General Corporate Income Tax Rate Reduction
Effective April 1, 2020, the province will reduce the general corporate income tax rate from 16 per cent to 14 per cent.
The general corporate income tax rate in Nova Scotia has been set at 16 per cent since 1990. From 1982 to 1989 the rate was 15 per cent. The reduction by 2 percentage points will provide businesses with $70.5 million in 2020–21.
Small Business Corporate Income Tax Rate Reduction
Effective April 1, 2020, the province will reduce the small business corporate income tax rate from 3.0 per cent to 2.5 per cent.
From 2011 to 2014 the small business corporate income tax rate was reduced by one-half percentage point each year—dropping the rate from 5 per cent to 3 per cent. The small business rate is available on the first $500,000 of active business income by Canadian Controlled Private Corporations (CCPCs) with taxable capital of less than $10 million. The rate reduction will provide small businesses in the province with $10.5 million in 2020–21.
Extend Digital Media Tax Credit (DMTC)
The DMTC is a refundable corporate income tax credit. It was introduced in 2007 to encourage the employment of skilled Nova Scotians and to foster the development of an interactive digital media industry in the province. Since its introduction, the province has provided almost $54 million in tax credits across 675 applications.
The DMTC was legislated to expire on December 31, 2020, but new legislation will be introduced as part of Budget 2020–21 to extend the tax credit for five years—to December 31, 2025.
The province will review the DMTC in consultation with the industry and stakeholders to ensure that the tax credit remains relevant and effective in an ever-changing digital technology environment.
Extend Digital Animation Tax Credit (DATC)
The DATC is a refundable corporate income tax credit. It was introduced in 2015 to provide support for the production of digital-animation productions in the province. The tax credit, together with the Film and Television Production Incentive Fund, was put in place to replace the former Film Industry Tax Credit. Since its introduction, the province has approved Part A applications totaling almost $45 million across 45 applications.
The DATC was legislated to expire on June 30, 2020, but new legislation will be introduced as part of Budget 2020–21 to extend the tax credit for five years—to December 31, 2025.
The province will review the DATC to ensure that the tax credit continues to support the digital animation industry.
Increase Tobacco Taxes
Effective February 26, 2020, the province will increase the tax rates on all tobacco products sold in Nova Scotia.
The tax rate on cigarettes and tobacco sticks will rise from 27.52 cents per unit to 29.52 cents per unit.
The tax rate on fine cut tobacco will rise from 26 cents per gram to 40 cents per gram, while the tax rate for other tobacco products will rise from 18.52 cents per gram to 40 cents per gram. Nova Scotia is the only province that has separate rates for fine cut and other tobacco, and the rate increase brings the province in line with other Canadian jurisdictions. It also treats fine cut tobacco similarly to cigarettes.
The tax on cigars will rise from 60 per cent of the suggested retail selling price to 75 per cent. Again, this is in line with tax rates applicable to cigars across the country.
The tax increases are expected to generate approximately $17.4 million in revenues for 2020–21.
Implement Vaping Products Tax
Effective September 15, 2020, the province will implement a tax on all vaping products
sold in Nova Scotia.
Vaping substances, including those that do not contain nicotine, will be taxed at the
rate of $0.50 per millilitre. The province has previously announced that it will ban
flavoured vaping liquids effective April 1, 2020. This is consistent with the province’s ban
on flavoured tobacco products. Vaping devices and their components will be taxed at a
rate of 20 per cent of their suggested retail selling price. Cannabis vaping substances
are taxed under the cannabis tax.
All retailers, wholesalers, and manufacturers of vaping products will be required to be
licensed to sell their products in Nova Scotia, effective July 1, 2020. Vaping product
taxes are projected to be $2.3 million in 2020–21.
The full version of the Nova Scotia Budget can be found here: https://novascotia.ca/budget/