Provinces hold back on tax increases

The only major tax cut was a drop to 3% from 4% for the small-business tax rate in Newfoundland and Labrador as of July 1, 2014, which benefits financial advisors in that province. Quebec also lowered its small business tax rate, to 6% from 8%, effective June 5, 2014, but only for manufacturers. This tax rate will be cut further, to 4%, as of April 1, 2015.

There were no tax changes at all in Alberta, Saskatchewan, Manitoba, New Brunswick and Prince Edward Island, but there were some in the remaining five provinces. Here’s a closer look at their budgets:

– British Columbia. A new refundable early childhood tax benefit is being introduced as of April 2015. This will provide up to $55 a month for each child under six years of age for families with net income of up to $100,000. The benefit will be paid through the federal Canada child tax benefit system.

There also were tax changes introduced for home ownership. The exemption threshold for transfer taxes increases to $475,000 from $425,000 for “first-time home purchases” as of Feb. 19, 2014, with partial relief for homes valued at $475,000-$500,000.

As well, the maximum value for a residence to qualify for the B.C. homeowner grant, which reduces property taxes, was reduced to $1.1 million from almost $1.3 million as of the 2014 taxation year.

It’s also worth noting that medical premiums are rising by 4% as of Jan. 1, 2015. This premium goes up every year, reflecting rising costs.

– Ontario. The personal income tax rate on annual taxable income of $150,000-$220,000 has increased to 12.16% from 11.16%; the rate for taxable income of $220,000-$514,000 rose to 13.16% from 11.16%. Those with income higher than $514,000 will continue to pay 13.16%. These changes were effective for taxation years beginning Jan. 1, 2014.

There also were changes to the land transfer tax (an anti-tax avoidance amendment) and a review of the provincial land tax. Tobacco taxes also were increased.

In addition, Ontario plans to introduce the Ontario Retirement Pension Plan (ORPP), which will be mandatory for companies that don’t already have a pension plan in place. The ORPP will be indexed to inflation and will require contributions by both employees and employers; this plan is expected to result in a benefit equal to 15% of earnings up to a specified maximum – topping up the Canada Pension Plan’s 25%.

– Quebec. Although the province’s new Liberal government, elected in April, didn’t have time to come up with a detailed fiscal plan by the June budget date, Quebec’s budget did include some measures.

The $2-a-day increase for child-care services in the Parti Québécois’ February budget was cancelled and replaced with inflation indexing, which results in an increase to $7.30 a day from $7 as of Oct. 1, 2014.

The tax credit for experienced workers aged 65 or older will be calculated on the first $4,000 of eligible work income in excess of $5,000, up from $3,000, as of the 2015 taxation year. And a new refundable tax credit of up to $40 a year was introduced for low- or middle-income individuals aged 70 or older who register for “recognized activity” programs as of June 5, 2014.

There also were amendments to the rules for income splitting and the definition of “base wages.”

As well, the tax credit for the purchase of shares of Capital régional et co-opératif Desjardins was reduced to 45% from 50% for shares acquired after Feb. 28, 2014.

Tobacco taxes were increased and the taxes on alcoholic beverages were harmonized, as of Aug. 1, 2014, regardless of whether these products are sold for home consumption or by licensed establishments.

The new provincial government has established committees to review Quebec’s taxation system and program spending, with recommendations expected to be included in the 2015 budget. However, these recommendations are not expected to include major tax increases because the government has committed to forgoing any “generalized” tax increases for two years.

– Nova Scotia. The efficiency tax will be eliminated from hydro bills as of Jan. 1, 2015.

The graduate retention rebate ended as of Jan. 1, 2014. There were some measures to ease the burden of tuition costs and student loan repayment, as well as increased home-care support services.

– Newfoundland and Labrador. Besides a reduction in the small-business tax rate, the tuition freeze continues and student loans are to be converted to non-repayable grants by Sept. 1, 2015.

Tobacco taxes also were increased.

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