2007 Newfoundland and Labrador Budget Impact Paper

This paper was prepared by the Compensation Sector, Accounting, Banking and Compensation Branch, Public Works and Government Services Canada (PWGSC). It should be noted that this document is not all encompassing. Employees may find this document informative from a personal perspective.

The following items, which are relative to the compensation product, were introduced in the Newfoundland and Labrador budget speech that was presented by the Honourable Tom Marshall, Minister of Finance for the Government of Newfoundland and Labrador on April 26, 2007.

ITEM AFFECTING PWGSC COMPENSATION SYSTEMS

Personal Income Tax

The Government of Newfoundland and Labrador has advised that all personal income tax rates will be decreased effective July 1, 2007. The following table shows the Newfoundland and Labrador's personal income tax brackets and corresponding tax rates before and after the change effective July 1, 2007.

Newfoundland and Labrador Tax Brackets and Rates
Tax Brackets ($)	Current Tax Rates	Tax Rate effective July 1, 2007
More than - Not more than
0 to 29,590	10.57%	8.7%
29,590 to 59,180	16.16%	13.8%
Over 59,180	18.02%	16.5%

Impact: PWGSC compensation systems will be programmed to reflect the changes for 2007 in July 2007.

Personal Income tax System

The personal income tax system, including tax brackets and most non-refundable tax credits will be indexed to inflation.

Impact: PWGSC compensation systems will be programmed to reflect the changes for 2007 in July 2007. It is expected that the Canada Revenue Agency (CRA) will provide employers with the adjusted tax bracket thresholds and the adjusted tax credit amounts, which will take into consideration the first six months of 2007, by June 2007.

ITEMS OF INTEREST

The Low-Income Tax Reduction

Effective January 1, 2007, this program has been changed so that more low-income tax filers will not be required to pay provincial personal income tax.

Impact: This change will be incorporated into the 2007 income tax return.

Personal Income Tax Surtax

Effective July 1, 2007, the 9% surtax will be eliminated.

Impact: This change will be incorporated into the 2007 income tax return.

Senior's Benefit

Effective July 1, 2007, the Senior's Benefit for married seniors will be increased as a result of adjustments to the income threshold range.

Impact: This change will be incorporated into the 2007 income tax return.

To review the 2007 Newfoundland and Labrador budget documents, please visit this site:

http://www.budget.gov.nl.ca/budget2007/