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March 26, 2013

No. 2013-12

 

 

Highlights of the 2013 New Brunswick Budget

Today New Brunswick Finance Minister Blaine Higgs delivered the province’s 2013 budget.The budget projects a deficit of $478.7 million in 2013-14, a deficit of $271 million in 2014-15 and a deficit of $102 million for 2015-16. The budget increases both corporate and personal tax rates.

Highlights of tax measures announced in today’s budget are summarized below.

Business Tax Changes

Corporate income tax rates

The provincial general income tax rate will be increased to 12% (from 10%) effective July 1, 2013.  Thus, the combined federal and New Brunswick rate will be 27% (up from 25%).  The government stated that the small business income tax rate will remain the same.

 

Corporate Income Tax Rates – As of July 1, 2013:

 

New Brunswick

Combined Federal and New Brunswick

General

M&P

Small business*

12%

12%

4.5%

27%

27%

15.5%

*on first $500,000 of active business income

Resource taxation 

The budget notes that the government will announce several changes to the province’s natural resources royalty structure in the Legislature soon.

 

Personal Tax Changes

Personal income tax rates

The province announced an increase in personal income tax rates effective July 1, 2013.  The personal income tax rates will be returned to the rates that applied in 2006.

 

Personal Income Tax Rates

Tax Rates

Tax Brackets

9.68%* (up from 9.1%)

14.82%* (up from 12.1%)

16.52%* (up from 12.4%)

17.84%* (up from 14.3%)

Up to $38,954

38,955–77,908

77,909–126,662

126,663 and over

*personal income tax rate increase effective July 1, 2013

 

As a result of the tax rate increases, New Brunswick’s 2013 combined federal and provincial top marginal tax rates will change as follows:

 

Combined Top Marginal

Tax Rates for 2013

 

Pre-Budget

Post Budget

%

Increase

Interest and regular income

43.30%

45.07%

1.77%

Capital gains

21.65%

22.53%

0.88%

Eligible dividends

22.47%

24.91%

2.44%

Non-eligible dividends

30.83%

33.04%

2.21%

In 2014, the top combined marginal tax rate will increase to 46.84%.

Low-Income Rate Reduction

The budget notes that New Brunswick will continue enhancements to the Low-Income Tax Reduction that were announced in 2009 to help protect lower-income earners from the budget’s tax rate increases.

 

Other Tax Measures

Tobacco tax

The budget increases the tax rate on cigarettes by 2 cents per cigarette or 50 cents per package of 25 cigarettes.  The budget also increases the tax rate on tobacco products to 19 cents per cigarette or equivalent unit, except for cigars which will be taxed at 75% of the retail price.  The tax rate increase is effective March 27, 2013.

 

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We can help

Your KPMG adviser can help you assess the effect of the tax changes in this year’s New Brunswick 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 New Brunswick Department of Finance.

 

KPMG Tax professionals in New Brunswick:

 

Luann Jones-Foster, CA

Partner, Tax

T: 506-856-6477

E: ljonesfoster@kpmg.ca

 

Todd MacIntosh, CA

Partner, Tax
T: 506-856-6472

E: tmacintosh@kpmg.ca

 

 

 

 

Information is current to March 26, 2013. 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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