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Provincial and territorial 2016 budget overview

canada-speech-bubbleThroughout the last few months a number of provinces and territories have released their Budgets for the year 2016.

The following is a brief overview of each Budget released to date, which highlights various measures that would be of interest to business owners.

For a more in-depth look at each province’s and territories’ budget measures, be sure to check out the full-articles on HRinfodesk!

Alberta

On April 14, 2016, Alberta Finance Minister Joe Ceci presented Alberta’s 2016 Budget. Budget 2016 focuses on four key pillars: supporting families and communities; investing in infrastructure; diversifying the energy industry and energy markets; and supporting Alberta businesses.

With a $10.4 billion deficit this year, deficits thereafter are expected to decline gradually with $10.1 billion in 2017-18, and $8.4 billion in 2018-19.

Budget 2016 recognizes that the steep decline in oil prices has had a significant effect on Alberta.

The aim is to have a balanced budget by 2024.

The following is a brief overview of measures that would be of interest to businesses.

Corporate income tax: From a business perspective, there is good news! The tax rate for small businesses (revenue of $500,000 or less) will be reduced from three percent to two percent on January 1, 2017. With this change, Alberta will be tied with Saskatchewan for the second‑lowest provincial small business rate. According to the Budget, $865 million will go back to small businesses through the tax rate reduction over the next five years. Alberta’s corporate tax rate remains at 12 percent.

Investor and investment tax credits: The government will continue to look at different options to create jobs and attract investment. This includes introducing two tax credits for individuals and corporations that invest in Alberta. 1) The Alberta Investor Tax Credit, worth $90 million over two years, will benefit investors who invest in eligible small and medium‑sized enterprises in Alberta. 2) The Capital Investment Tax Credit, worth $75 million over two years, will benefit corporations that make investments in eligible capital assets.

Carbon pricing: Fuels, including natural gas, transportation fuels and other fuels, will be subject to a new carbon levy when consumed for combustion purposes. Such carbon levy will be introduced January 1, 2017 and will reflect a price of $20 per tonne of carbon dioxide‑equivalent emissions, rising to $30 per tonne on January 1, 2018.

The Budget also proposed that carbon emissions of Large Final Emitters will continue to be subject to the Specified Gas Emitters Regulation framework until the end of 2017, when the province will transition to product and sector‑based performance standards. Large Final Emitters will be subject to a cost of $20 per tonne of greenhouse gas emissions over their emissions target as of January 1, 2016. The cost will rise to $30 per tonne on January 1, 2017.

For more on Alberta budget measures, read article 42652.

British Columbia

On February 16, 2016, Finance Minister Michael de Jong delivered British Columbia’s balanced 2016 Budget. The province’s aim  is to further strengthen its economy, create jobs, and make life more affordable for British Columbians.

The Budget foresees a surplus of $377 million for the current 2015-16 year, $264 million for 2016-17, $287 million for 2017-18, and $373 million for 2018-19.

The following is a brief overview of measures that would be of interest to businesses.

Corporate income tax: No changes to corporate taxes were announced. Therefore, the provinces corporate income tax rates, effective January 1, 2016, remain at 2.5 percent for small businesses and 11 percent for general corporate.

New non-refundable Farmers’ Food Donation Tax Credit: Effective February 17, 2016, the tax credit is available to individuals and corporations that carry on the business of farming and donate a qualifying agricultural product to a registered charity that provides food to those in need or helps to operate a school meal program. The credit is worth 25 percent of the fair market value of the qualifying agricultural product and must be claimed in the same year that a charitable donation tax credit or deduction is claimed for the donation.

Mining tax credits: The Budget affirms two measures that were previously announced on January 25, 2016: Extension of the B.C. mining flow-through share tax credit to the end of 2016, as well as the extension of the mining exploration tax credit to the end of 2019.

Equity tax credit budget increased: Beginning in 2016, the budget for the small business venture capital tax credit is increased by $5 million, $3 million of which will be for direct investments in eligible new corporations. This allows for up to $16.7 million annually in additional equity financing for qualifying corporations.

