Provincial & territorial budgets 2019: An overview of changes

In this tax alert, we’ve compiled business and personal tax changes of significance for each province and territory and centralized them here for quick reference.

Official budget dates:

ACCESS KEY TAX RATES

British Columbia

British Columbia’s 2019 budget was tabled by Finance Minister Carole James on February 19, 2019. No business or personal tax increases were proposed.

Other business tax measures

• The budget enhanced the small business venture capital tax credit. The maximum amount that eligible business corporations can raise through the tax credit program is increased to $10 million from $5 million. Eligible business activities now also include advanced commercialization. Eligible small business corporations can engage in activities related to scaling up their business after two years in the tax credit program.
• Mining exploration tax credit and mining flow-through share tax credit are made permanent effective January 1, 2019.
• The new mine allowance is extended and will continue to the end of 2020.
• The shipbuilding and ship repair industry tax credit is extended and will continue to the end of 2022.
• Training tax credits are extended and will continue to the end of 2019.
• Natural gas sellers at the retail level in British Columbia will be subject to a penalty if they are not registered as natural gas retail dealers with the province.
• Effective July 1, 2019, the Translink service region’s motor fuel tax rates on clear gasoline and clear diesel will be eligible to be increased from 17 cents per litre to a maximum of 18.5 cents per litre.

PERSONAL TAX MEASURES

Several changes have been proposed for personal tax credits, including:

• B.C. child opportunity benefit

Effective October 1, 2020, a new BC Child Opportunity Benefit will be combined with the early childhood tax benefit into a single new benefit. The refundable tax credit will provide a maximum benefit of:

1. $1,600 for the family’s first child;
2. $1,000 for a second child and;
3. $800 for each subsequent child under the age of 18.

The new benefit is reduced by 4 per cent of family income over $25,000 until it is equivalent to $700 for the first child, $680 for the second child and $660 for each subsequent child under the age of 18. The new benefit is phased out at a rate of 4 per cent of family net income over $80,000. The $25,000 and $80,000 thresholds will be indexed to inflation in future years. For a family with one child, the new benefit will be fully phased out at $97,500 of family net income.

• Small business venture capital tax credit program enhanced

The annual tax credit limit that an individual can claim for investments made after 19 February 2019 is increased to $120,000 from $60,000. Effective 20 February 2019, share transfers are permitted to a tax-free savings account (TFSA) and equity purchases within a TFSA are eligible for tax credits. Finally, effective 2 March 2019, investments in convertible equity issued by an eligible business corporation can qualify for a tax credit.

• Climate action tax credit

Effective July 1, 2019, the climate action tax credit is enhanced as reflected in the table below:

• The budget expands the pension tax credit to apply to certain retirement income security benefits paid to veterans effective 2015 taxation year.
• The farmers' food donation tax credit is extended and will continue to the end of 2020.

Sales tax updates

The budget amended the Provincial Sales Tax Act to permit a principal and its agent to jointly designate a single party (generally the agent) to be responsible for tax collection on sales, reporting and remittance of tax when the principal uses the agent to make a sale or lease, or when a billing agent is used to collect payments.

New Brunswick

New Brunswick’s 2019-2020 budget was tabled by Finance Minister Ernie Steeves. The government’s “Acting with Urgency” budget focusses on reducing debt levels all while maintaining essential services for taxpayers in order to lay the groundwork for a sustainable economy. The budget does not change corporate or personal income tax rates.

BUSINESS TAX MEASURES

Passive investment income and the small business deduction limit

New Brunswick will not parallel the 2018 federal budget measure that phases out the $500,000 SBD limit for Canadian-controlled private corporations (CCPCs) that earn between $50,000 and $150,000 of passive investment income in a taxation year, for taxation years beginning after 2018. By not paralleling the federal measure, a CCPC could continue to save up to $57,500 in New Brunswick tax annually.

PERSONAL TAX MEASURES

Tuition tax credit

The budget proposes to reintroduce the province’s tuition tax credit. Individuals will be able to claim this personal income tax credit when they file their annual tax return in 2020.

