On February 25, 2020, Finance and Treasury Board Minister Karen Casey presented the 2020–2021 Nova Scotia budget. This year’s budget, which is titled “Better Together”, focuses on investments leading to improving the lives of Nova Scotians, building economic success, financing a modern infrastructure, and laying the groundwork for a bright future.
This year’s budget includes a number of key corporate income tax proposals and, in addition, a couple of interesting commodity tax initiatives were announced, as noted below.
Corporate Income Tax Measures
Budget 2020 includes a proposal for a general corporate income tax rate reduction to 14% from 16% that will take effect on April 1, 2020. In addition, a reduction of the small business corporate income tax rate to 2.5% from 3% also effective April 1, 2020, was planned for in this year’s budget.
Commodity Tax Measures
This year’s budget proposes an increase in the tax rates on all tobacco products sold in Nova Scotia, effective February 26, 2020. Specifically, the tax rate on cigarettes and tobacco sticks will increase to 29.52 cents per unit from 27.52 cents per unit, the tax rate on fine-cut tobacco will climb to 40 cents per gram from 26 cents per gram, the tax rate on other tobacco products will rise to 40 cents per gram from 18.52 cents per gram, and the tax on cigars will increase to 75% of the suggested retail selling price from 60%. The proposed tax rate increases for fine-cut tobacco, other tobacco products, and cigars will bring the Nova Scotia tax rates in line with similar rates in other Canadian jurisdictions.
Vaping Products Tax
Budget 2020 also includes a proposal for the introduction of a new commodity tax. Effective September 15, 2020, Nova Scotia plans to implement a tax on all vaping products sold in the province. Under this proposal, vaping substances—with or without nicotine—will be taxed at a rate of 50 cents per millilitre, and vaping devices and their components will be taxed at a rate of 20% of their suggested retail selling price. As part of this announcement, the province confirmed that the sale of flavoured vaping liquids will be banned, effective April 1, 2020. In addition, this year’s budget proposes that all retailers, wholesalers, and manufacturers of vaping products must be licensed to sell their products in Nova Scotia, effective July 1, 2020.
Further information on Nova Scotia’s 2020–2021 budget may be found on the province’s website at: https://novascotia.ca/budget/
If you have any questions about how these proposed changes might impact your organization, please do not hesitate to call the Ryan TaxDirectTM line at 1-800-667-1600.