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Tax Alert 2023 No. 05, 24 February 2023
“The investments we are making today move us closer to our Katujjiluta goal of healthy and resilient communities where all Nunavummiut can prosper.”
Nunavut Finance Minister Lorne Kusugak
2023–24 budget speech
On 23 February 2023, Nunavut Finance Minister Lorne Kusugak tabled the territory’s fiscal 2023–24 budget. The budget contains no new taxes and no income tax increases.
The minister anticipates an operating surplus of $67.6 million for 2022–23 and projects an operating deficit of $8.2 million for 2023–24.
Following is a brief summary of the key tax measures.
Business tax measures
Corporate income tax rates
No changes are proposed to the corporate income tax rates or the $500,000 small-business limit.
Nunavut’s 2023 corporate income tax rates are summarized in Table A.
Table A – 2023 Nunavut corporate income tax rates1
|
Nunavut |
Federal and |
|
|---|---|---|
|
Small-business tax rate2 |
3.00% |
12.00% |
|
General corporate tax rate2, 3 |
12.00% |
27.00% |
1 The rates represent calendar-year-end rates unless otherwise indicated.
2 The corporate income tax rates for manufacturers of qualifying zero-emission technology are reduced to 7.5% for eligible income otherwise subject to the 15% general corporate income tax rate or 4.5% for eligible income otherwise subject to the 9% small-business corporate income tax rate.
3 An additional tax applies to banks and life insurers at a rate of 1.5% on taxable income (subject to a $100 million exemption to be shared by group members), effective for taxation years ending after 7 April 2022 (prorated for taxation years straddling this effective date).
Personal tax
Personal income tax rates
The budget does not include any changes to personal income tax rates.
The 2023 Nunavut personal income tax rates are summarized in Table B.
Table B – 2023 Nunavut personal income tax rates
|
First |
Second |
Third |
Fourth |
|---|---|---|---|
|
$0 to $50,877 |
$50,878 to $101,754 |
$101,755 to $165,429 |
Above $165,429 |
|
4.00% |
7.00% |
9.00% |
11.50% |
For taxable income in excess of $106,717, the 2023 combined federal-Nunavut personal income tax rates are outlined in Table C.
Table C – Combined 2023 federal and Nunavut personal income tax rates
|
Bracket |
Ordinary income1 |
Eligible dividends |
Non-eligible dividends |
|---|---|---|---|
|
$106,718 to $165,429 |
35.00% |
19.97% |
26.87% |
|
$165,430 to $235,6752 |
40.82% |
28.00% |
33.55% |
|
Above $235,675 |
44.50% |
33.08% |
37.79% |
1 The rate on capital gains is one-half the ordinary income tax rate.
2 The federal basic personal amount comprises two elements: the base amount ($13,521 for 2023) and an additional amount ($1,479 for 2023). The additional amount is reduced for individuals with net income in excess of $165,430 and is fully eliminated for individuals with net income in excess of $235,675. Consequently, the additional amount is clawed back on net income in excess of $165,430 until the additional tax credit of $222 is eliminated; this results in additional federal income tax (e.g., 0.32% on ordinary income) on net income between $165,431 and $235,675.
Personal tax credits
This budget proposes the following personal tax credit:
- Nunavut Carbon Credit – Introduction of a new refundable tax credit to replace the Nunavut Carbon Rebate that was offering a direct 50% at-the-pump discount of the carbon tax. The new income tax credit will offer direct payments every three months starting July 2023 to offset higher fuel costs.
Other tax measures
Homeowner fuel subsidy
Budget 2023–24 proposes a one-time subsidy or rebate to offset the higher cost of heating, up to a maximum payment of $1,000 for each eligible homeowner. Eligible homeowners can apply for the subsidy starting in spring 2023.
Fuel Tax Act
Following a review of the Petroleum Products Tax Act, the government intends to replace it with a new Fuel Tax Act (the Act) to keep up with Nunavut’s evolving economic reality. The Act is to be introduced into the Nunavut Legislative Assembly in spring 2023. No further details were announced.
Tobacco Tax Act
The government intends to complete its review of the Tobacco Tax Act and recommend possible legislative amendments in 2023–24. No further details were announced.
Learn more
For more information, please contact your EY or EY Law advisor.
Download this tax alert
Budget information: For up-to-date information on the federal, provincial and territorial budgets, visit ey.com/ca/Budget.