Newfoundland and Labrador

Newfoundland and Labrador’s 2019-2020 budget was tabled by Finance Minister Tom Osborne. Budget 2019 reflects priorities of advancements in health care and education and a focus on job creation and economic growth. The budget proposes targeted spending to stimulate growth in key provincial industries such as ocean technology, aquaculture, mining, global aerospace and infrastructure. Budget 2019 includes no tax or fee increases.

Other business tax measures

The budget proposes to renew the Newfoundland and Labrador Film and Video Industry Tax Credit until 2021.

Sales tax updates

The budget eliminates the 13 per cent retail sales tax on automobile insurance premiums. This change will be implemented by early July and will be retroactive to April 16, 2019.

The budget confirms the continuation of the Search and Rescue Volunteer Tax Credit, which allows eligible volunteers to claim a $3,000 non-refundable tax credit from their provincial income tax return. The budget also amends the Income and Employment Support Regulations to exempt payments from child support, Canada Pension Plan Disabled Contributor’s Benefit, and Canada Pension Plan Surviving Child Benefit for the purpose of determining eligibility for Income Support. Further, government is introducing a one-year, $1 million Heat Pump Rebate Program in 2019-2020 to assist homeowners in increasing the energy efficiency of their homes. Through this pilot program, up to 1,000 Homeowners can receive a grant of $1,000 toward the purchase and installation of an eligible heat pump.

Northwest Territories

Northwest Territories’ 2019-2020 budget was tabled by Finance Minister Robert C. McLeod on February 6, 2019. The budget does not propose any changes to existing personal and corporate tax rates. The budget puts into effect the cannabis excise tax and the carbon tax, which were previously announced.

OTHER TAX MEASURES

Sugary drinks tax

The discussion paper on the proposed implementation of a tax on all sugary drinks, which was first announced in the 2017–18 budget, will be released to the public later in the year. The report will detail the findings from the consultation.

Carbon pricing

The Government of the Northwest Territories initially announced its carbon pricing plans on July 11th, 2018. A carbon tax on fuels will take effect on July 1,2019. Full or partial rebates and benefits from the tax are to be returned into the economy.

The carbon tax revenue is expected to be $16.2 million in 2019–2020. The budget proposes to return almost $7 million to residents and businesses through a 100 per cent rebate of the tax paid on heating fuel and fuel used to generate electricity and through Cost of Living Offsets for individuals and families. Large emitters will receive about $5 million in carbon tax rebates and additional rebates will be placed in individualized trusts that can be used to make investments that reduce greenhouse gas emissions.

Nova Scotia

Nova Scotia’s 2019-2020 budget was tabled by Minister of Finance and Treasury Board Karen Casey on March 26, 2019. The budget does not include any changes to corporate or personal income tax rates, but welcomes new tax credits that will drive private sector investment such as the extension of the Innovation Equity Tax Credit and a new Venture Capital Tax Credit for both corporations and individuals.

Corporate tax credits

The budget proposes the following corporate tax credits/amounts:

• Innovation Equity Tax Credit
  • The previous year’s budget introduced the new Innovation Equity Tax Credit (“IETC”) only to individuals; Budget 2019 extends the IETC to corporations as well.  The IETC is designed to encourage investors to make equity investments in support of young, growing and innovative businesses. 
  • Effective April 1, 2019, the IETC allows corporations to claim a 15 per cent non-refundable tax credit on their corporate investments on a maximum investment limit of $500,000. 
  • Qualifying investments include common shares, preferred shares and convertible debentures. The minimum holding period for these investments is four years.  There are several restrictions for these investments to be eligible for the IETC, including that the investment must be of a corporation that is less than 10 years old and is developing or implementing new technologies or applying existing technologies in a new way to create new products, services or processes.

