On March 25, 2021, the Nova Scotia government released its 2021 budget. The following are highlights of the key tax measures.
Personal tax measures
No personal income tax rate changes were announced in this year’s budget. The current personal combined income tax rates for 2021 are outlined below:
|
Personal (combined) federal and N.S. top marginal tax rates |
|
|
 |
Rate |
|
Interest/regular income |
54.0% |
|
Capital gains |
27.0% |
|
Eligible dividends |
41.58% |
|
Other-than-eligible dividends |
48.28% |
Corporate tax measures
No corporate income tax rate changes were announced in this year’s budget. The current corporate income tax rates for 2021 are outlined below:
|
 |
Small business corporations |
General corporations |
||
|
 |
Rate |
Threshold |
Non-M&P |
M&P |
|
Federal |
9.0% |
$500,000 |
15.0% |
15.0% |
|
Nova Scotia |
2.5% |
$500,000 |
14.0% |
14.0% |
|
Combined |
11.5% |
$500,000 |
29.0% |
29.0% |
Other tax measures
Extension of Equity Tax Credit for CEDIFs
As announced in the 2019–20 budget, the Equity Tax Credit was phased out as of December 31, 2019, with the exception of investments in Community Economic Development Investment Funds (CEDIFs). The tax credit for these investments was scheduled to expire on February 28, 2022. However, with this budget, the tax credit will be extended for an additional 10-year period. The CEDIF provides a 35 per cent tax credit for individuals who invest up to $50,000 in a taxation year and hold their shares for a five-year period. Rollover tax credits provide an additional 20 per cent when individuals retain their shares for an additional five years (10 years in total) and a further 10 per cent when individuals retain their shares for a period of 15 years.
Next steps
Contact your Baker Tilly advisor to learn more about how we can help navigate the complexities of the Canadian tax system.
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