ARCHIVED CD 2010-009
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June 21, 2010
SUBJECT: Tax Changes - Effective July 1, 2010
1. PURPOSE
1.1 The purpose of this directive is to provide clients with information relative to the tax legislation changes that are effective July 1, 2010.
1.2 A notice of information to employees concerning the above has been included with this Compensation Directive and will also be posted in the "Are you a Public Service Employee?" page of the Compensation Sector Web site.
2. BACKGROUND
2.1 The provincial budgets for Newfoundland and Labrador and Nova Scotia contained changes to their respective tax legislation which will be effective July 1, 2010.
2.2 The explanations in this directive will help compensation advisors provide information to employees concerning the factors that may cause changes to their pay cheques.
3. POLICY
3.1. Provincial Tax Brackets and Rates effective July 1, 2010
3.1.1. Newfoundland and Labrador
Newfoundland and Labrador has reduced the second and third personal income tax brackets from 12.8% to 12.5% and 15.5% to 13.3% respectively. The following table provides the changes to the Newfoundland and Labrador tax rates effectiveJuly 1, 2010.
| Tax brackets and rates effective January1,2010 | Tax brackets and rates effectiveJuly 1, 2010 | ||
|---|---|---|---|
| Tax brackets | Tax rates | Tax brackets | Tax rates |
| More than - Not more than | More than - Not more than | ||
| $0 to $31,278 | 7.70% | $0 to $31,278 | 7.70% |
| $31,278 to $62,556 | 12.80% | $31,278 to $62,556 | 12.50% |
| Over $62,556 | 15.50% | Over $62,556 | 13.30% |
Personal Tax Credits
Newfoundland and Labrador is increasing the provincial Age amount tax credit to $5,000. The following table provides the changes to the Newfoundland and Labrador tax credit amounts effective July 1, 2010.
| Amount effective January1,2010 | Amount effectiveJuly 1, 2010 | |
|---|---|---|
| Age amount | maximum of $3,681 | maximum of $5,000 |
The "2010 Newfoundland and Labrador Personal Tax Credits Return" (TD1NL) form has been revised to include these changes.
3.1.2. Nova Scotia
The government of Nova Scotia has announced that the province will add a fifth tax bracket for personal taxable income in excess of $150,000.
The following table provides the changes to the Nova Scotia tax brackets and rates effective July 1, 2010. The current provincial surtax equal to 10% of individual provincial tax payable in excess of $10,000 will be suspended effectiveJuly 1, 2010.
| Tax brackets and rates effective January1,2010 | Tax brackets and rates effectiveJuly 1, 2010 | ||
|---|---|---|---|
| Tax brackets | Tax rates | Tax brackets | Tax rates |
| More than - Not more than | More than - Not more than | ||
| $0 to $29,590 | 8.79% | $0 to $29,590 | 8.79% |
| $29,590 to $59,180 | 14.95% | $29,590 to $59,180 | 14.95% |
| $59,180 to $93,000 | 16.67% | $59,180 to $93,000 | 16.67% |
| Over $93,000 | 17.50% | $93,000 to $150,000 | 17.50% |
| Over $150,000 | 24.50% | ||
3.2. Multiple Tax Adjustment Factors
The Canada Revenue Agency (CRA) has provided new rates for the Multiple Tax Adjustment Factors applicable to the province of Nova Scotia, effective July 1, 2010. The Multiple Tax Adjustment Factors effective July 1, 2010 will be as follows:
| Tax brackets | Tax rates | Nova Scotia | New Brunswick | Ontario |
|---|---|---|---|---|
| More than - Not more than | ||||
| $0 to $40,970 | 15.00% | 90% | 94.00% | 61% |
| $40,970 to $81,941 | 22.00% | 103% | 93.00% | 73% |
| $81,941 to $127,021 | 26.00% | 103% | 89.00% | 86% |
| Over $127,021 | 29.00% | 103% | 88.00% | 89% |
4. PROCEDURES/INSTRUCTIONS
4.1 All pay systems will be programmed to automatically reflect the new provincial tax rates for payments dated on or afterJuly 1, 2010.
4.2 Effective July 1, 2010, employees who wish to obtain the additional credit for the Newfoundland and Labrador Age amount personal tax credit must file a revised "2010 Newfoundland and Labrador Personal Tax Credits Return" (TD1NL) form. This form is available at District Taxation Office (DTO) or on the Internet at the following address: Canada Revenue Agency - Forms listed by form number
5. INQUIRIES
5.1 Any inquiries on the information contained in this document should be addressed to your Public Works and Government Services Canada (PWGSC) Compensation Services Office (CSO).
Original Signed by
B. Fortin
Brigitte Fortin
Director General
Compensation Sector
Accounting, Banking and Compensation
Reference(s): CJA
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