Farmer exemption from PST: Effective February 17, 2016, telescopic handlers, skid steers and polycarbonate greenhouse panels obtained by qualifying farmers for use solely for a farm purpose are exempt from provincial sales tax. To qualify for this exemption, polycarbonate greenhouse panels must be purchased in a minimum quantity of 500 square metres.

For further information on British Columbia Budget measures, read article 42492

New Brunswick

New Brunswick’s 2016 Budget was tabled on February 2, 2016. Job creation has been deemed the province’s first priority. The Budget foresees a deficit of $347 million for 2016-17, $267 million for 2017-18 , and $167 million for 2018-19  .

The following is a brief overview of measures that would be of interest to businesses.

Corporate income tax: Effective April 1, 216, the general corporate income tax rate will increased from 12 percent to 14 percent. The small business income tax rate will remain 4 percent.

HST increase: Effective July 1, 2016, the provincial portion of the harmonized sales tax (“HST”) rate will increase from 8 percent to 10 percent, raising the joint federal-provincial HST rate from 13 percent to 15 percent.

Tobacco tax: Tobacco tax increase by 3.26 cents on February 3, 2016, and a further 3.26 cent increase effective February 1, 2017.

Real property transfer tax: Effective April 1, 2016, the real property transfer tax will increase from 0.5 percent to 1 percent. This tax is a one-time payment on the purchase of a property when the deed is registered.

Financial corporation capital tax: Changes to the Financial Corporation Capital Tax Act to increase the financial corporation capital tax rate from 4 percent to 5 percent for banks, effective April 1, 2016.

For more on New Brunswick Budget 2016 measures read article 42425.

Newfoundland and Labrador

On April 14, 2016, Finance Minister Cathy Bennett delivered the Newfoundland and Labrador’s 2016 Budget Through investment in technology and expansion, the Province looks to build the foundation for, and achieve, long-term success for businesses.

The deficit for 2015-16 is now expected to be $2.2 billion (previously forecasted at $2 billion) due to further declines in offshore royalties. The budgeted deficit for 2016-17 is projected to be $1.8 billion. Given the actions presented in Budget 2016, the province noted that it has been able to cut that projected deficit by one-third (the previous projected deficit for 2016-17 was 2.7 billion). According to the province, it is expecting a return to surplus in Budget 2022.

The following is a brief overview of measures that would be of interest to businesses.

Financial Corporations Capital Tax and the general corporate income tax rates: Effective January 1, 2016, both taxes will increase by one percent (14 percent to 15 percent for the general corporate income tax, and 5 percent to 6 percent for the Financial Corporations Capital Tax). The Manufacturing and Processing Profits Tax Credit will be eliminated, effective January 1, 2016.

Insurance Companies Tax: The Insurance Companies Tax will increase from 4 percent to 5 percent, effective July 1, 2016.

HST increase: Effective July 1, 2016, the harmonized sales tax (“HST”) rate will go up from 13 percent to 15 percent, with the provincial portion of the HST increasing from eight percent to 10 percent.

Tobacco taxes: Effective April 15, 2016, tobacco taxes will increase by one cent per cigarette and by two cents per gram on fine-cut tobacco products.

Retail Sales Tax: Effective July 1, 2016, the Retail Sales Tax on insurance premiums is being re-introduced at a rate of 15 percent for property and casualty insurance policies. Also, effective July 1, 2016, the Retail Sales Tax on used vehicles will go up from 14 percent to 15 percent.

Gasoline Tax: Will temporarily increase by 16.5 cents per litre, effective June 2, 2016. This tax increase will be reviewed ahead of the Fall 2016 supplemental budget. The tax rate on diesel products will also increase by five cents per litre and the tax rate on aviation fuel will go up from 0.7 cents per litre to 2.5 cents per litre on June 2, 2016.

Industry investments: The Province is committed to investing in seafood, mining, and the forestry and agriculture industries, as well as towards innovation and diversification, and managing energy resources.

For further Newfoundland and Labrador Budget 2016 measures read article 42660.

Nunavut

The Nunavut government tabled its 2016 Budget on February 25, 2016. The focus of the budget is on spending in health care and social assistance.

