Canada: Newfoundland and Labrador issues budget 2023/24

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EY Global
3 Apr 2023
Subject Tax Alert
Categories Corporate Tax
Jurisdictions Canada

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  • Newfoundland and Labrador budget for 2023/2024 has been tabled.
  • The budget contains tax measures affecting individuals and corporations.
  • This Alert summarizes the key tax measures.

Executive summary

On 23 March 2023, Newfoundland and Labrador Deputy Premier and Minister of Finance Siobhan Coady tabled the province’s fiscal 2023/24 budget. The budget contains tax measures affecting individuals and corporations.

The Minister anticipates a surplus of CA$784 millioni for 2022/23 compared to the original estimated deficit of $351 million. The Minister projects a deficit of $160 million for 2023/24 followed by a return to surplus for the next four years.

A brief summary of the key tax measures follows.

Detailed discussion

Business tax measures

Corporate income tax rates

No changes are proposed to the corporate income tax rates or the $500,000 small-business limit.

Newfoundland and Labrador’s 2023 corporate income tax rates are summarized in Table A.

Table A – 2023 Newfoundland and Labrador (NL) corporate income tax rates1

  NL Federal and NL combined
Small-business tax rate2 3% 12%
General corporate tax rate2, 3

15%

 30%

1 The rates represent calendar-year-end rates unless otherwise indicated.

2 The federal corporate income tax rates for manufacturers of qualifying zero-emission technology are reduced to 7.5% for eligible income otherwise subject to the 15% federal general corporate income tax rate or 4.5% for eligible income otherwise subject to the 9% federal small-business corporate income tax rate. These reductions are not reflected in the combined federal and Newfoundland and Labrador rates above.

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 tax years ending after 7 April 2022 (prorated for tax years straddling this effective date).

Other business tax measures

This budget proposes to increase the All-Spend Film and Video Production tax credit from 30% to 40%.

Personal tax
Personal income tax rates

The budget does not include any changes to personal income tax rates.

The 2023 Newfoundland and Labrador personal income tax rates are summarized in Table B.

Table B – 2023 Newfoundland and Labrador personal income tax rates

First- bracket rate1

 Second- bracket rate Third- bracket rate Fourth- bracket rate Fifth- bracket rate Sixth- bracket rate Seventh- bracket rate Eighth- bracket rate
$0 to $41,457 $41,458 to $82,913 $82,914 to $148,027 $148,028 to $207,239 $207,240 to $264,750 $264,751 to $529,500 $529,501 to $1,059,000 Above $1,059,000
8.70% 14.50% 15.80% 17.80% 19.80% 20.80% 21.30% 21.80%

1 Individuals resident in Newfoundland and Labrador on 31 December 2023 with taxable income up to $21,141 pay no provincial income tax due to a low-income tax reduction. The low-income tax reduction is clawed back for income exceeding $22,447 until the reduction is eliminated, resulting in an additional 16% of provincial tax on income between $22,448 and $28,297.

For taxable income exceeding $264,750, the 2023 combined federal-Newfoundland and Labrador personal income tax rates are outlined in Table C.

Table C – Combined 2023 federal and Newfoundland and Labrador personal income tax rates

Bracket Ordinary income1 Eligible dividends

Non-eligible dividends
$264,751 to $529,500 53.80% 44.82% 47.81%
$529,501 to $1,059,000 54.30% 45.51% 48.38%
Above $1,059,000 54.80% 46.20% 48.96%

1 The rate on capital gains is one-half the ordinary income tax rate.

Personal tax credits

This budget proposes to double the Newfoundland and Labrador Physical Activity tax credit, which will provide a refundable tax credit of up to $348 per family.

Other tax measures

Provincial tax measures

  • The exemption threshold for the Health and Post-Secondary Education Tax will be increased from $1.3 million to $2 million.

  • The retail sales tax on home insurance will be eliminated.

  • The provincial tax on gas and diesel will be reduced by 7 cents per liter (8.05 cents per liter including the impact of Harmonized Sales Tax).

For additional information with respect to this Alert, please contact the following:

Ernst & Young LLP (Canada), St. John’s
  • Troy Stanley
  • Norman Byrne

For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.