April 3, 2012
Today Nova Scotia Finance Minister Graham Steele delivered the province’s 2012 budget. The budget projects deficits of $390 million in 2011-12 and $211 million in 2012-13, and surpluses of $15 million in 2013-14 and $20 million in 2014-15. The budget reduces the small business income tax rate for 2013, and lowers the province’s Harmonized Sales Tax (HST) rate beginning in 2014, among other corporate and personal tax changes.
Highlights of tax measures announced in today’s budget are summarized below.
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Small business income tax rate
The budget says the government will reduce the small business corporate income tax rate to 3.5% (from 4%), effective January 1, 2013. The measure will be pro-rated for taxation years that straddle January 1, 2013.
As a result, Nova Scotia's corporate income tax rates effective January 1, 2012 will be as follows:
Large corporations tax
The budget confirms the elimination of the Large Corporations Tax on capital of non-financial institutions (with taxable capital of $10 million or more), effective July 1, 2012.
Harmonized Sales Tax changes
The budget announces that the province’s Harmonized Sales Tax (HST) will be reduced to 14% (from 15%) in 2014, with a further reduction to 13% in 2015. This change will bring Nova Scotia’s HST rate back to the same level it was in 2010 (before the July 1 increase).
The budget proposes to increase the HST rebate for first-time homebuyers where the Agreement of Purchase and Sale is entered into on or after April 1, 2012. Currently, Nova Scotia provides a rebate of 18.75% (to a maximum of $1,500) of the provincial portion of the HST on new homes purchased by first-time home buyers. First-time home buyers are defined as individuals who have not owned and occupied a home in the past five years.
Personal income tax rates
No changes to the personal income tax rates were announced. As a result, Nova Scotia's combined top marginal tax rates remain as follows:
Personal income tax credits
The budget proposes the following increases to personal tax credit amounts:
- The dependent amount is increased to $8,481 (from $7,201) to match the basic personal amount
- The spousal/partner amount is increased to $8,481 (from $7,201) to match the basic personal amount
- The disability amount is increased to $7,341 (from $5,035).
These increases will result in the following maximum tax savings for eligible taxpayers:
Equity Tax Credit and the Labour-Sponsored Venture Capital Tax Credit
The budget announced a 10-year extension of the Equity Tax Credit and the Labour-Sponsored Venture Capital Tax Credit to February 28, 2022. Previously, these credits were scheduled to expire on February 29, 2012.
Upcoming event: KPMG’s 2012 Spring Economic Outlook
You are invited to join KPMG on April 11, 2012 for our annual Spring Economic Outlook event taking place in Halifax, which features Elizabeth Beale, President & CEO of the Atlantic Provinces Economic Council. KPMG's Tax Professionals will also share insights on specific tax measures from the federal and Nova Scotia budgets. Find out more: http://tinyurl.com/77b3h9s
Your KPMG adviser can help you assess the effect of the tax changes in this year’s Nova Scotia budget on your personal finances or business affairs, and point out ways to take advantage of their benefits or ease their impact. We can also keep you abreast of the progress of these proposals as they make their way into law and help you bring any concerns you may have to the attention of the Nova Scotia Department of Finance.
Information is current to April 3, 2012. The information contained in this TaxNewsFlash-Canada is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG’s National Tax Centre at 416.777.8500.
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