personal income tax rates unchanged from 2019. Tax brackets and other amounts have been indexed by 0.9% to recognize the impact of inflation. The table below shows Newfoundland and Labrador tax rates and brackets for 2020.
| Category | 2020 tax rates |
|---|---|
| First $37,929 | 8.7% |
| $37,930 - $75,898 | 14.5% |
| $75,899 - $135,432 | 15.8% |
| $135,433 - $189,604 | 17.3% |
| $189,605 and over | 18.3% |
The table below shows the 2020 combined federal and provincial highest marginal tax rates for various types of income.
| Type of income | 2020 combined tax rates |
|---|---|
| Regular income | 51.30% |
| Capital gains | 25.65% |
| Eligible dividends | 42.61% |
| Non-eligible dividends | 44.59% |
Corporate Tax Matters
Corporate income tax rates
There were no changes proposed to corporate income tax rates. The table below shows Newfoundland and Labrador tax rates and the small business limit for 2020.
| Category | 2020 tax rates |
|---|---|
| General rate | 15% |
| Manufacturing and processing rate | 15% |
| Investment income rate | 15% |
| Small business rate | 3% |
| Small business limit | $500,000 |
The table below shows the 2020 combined federal and provincial corporate income tax rates for various types of income earned by a Canadian controlled private corporation (CCPC).
| Type of income | 2020 combined tax rates |
|---|---|
| Small business income | 12% |
| Active income over $500,000 | 30% |
| Manufacturing and processing income | 30% |
| Investment income | 53.7% |
Other Proposals
Increased taxes for tobacco and vaping products
To curb usage and lessen future demands on the health care system, Budget 2020 proposes a new 20 per cent tax on vaping products. It also proposes an additional five cents per cigarette and an additional 10 cents per gram on fine cut tobacco.
Changes to the gasoline tax and price on carbon
Effective October 1, 2020, the price of gasoline will increase by 0.21 cents per litre while the tax on diesel will increase by 2.68 cents per litre. These changes are the result of a reduction to the provincial portion of the gasoline tax and an increase to carbon taxes.
How We Can Help
Your Assante advisor can help you assess the impact of these proposals on your personal finances or business affairs and show you ways to take advantage of their benefits or ease their impact.