• Venture Capital Tax Credit
  • Effective April 1, 2019, the new Venture Capital Tax Credit (“VCTC”), a non-refundable 15 per cent income tax credit on qualifying investments, will be available for corporations who invest in a Venture Capital Corporation or Fund. This venture capital investment structure is ideal for investors who pool their investments with others and rely on professional fund management to select a portfolio of investment opportunities. Note that the venture capital fund must be based in Nova Scotia.

Other measures

Budget 2019 enhances the existing Nova Scotia Loan Forgiveness Program. The enhanced program forgives the entire amount of the Nova Scotia student loan if students complete their undergraduate degree within five years, regardless of the amount owing. To be eligible, the student loan must be borrowed by an eligible Nova Scotian student studying at a Nova Scotian university. Upfront grants for Nova Scotia students studying out of province in programs available in the province here will be phased out.

Nunavut

On February, 20 2019, Nunavut Finance Minister George Hickes tabled the territory’s fiscal 2019 budget. The budget contains no new taxes and no tax increases.

Carbon pricing

Nunavut is developing options on how best to return to taxpayers the revenue that will be generated by the federal backstop carbon pollution pricing system, which Nunavut chose to voluntarily adopt. The details on this revenue return will be made public before the carbon pricing system takes effect in the territory on July 1, 2019.

Prince Edward Island

On June 25, 2019, Hon. Darlene Compton, Minister of Finance, delivered the budget address to the Legislative Assembly of PEI.  Overall, the budget focuses on more access to primary health care, more localized support for mental health, better supports in our classrooms, enhanced support for food and housing rates for those under social supports, and more active engagement with non-governmental organizations who help deliver supports to Islanders. From a financial perspective, the budget proposes to create more disposable income for Islanders. 

BUSINESS TAX MEASURES

The small business tax rate will drop by an additional 0.5 per cent to 3 per cent on Jan. 1, 2020. This measure is estimated to benefit 2,600 small businesses in PEI. The drop in the small business tax rate will mean that PEI has the second lowest rate in all provinces east of Manitoba.

PERSONAL TAX MEASURES

The basic personal income tax amount will be raised to $10,000. Changes will also be made to the spouse and equivalent to spouse amounts. Additionally, the low income threshold will move from $17,000 to $18,000 on Jan. 1, 2020. These tax fairness measures will ensure that an additional 1,700 lower income Islanders will no longer pay provincial income tax. Together, the individual tax measures will result in a single parent saving up to $202 each year and a senior couple saving as much as $215 in taxes, resulting in more dollars in their pockets. 

Québec

Québec’s 2019-2020 budget was tabled by Finance Minister Éric Girard. The budget aims to improve education and health services, stimulate the economy and address climate change. The budget contains no new taxes and no tax increases.

BUSINESS TAX MEASURES

• New refundable tax credit for employing experienced workers — Qualified small and medium businesses (SMBs) will be granted a refundable tax credit for employing individuals aged 60 or over who are subject to Quebec payroll taxes. The rate will vary based on the individual’s age and the corporation’s total payroll (between 50-75 per cent). The tax credit will be calculated on the employer contributions paid by the corporation in respect of such employee and can total as much as $1,250-$1,875 annually per worker.
• Reduction of the capital investment threshold to certain large investment projects — A corporation that carries out a large investment project in a designated region may claim a tax holiday in respect of the income from its eligible activities and from employer contributions to the Health Services Fund (HSF). The capital investment threshold that must be met for project qualification purposes is reduced from $75 million to $50 million.
• Introduction of a sustainable development certification allowance in the Mining Tax Act — Mining exploration leads to the discovery and, under certain conditions, development of mineral deposits. The adoption of practices that comply with the highest sustainable development standards will serve to boost this industry. To that end, the budget provides that the costs associated with obtaining and maintaining sustainable development certification will be deductible as an allowance. Changes will be made to the refundable duties credit for losses that an operator may claim for a fiscal year, to take into account the introduction of the sustainable development certification allowance.
• Changes to certain measure respecting tips — Eligible expenses for the refundable tax credit for the reporting of tips available to employers will now include the portion of the indemnities for days of leave to fulfill family obligations or days of leave for health reasons that is attributable to tips and that was paid in the taxation year or fiscal period, as applicable. In addition, an amendment will be made so that a person cannot incur both a penalty for false statements or omissions and the penalty related to the attribution of tips for the same omission.