There are no new payroll/individual personal taxes or changes. Also, no changes have been proposed to the corporate tax rates or the $500,000 small-business limit. However, the Department of Finance has launched a comprehensive review of the Nunavut taxation system.

The government intends to give the Department of Health $21 million more in 2016-17 for front-line service delivery, an increase of six percent from 2015-16. That will include more money for home care and community care, hospitals and doctors, community health centres, and medical transportation.

For further Nunavut Budget 2016 measures, read article 42506.

Nova Scotia

On April 19, 2016, Stephen McNeil’s Liberal government tabled its third Budget. The Province intends to make strategic investments to encourage innovation and boost export growth, invest in transportation and municipal infrastructure, support its creative industries, and reduce red tape for businesses.

Budget 2016-17 is balanced. Although the Budget projects a $127.4 million surplus, $110.3 million comes from a one-time revenue increase in 2016-2017 because of federal and municipal contributions to the new Halifax Convention Centre. The $110.3 million will go towards the debt to provide the fiscal capacity to launch the multi-year development of the QEII Health Sciences Centre. Therefore leaving Nova Scotia with a $17.1 million dollar surplus.

The following is a brief overview of measures that would be of interest to businesses.

Corporate income tax: No changes to corporate taxes were announced. Therefore, the provinces corporate income tax rates, effective January 1, 2016, remain at 3 percent for small businesses and 16 percent for general corporate.

Capital Investment Tax Credit: Effective January 1, 2015, the Capital Investment Tax Credit will provide a 15 percent refundable corporate income tax credit for capital equipment acquired for use in Nova Scotia as part of a capital project that exceeds $15 million in total cost. This year’s Budget reaffirms that the tax credit is available to corporations primarily in the manufacturing and processing, farming, fishing, and logging sectors.

Food Bank Tax Credit for Farmers: Effective January 1, 2016, individuals and corporations that carry on a farming business may claim a non-refundable tax credit equal to 25 percent of the fair market value of qualifying agricultural products donated to a registered charity that provides food to those families in need. The tax credit must be claimed in the same year that a charitable donation tax credit or deduction is claimed for the donation.

Tobacco taxes: Effective April 20, 2016, the tobacco tax rate will increase by $0.02 per cigarette, $0.02 per gram of fine-cut tobacco, and $0.02 per pre-proportioned tobacco stick. In addition, the tax on cigars will increase from 56 percent to 60 percent of the suggested retail selling price of a cigar.

For further Nova Scotia Budget 2016 measures that could affect your business, read article 42677.

Ontario

On February 25, 2016, Finance Minister Charles Sousa released Ontario’s 2016 Budget. Ontario’s plan includes reducing business costs, keeping tax rates competitive, building strategic partnerships, helping businesses go global, strengthening the financial services sector, and investing in training and education.

The deficit for the 2015 year, ending March 31, is forecast to be $5.7 billion, and in 2016-17 it is projected to drop to $4.3 billion. The government asserts that they “are on track to balance the budget in 2017–18” and look to continue on that path to balance in 2018-19.

Although Ontario is getting its operating deficit under control, debt is on the rise. As of March 31, 2016, net debt is forecast to be 296.1 billion and by the end of March 2019, it is expected to be $326.8 billion.

The following is a brief overview of measures that would be of interest to businesses.

Small business dividend tax credit and gross-up: In its 2015 budget, the Federal government announced reductions in the federal small business corporate income tax rate over four years. The corresponding changes to the gross-up rate for non-eligible dividends (generally issued by companies taxed at the small business rate) will be paralleled by Ontario. As a result, for 2016, Ontario’s non-eligible dividend tax credit rate will decline from 4.5 percent for 2015 to 4.2863 percent.

Although, no changes to corporate taxes were announced.

Research and development (R&D) tax credits: Effective for eligible R&D expenditures incurred in taxation years that end on or after June 1, 2016: Decreasing the Ontario Research and Development Tax Credit rate from 4.5 percent to 3.5 percent; and
decreasing the Ontario Innovation Tax Credit rate from 10 percent to 8 percent. The rate reductions would be prorated for taxation years straddling June 1, 2016. Ontario will reinvest savings from the proposed tax credit changes into new targeted investments across key sectors of Ontario’s economy.

