Canadian Payroll Reporter

2 Canadian HR Reporter, a Thomson Reuters business 2015 News MAy 2015 | CPR Quebec budget proposes major changes election, it proposes to implement the health levy on Jul. 1. The amount each individual would pay for the levy would be based on their taxable income: Since the government would implement the levy mid-year, Campbell said the amount payable for 2015 would be one-half of the full-year amount. If the government wins re- election, it is expected the CRA will provide information in the coming weeks on how it plans to implement the levy so employers have time to make changes to their payroll systems before Jul 1. Campbell also proposed moving the prov- ince's personal income tax system from a flat rate structure to a graduated one, with three tax brackets, beginning next year. If enacted, the current 10 per cent flat tax rate that ap- plies to all taxpayers would apply only to the lowest income tax bracket. A second tax bracket would apply for tax- able income from over $100,000 to $250,000. The rate for the bracket would be 10.5 per cent in 2016, 11 per cent in 2017 and 11.5 per cent in 2018 and later years. A third tax bracket would apply for taxable income over $250,000. The rate for the bracket would be 11 per cent for 2016, 11.5 per cent for 2017, 12 per cent for 2018 and 11.5 per cent for 2019 and later years. Proposed Tax Brackets and Rates New Brunswick: The New Brunswick government is propos- ing to change its personal income tax brack- ets and rates this year, Finance Minister Roger Melanson announced in releasing the province's 2015-16 budget on Mar. 31. The changes would create two new personal in- come tax brackets and tax rates, retroactive to Jan. 1. A new 21 per cent tax rate would apply to taxable income between $150,000 and $250,000, while a rate of 25.75 per cent would apply for taxable income greater than $250,000. The rates for individu- als with a taxable income below $150,000 would not change. It is expected the CRA will implement the changes on July 1 for source deduction pur- poses, although this could not be confirmed at press time. In the past, the CRA has gen- erally implemented personal income tax changes on Jan. 1 and July 1. Nova Scotia: The Nova Scotia budget, released on Apr. 9, did not include any payroll-related tax changes. The government did, however, announce it would set up a working group to study recommendations put forward in a tax review report released last fall and would continue to consult with the public and tax experts about the recommended tax changes. The report, Charting a Path for Growth: Nova Scotia Tax and Regulatory Review, recommended widespread changes to the province's tax system, including reducing personal income tax rates, raising the basic personal exemption and indexing tax brack- ets. To read the full report, go to www.no- vascotia.ca/finance/en/home/taxation/ default.aspx. Quebec: Quebec's budget, which Finance Minister Carlos Leitão released on Mar. 26, contained a number of proposals that will impact payroll. Some of the major payroll-related changes include: • Health contribution to be eliminated: Leitão says the government plans to gradu- ally eliminate a mandatory health contribu- tion that provincial residents aged 18 and over are required to pay (unless exempted) if their income exceeds a specified threshold. Employees pay it through income tax source deductions. The phase-out would begin Jan. 1, 2017, and would take three years. • WSDRF threshold to increase: Leitão an- nounced the government would increase the threshold from $1 million to $2 million for mandatory partici- pation in the prov- ince's Workforce Skills Development and Recognition Fund (WSDRF). The change would take effect this year. Quebec law requires employers whose total pay- roll for a calendar year exceeds the threshold to spend at least one per cent of payroll on eligible employee training and development. Employers that fail to do so have to pay a contribution to the WSDRF equal to the difference between what they were required to spend and what they actu- ally spent. • HSF rate reductions and holidays an- nounced: The budget proposes to gradually reduce the Health Services Fund (HSF) con- tribution rate for small and medium-size en- terprises (SMEs) in the service and construc- tion sectors if their annual payroll is less than $5 million. The rate reduction would occur over three years, beginning in 2017. For SMEs with a total annual payroll of $1 million or less, the rate would eventually be reduced from 2.7 per cent to 2.25 per cent. Those with a payroll over $1 million but under $5 mil- lion, would also see their rate go down based on a formula tied to the size of their annual payroll. The rate for employers whose total annual payroll is $5 million or more would remain 4.26 per cent. The budget also proposes to extend eli- gibility for a tax holiday from HSF contri- butions for businesses that carry out large investment projects in the province to new Taxable 2016 2017 2018 2019 and Income (%) (%) (%) later years (%) $0 - $100,000.00 10 10 10 10 $100,000.01 - $250,000.00 10.5 11 11.5 11.5 $250,000.01 and up 11 11.5 12 11.5 Current Current Proposed Proposed Tax Brackets Tax Rates Tax Brackets Tax Rates (per cent) (per cent) $0.01 – $39,973.00 9.68 $0.01 – $39,973.00 9.68 $39,973.01 – $79,946.00 14.82 $39,973.01 – $79,946.00 14.82 $79,946.01 – $129,975.00 16.52 $79,946.01 – $129,975.00 16.52 $129,975.01 and over 17.84 $129,975.01 – $150,000.00 17.84 $150,000.01 – $250,000.00 21.0 $250,000.01 and over 25.75 see YUKON on page 8 Taxable Income Amount Payable for Health Care Contribution Levy $0 - $50,000 Exempt $50,000 - $70,000 (Taxable income - $50,000) x 5 per cent, to a maximum of $200 $70,000 - $90,000 $200 + (Taxable income - $70,000) x 5 per cent, to a maximum of $400 $90,000 - $110,000 $400 + (Taxable income - $90,000) x 15 per cent, to a maximum of $600 $110,000 - $130,000 $600 + (Taxable income - $110,000) x 15 per cent, to a maximum of $800 $130,000 and up $800 + (Taxable income - $130,000) x 25 per cent, to a maximum of $1,000 from BUDGET on page 1

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