Almost all is quiet on the personal income tax front in Canada this year — at least, at the provincial level. Only a few provinces are making any significant modifications to their tax regimes.

Change is most evident in the Atlantic provinces, as New-foundland and Labrador, once a bastion of high taxes, has cut its top two tax rates and now boasts one of the lowest top marginal tax rates in the country, according to Karen Yull, partner, tax services, with Grant Thornton LLP in Toronto. The province’s blended federal/provincial rate for 2010 — because all changes take place halfway through the taxation year, on July 1 — for the top tax bracket is 43.4%. In 2011, it will drop to 42.3%.

This is getting close to the low levels found in Alberta, where top earners pay only 39% in personal income taxes.

Newfoundland also has dropped its tax rate on eligible dividends; the top combined rate for 2011 will be just less than 21%, which brings it in line with most of the rest of the country, Yull adds.

Conversely, Nova Scotia has bumped up personal income taxes for high-income earners, bringing the top combined marginal tax rate to 50% — the highest in the country. The province went even further to generate some much-needed capital by introducing a new tax bracket, which imposes a 21% provincial tax on income above $150,000.

Creating an entirely new tax bracket is unusual, says John Hutson, tax partner with Deloitte & Touche LLP in Vaughan, Ont.: “Normally, what happens is that the dollar thresholds within brackets will be expanded or contracted.”

Nova Scotia’s dividend tax rate is also climbing, though it’s still not the highest in the country, says Yull — that dishonour goes to Prince Edward Island. Nova Scotia will have a top combined rate of 37.4% on eligible dividends by 2012, although this will be cut back to a more modest 33.9% by the same year if the province stays on target to balance its budget in 2010.

Nova Scotia is also top dog when it comes to the harmonized sales tax. It increased its portion of the HST by two percentage points to 10%, bringing the combined rate to 15%. In fact, Yull describes Nova Scotia as a “strange hybrid” this year because it has the highest income and consumption taxes. (The other HST provinces hover between 12% and 13%.) Nova Scotia has tried to soften the sticker shock for consumers by dropping the provincial portion of the HST on family essentials as of July 1, says Robert Demers, a partner and national indirect tax leader with Deloitte in Montreal.@page_break@In addition, Nova Scotia is offering a few breaks to low-income residents, including an affordable living tax credit and a poverty reduction credit. The province is giving low-income seniors some breathing room by allowing them to forgo paying provincial taxes on their guaranteed income supplements and not including their tax credits as income to determine their low income tax reduction.

But Nova Scotia is clearly on a budget-balancing streak, deferring several forward-thinking tax credits — including one for transit and another for healthy living.

Quebec, which doesn’t have the HST per se, is bumping up its provincial sales tax so that by January 2012, the combined GST and QST will be 14.5%. Demers says the province is providing a QST tax credit to lower-income families. The province is also offering QST rebates on new or substantially renovated housing and residential rental property and on hybrid vehicles.

Other changes to 2010 provincial taxes include:

> Manitoba has introduced a refundable fertility treatment tax credit of up to $8,000 annually on payments made after September.

Manitoba is also tweaking its children’s fitness tax credit to include a broader age group, up to age 24.

Manitoba is also offering an advance on its tuition fee income tax rebate, which typically provides 60% of all post-secondary tuition fees. The advance allows students to claim a 5% refundable tax credit on school fees while still in school.

> Ontario plans to introduce a children’s activity credit wherein families that enrol their kids in extracurricular activities would receive a credit worth up to $50 per child under 16, and up to $100 for a child under 18 with a disability.

In an effort to provide some tax relief, Ontario’s property tax credit has been converted into an energy and property tax credit, to be paid quarterly starting in 2011.

> British Columbia is offering parents, who have built up at least 15% equity in their principal residence and have children under the age of 18, the ability to defer property taxes until the home is sold. IE