Red tape challenge: Launch of an online consultation tool designed to identify and eliminate duplication, lessen compliance burdens, shorten response times and make it easier for businesses to interact with the government. It will engage with the public, businesses and stakeholders in addressing regulatory challenges and identifying opportunities to reshape Ontario’s economy.

For further Ontario Budget 2016 measures, read article 42509.

Prince Edward Island

On April 19, 2016, Finance Minister the Honourable Allen Roach presented Prince Edward Island’s 2016 Budget.

According to Honourable Roach, “Our budget plan is consistent with our pledge to grow the economy, spend public dollars wisely and provide more opportunities for future generations of Islanders.”

The anticipated deficit for the 2015-16 fiscal year is $27.7 million (original forecast of $19.9 million), for 2016-17 a deficit $9.6 million, and a surplus of 9.2 million in 2017-18.

The Budget contains no changes in corporate tax rates, and there was no introduction to any new taxes or fees.

Although, regarding sales and other tax measures it was announced:

  • Increase of the harmonized sales tax (“HST”) by one percent effective October 1, 2016. HST will increase from 14 percent to 15 percent, with the provincial portion increasing from 9 percent to 10 percent.
  • Elimination of the Real Property Transfer Tax for all first-time home buyers as of October 1, 2016.

For further Prince Edward Island Budget 2016 measures read 42681.

Quebec

On March 17, 2016, the Quebec government tabled Budget 2016 in the National Assembly. In order to foster innovation and support productivity in businesses, Quebec will be making investment in
education and training a priority. The Province wants this year’s Budget to be a catalyst for renewed business confidence and investment

The surplus for 2015-2016 is expected to amount to $1.4 billion. The Minister also anticipates a $2 billion surplus for 2016-2017. The government is projecting revenue of $102.6 billion in 2016-17, including $20.2 billion in various federal transfer and equalization payments.

The following is a brief overview of measures that would be of interest to businesses:

  • No tax or rate increases.
  • Health Services Fund contribution reduction for SMBs: The government is increasing support for small to medium size businesses (“SMBs”) by allowing reduction in the Health Services Fund contribution, effective January 1, 2017, representing an additional amount of nearly $245 million. The rate applicable to businesses with a payroll of $1 million or less will gradually be reduced by 2021, by:
    • nearly 50 percent for SMBs in the primary and manufacturing sectors, 1.6 percent to 1.45 percent.
    • over 25 percent for SMBs in the service and construction sectors, 2.7 percent to 2.0 percent.
  • New electricity rate discount: For businesses representing $539 million to stimulate manufacturing investment.
  • Tax reduction for innovative corporations: A reduction in the tax rate on income attributable to a patent (from 11.8 percent to 4 percent).
  • Support the startup phase of innovative businesses: $20 million for the AmorChem II fund; $15 million for the InnovExport fund; and $30 million for a new clean technologies seed fund.

For further Quebec Budget 2016 measures read article 42579.

Yukon

On April 7, 2016, the Yukon government tabled its 2016 Budget. For five consecutive years, the Yukon government has tabled a surplus, totaling $9.483 million this year. Premier and Minister of Finance Darrell Pasloski stated, “In a year when most Canadian jurisdictions are facing high deficits, I am proud that Yukon is in a position of surplus…We are presenting a principled long-term fiscal plan that will position Yukon to be a growth economy for years to come.”

The following is a brief overview of measures that would be of interest to businesses:

  • a balanced budget with no net debt;
  • no tax increases for families or businesses;
  • no changes have been proposed to the corporate tax rates or the $500,000 small-business limit;
  • a $3 million increase in spending on information technology.

For further Yukon Budget 2016 measures that could affect your business, read article 42646/a>.

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Cristina Lavecchia, Editor

Cristina is an editor and researcher at First Reference. She is a licensed paralegal and obtained a Bachelor of Arts degree, Political Science major at York University. During Cristina's paralegal and undergraduate studies she studied employment standards, occupational health and safety, and workplace safety and insurance. Read more
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