Canada | Newfoundland and Labrador Budget 2024-25 includes change for small businesses

On 21 March 2024, Newfoundland and Labrador Deputy Premier and Finance Minister Siobhan Coady tabled the province's fiscal 2024-25 budget. The budget contains no new taxes and no tax increases but includes a reduction in the small-business income tax rate.

The minister anticipates a deficit of CA$152m for 2024-25, representing 1.5% of revenues. The province projects a balanced budget for 2025-26 and for the foreseeable future.

A brief summary of the key tax measures follows.

Business tax measures

Corporate income tax rates

No changes are proposed to the general corporate income tax rate; however, the small-business tax rate has been reduced from 3% to 2.5%, effective 1 January 2024. No changes are proposed to the CA$500,000 small-business limit.

Newfoundland and Labrador's (NL) current and proposed corporate income tax rates are summarized in Table A.

Table A — 2024 Newfoundland and Labrador corporate income tax rates1

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-NL rates above.

3 An additional federal tax applies to banks and life insurers at a rate of 1.5% on taxable income (subject to a CA$100m exemption to be shared by group members).

Personal tax

Personal income tax rates

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

The 2024 Newfoundland and Labrador personal income tax rates are summarized in Table B.

Table B — 2024 Newfoundland and Labrador personal income tax rates

1 Individuals resident in Newfoundland and Labrador on 31 December 2024 with taxable income up to CA$22,013 pay no provincial income tax as a result of a low-income tax reduction. The low-income tax reduction is clawed back for income exceeding CA$23,390 until the reduction is eliminated, resulting in an additional 16% of provincial tax on income between CA$23,391 and CA$29,478.

For taxable income exceeding CA$275,870, the 2024 combined federal-Newfoundland and Labrador personal income tax rates are outlined in Table C.

Table C — Combined 2024 federal and Newfoundland and Labrador personal income tax rates

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

Personal tax credits

This budget does not propose any changes to the Newfoundland and Labrador personal credits/amounts.

For up-to-date information on the federal, provincial and territorial budgets, visit ey.com/ca/Budget.

Contact Information

For additional information concerning this Alert, please contact:

Ernst & Young LLP (Canada), St. John's

• Troy Stanley
  
  
• Norman Byrne

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor

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