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April 4, 2013

No. 2013-15

 

 

Highlights of the 2013 Nova Scotia Budget

Today Nova Scotia Finance Minister Maureen MacDonald delivered the province’s 2013 budget. The budget is balanced, and projects surpluses of $16.4 million in 2013-14, $18.3 million in 2014-15, $19.4 million in 2015-16 and $21.9 million in 2016-17. The budget reduces the small business income tax rate for 2014, lowers the small business limit threshold and confirms its promise to lower 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.

Business Tax Changes

Small business income tax rate

The budget says the government will reduce the small business corporate income tax rate to 3.0% (from 3.5%), effective January 1, 2014. The small business income threshold will also decrease to $350,000 (from $400,000).

As a result, Nova Scotia's corporate income tax rates effective January 1, 2013 will be as follows:

Corporate Income Tax Rates – As of January 1, 2013

 

Nova Scotia

Combined Federal and Nova Scotia

General

M&P

Small business1

16.0%

16.0%

3.5%

31.0%

31.0%

14.5%

1.   Nova Scotia’s small business rate will decrease to 3.0% (from 3.5%) effective January 1, 2014. The small business limit threshold will also decrease to $350,000 (from $400,000).

 

Indirect Tax Changes

Harmonized Sales Tax changes

The budget confirms 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.

 

Personal Tax Changes

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 Rates – As of January 1, 2013

Combined Top Marginal
Tax Rates for 2013
1

Interest and regular income

50.00%

Capital gains

25.00%

Eligible dividends

36.06%

Non-eligible dividends

36.21%

1.      The budget announced that it will maintain its highest income tax bracket

of 21% ( 50% combined federal and Nova Scotia) on income of $ 150,000

or more, even though this bracket was scheduled to be removed once the budget was balanced.

 

Other Tax Measures

Digital media and film industry tax credits

The Digital Media Tax Credit, previously set to expire at the end of 2012, will be extended to December 31, 2013.  This is a refundable tax credit for costs directly related to the development of interactive digital media products.  Total potential tax credits available on qualifying expenditures can be as much as 60% depending upon the geographic area.

The budget also confirms the Province’s continued support for the Film Industry Tax Credit which also provides potential tax credits of up to 65% for film productions in Nova Scotia.

Tobacco tax

The budget increases the tax rate on cigarettes by 2 cents per cigarette or gram of fine-cut tobacco, effective April 5, 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 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.

For details, contact:

KPMG Tax professionals in Nova Scotia:

 

Steven Moore, CA

Partner, Tax
T: 902-492-6069

E: stevemoore@kpmg.ca

 

Mike Power, CA

Partner, Tax

T: 902-492-6087

E: mikepower@kpmg.ca

 

 

 

Information is current to April 4, 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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