PERSONAL TAX MEASURES

• Enhancement of the tax credit for career extension — Renamed the Tax Credit for Career Extension (formerly, the Tax Credit for Experienced Workers), this tax credit will be partly amended by lowering the age of eligibility from 61 to 60 and for workers aged 60-64, the maximum amount of eligible work income on which the tax credit is calculated (eligible work income that exceeds the first $5,000) will be raised to $10,000.
• Gradual elimination of the additional contribution for childcare — The additional contribution for childcare will be reduced by $0.70 a day and completely eliminated over four years. Families with an income below $78,320 will no longer pay the additional contribution and families with an income above that amount will pay a lower contribution (maximum additional contribution of $13.20).
• Reimbursement of a portion of the cost of glasses and contact lenses for children — A portion of the cost of glasses and contact lenses for children aged 17 and under will be reimbursed up to $250 per 24-month period, by the Régie de l’assurance maladie du Québec.
• Increase in the exemption for child support payments — The amount of income from child support payments that can be exempted from the calculation of government financial assistance will increase from $100 to $350 per month per child for the social assistance programs, $1,200 to $4,200 per year per child for the student financial assistance program and $0 to $4,200 per year per child for the legal aid and housing assistance programs.
• Continued support for Drive Green program — The Drive Green program, which provides funding for rebates on the purchase of new electric vehicles, will be extended to 2021 and broadened to include coverage for used all-electric vehicles. Starting in 2020-2021, the program will be reviewed to limit the application of the rebates to vehicles costing less than $60,000.  

Saskatchewan

Saskatchewan’s 2019-2020 budget was tabled by Finance Minister Donna Harpauer on March 20, 2019. The budget increases support for mental health and for vulnerable families, but does not contain any new taxes or changes to the tax rates in order to sustain economic growth.

BUSINESS TAX MEASURES

Corporate tax rates

Saskatchewan’s 2019-2020 budget does not propose to change the corporate tax rate or its $600,000 small business limit. 

Other business tax measures

• Potash Production Tax

Saskatchewan levies a Crown Royalty on potash production, as well as a Potash Production Tax (PPT) on companies that produce potash from both Crown and freehold lands in Saskatchewan. The PPT was originally introduced in 1990 and consists of two components; a base payment component and a profit tax component. The base payment is intended to be a simple flat payment per tonne of potash sales, which before the 2019-2020 budget was reduced by the Crown Royalties paid and the amount of the Saskatchewan Resource Credit (equal to 0.75 per cent of the value of potash sales). Effective April 1, 2019, the Saskatchewan Resource Credit has been eliminated, and the Crown Royalty will no longer be deductible in determining the base payment or the profit tax.

Yukon

Yukon’s 2019-2020 budget was tabled by Yukon Premier and Finance Minister Sandy Silver on March 7, 2019. The government’s priorities include targeted spending to build healthy communities (housing, education and healthcare) and fostering economic growth to generate jobs for Yukoners. Measures to address climate change figure prominently throughout the budget, as evidenced by investment in environmental initiatives including the carbon rate rebate program. The budget does not contain any new taxes or changes in the tax rates.

Carbon pricing rebate program

Starting on July 1, 2019, the federal carbon levy will be applied to fuels purchased in Yukon. Carbon dioxide emissions will initially be taxed at a rate of $20 per tonne. This rate will increase on April 1 of each year, until it reaches $50 per tonne in April 2022. Yukon’s carbon pricing rebate program will return all carbon levy revenues back to individuals, Yukon businesses, Placer miners and quartz mines, First Nations, and municipal governments. The CRA will administer portions of this program in the form of rebates to individuals and refundable tax credits for businesses.