On April 6, 2010, Finance Minister Graham Steele delivered the province's 2010-2011 Budget. Currently, the government forecasts a deficit of $222 million and has stated they believe that a balanced budget is achievable for the 2013-2014 fiscal year.
The following are some of the taxation highlights as introduced in the House of Assembly.
Small Business Tax Rate
On January 1, 2011, the government will reduce the rate of corporate income tax for small businesses from 5 per cent to 4.5 per cent. Eligible small businesses can apply this rate on the first $400,000 of taxable income. Based on the budget, the 2011 combined federal and provincial tax rates for Nova Scotia are as follows:
| Active business taxable income | Federal % | Nova Scotia % | Total % |
| 0 - $400,000 | 11.00 | 4.50 | 15.50 |
| $400,001 - $500,000 | 11.00 | 16.00 | 27.00 |
| OVER $500,000 | 18.00 | 16.00 | 34.00 |
High Income Tax Rate/Elimination of Surtax
Effective January 1, 2010, the province will eliminate the provincial surtax. The surtax was a 10% tax calculated on provincial tax in excess of $10,000. This surtax applied to taxable income in excess of $81,240. Effective January 1, 2010, a new fifth personal income tax bracket will be added in place of the surtax. This new fifth tax bracket will apply to taxable income in excess of $150,000, and will be subject to a marginal rate of 21 per cent. The elimination of the surtax and the addition of the new fifth tax bracket are supposed to stay in effect until the budget is balanced. Based on the budget, the 2010 combined federal and provincial tax rates for Nova Scotia are as follows:
| Taxable Income | Federal % | Nova Scotia % | Total % |
| $ 8,231 or less | 0.00 | 0.00 | 0.00 |
| 8,232 – 10,382 | 0.00 | 8.79 | 8.79 |
| 10,383 – 29,590 | 15.00 | 8.79 | 23.79 |
| 29,591 – 40,970 | 15.00 | 14.95 | 29.95 |
| 40,971 – 59,180 | 22.00 | 14.95 | 36.95 |
| 59,181 – 81,941 | 22.00 | 16.67 | 38.67 |
| 81,942 – 93,000 | 26.00 | 16.67 | 42.67 |
| 93,001 – 127,021 | 26.00 | 17.50 | 43.50 |
| 127,022 – 150,000 | 29.00 | 17.50 | 46.50 |
| OVER 150,000 | 29.00 | 21.00 | 50.00 |
Implications of corporate and personal tax changes
Due to the changes to the marginal tax rates for corporations and individuals, a detailed review of your remuneration strategy may be required to ensure maximum tax efficiency. Please consult your Collins Barrow office to discuss possible changes to your remuneration strategy.
Harmonized Sales Tax
Effective July 1, 2010, the harmonized sales tax (HST) rate in Nova Scotia will be restored to 15per cent. Under a new Comprehensive Integrated Tax Coordination Agreement with the federal government, the provincial portion of the HST will change from 8 per cent to 10 per cent. There will be some transition rules to deal with the implementation of the increase in HST rate, please contact your Collins Barrow tax specialist to discuss.
Nova Scotia Affordable Living Tax Credit
Beginning July 1, 2010, Nova Scotia households with low and modest income will receive a refundable tax credit payment every quarter. The annual amount of the credit will be $240 per household, plus $57 for each child under 19 living in the household. The credit will be reduced by $0.05 for every dollar of adjusted family income above $30,000. Credits will be paid in quarterly amounts, in conjunction with the federal Goods and Services Tax Credit.
Tax Reduction for Low-Income Seniors
The Guaranteed Income Supplement will no longer be applicable for provincial income tax.
HST Rebate on Family Essentials
Effective July 1, 2010, the province will provide point-of-sale rebates to reduce the tax impact on selected essential items. Point-of-sale rebates will effectively remove the provincial portion of sales tax from diapers, children's clothing, children's footwear, and feminine hygiene products. These rebates will be delivered immediately on purchase with no need for application.
Nova Scotia's existing point-of-sale rebates on home energy and books will continue as currently legislated, with adjustments to reflect the restoration of the HST. The current application-based rebate for first time home buyers will continue to deliver the same tax relief for new housing purchases, but there will be changes to eligibility for builders to claim on behalf of homebuyers and in the administration of the rebate.
Basic Personal Amount and Other Non-refundable Credits
The province is increasing the basic personal amount exempted from personal income taxes by $250 per year over a four-year period. The provinces other non-refundable credits will also grow by 13.83% over this period. The basic personal amount increased from $7,731 to $7,981 effective January 1, 2009 and to $8,231 in January 2010. Other non-refundable tax credit amounts grew by 3.23% in 2009 and 3.13% in 2010.