Finance Minister, Siobhán Coady, tabled the 2021 Newfoundland and Labrador provincial budget on May 31, 2021.
The budget predicts a deficit of $826 million in the 2021-22 fiscal year. Deficits are expected to continue throught the following four years, but the government predicts a return to surplus in fiscal year 2026-27. The province’s net debt is projected to reach $17.2 billion this year.
On the income tax side, the budget creates new personal tax brackets for taxable incomes over $135,973 slated to take effect on January 1, 2022. The changes are expected to raise an additional $15.3 million in revenue. The budget also proposes a new tax on sugary drinks and tax increases on cigarettes and tobacco products.
The following pages summarize 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 2021-22 budget increases tax rates for taxable income over $135,973 and adds 3 new tax brackets effective January 1, 2022. The table below outlines the tax rates and tax brackets for Newfoundland and Labrador in 2021 and the projected tax rates and brackets for 2022.
The table below outlines the combined federal and provincial highest marginal tax rates, for various types of income, in 2021 and the projected rates for 2022.
CORPORATE TAX MATTERS
Corporate income tax rates
The provincial budget contained no proposed changes to corporate income tax rates. The table below outlines Newfoundland and Labrador corporate tax rates and the small business limit for 2021.
The table below outlines the combined federal and provincial corporate income tax rates for various types of income earned by Canadian Controlled Private Corporations (CCPC) in 2021.
*does not take into account the federal temporary rate reduction for manufacterers of green technology.
Sugar sweetened beverage tax
The budget proposes a 20 cent per litre sugar sweetened beverage tax, to be implemented on April 1, 2022.
Increased cigarette and tobacco tax
The budget proposes a three cent increase per cigarette and a six cent per gram increase on fine cut tobacco. The rebate rate for Labrador Border Zones will increase by three cents for cigarettes and six cents per gram for fine cut tobacco.
Physical activity tax credit
The budget proposes a refundable tax credit of up to $2,000 per family accessing sport and recreational activities.
The mother baby nutrition supplement
Designed to help with the cost of extra food during pregnancy and infancy, the existing supplement provides a monthly financial benefit for low income pregnant mothers and for families with children under the age of one, the budget proposes an increase to $100 – up from $60.
Community gardens program
The budget proposes an increase in the community gardens grant program for not-for-profit corporations, municipalities or schools from $500 to $750.
Transitioning homes from oil heating to electrical heating
The budget proposes up to $1 million to help transition homes, whose sole source of heat is oil, to electricity by providing a rebate up to $2,500 per household.
Electric vehicle adoption program
The budget proposes $500,000 for an Electric Vehicle Adoption Accelerator program, which includes a $2,500 rebate to consumers who purchase electric vehicles.
WE CAN HELP
Your financial 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.
This communication is published by CI Global Asset Management (“CI GAM”). Any commentaries and information contained in this communication are provided as a general source of information and should not be considered personal investment advice. Facts and data provided by CI GAM and other sources are believed to be reliable as at the date of publication. Certain statements contained in this communication are based in whole or in part on information provided by third parties and CI GAM has taken reasonable steps to ensure their accuracy.
Market conditions may change which may impact the information contained in this document. Information in this communication is not intended to provide legal, accounting, investment or tax advice, and should not be relied upon in that regard. Professional advisors should be consulted prior to acting on the basis of the information contained in this communication.
You may not modify, copy, reproduce, publish, upload, post, transmit, distribute, or commercially exploit in any way any content included in this communication. You may download this communication for your activities as a financial advisor provided you keep intact all copyright and other proprietary notices. Unauthorized downloading, re-transmission, storage in any medium, copying, redistribution, or republication for any purpose is strictly prohibited without the written permission of CI GAM.
CI Global Asset Management is a registered business name of CI Investments Inc.
©CI Investments Inc. 2021. All rights reserved.
Published June 1, 2021