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Scrapping Nova Scotia Tax Break Would Blunt Province's Edge

Wednesday, November 26, 2014

The Canadian Federation of Independent Business (CFIB) has said that it is deeply concerned about proposals to hike Nova Scotia's small business tax rate from three percent to eight percent.

The proposal is made in the final report of the Nova Scotia Tax and Regulation Review. The review looked at the impact of taxes, fees, and regulations, and considered what changes would improve Nova Scotia's economic and business climate.

The report made 22 tax-related recommendations and a further 20 for regulations, fees, and related areas.

At three percent, Nova Scotia's small business tax rate is one of the lowest among Canadian provinces. The cost of this has ranged from CAD128m (USD113.5m) to almost CAD200m since 2008, and the New Small Business Tax Holiday, which does not exist in other provinces, eliminates income tax for the first three years.

According to the report, "Small business tax breaks create an incentive for business to stay small, and do not recognize the reality that large corporations drive economic and job growth." It recommends that the small business tax rate be increased over the next ten years, to eight percent, and that the small business tax threshold rise from CAD350,000 to CAD500,000.

The report suggests that the removal of the small business tax rate could fund a cut to the headline corporate tax rate from 16 percent to 13.5 percent. The "underused and ineffective" New Small Business Tax Holiday should be scrapped, and the scope and duration of all business tax credits limited, it said.

Jordi Morgan, Vice President, Atlantic, for CFIB, said: "Cutting taxes for big businesses at the expense of smaller ones doesn't make much economic sense. Most Nova Scotia businesses are small and they employ more than half of private sector workers in the province. That's a huge segment of the economy to disadvantage."

Morgan also contrasted the report's recommendation with recent developments in New Brunswick. "The new Liberal Government's first act upon taking office was to reduce their small business rate," she pointed out. From January 1, 2015, the lower rate of New Brunswick corporate tax will fall from 4.5 percent to 4 percent. The New Brunswick small business investor tax credit has also been enhanced, effective for the 2014 tax year, to enable corporations and trusts to claim a 15 percent non-refundable corporate income tax credit.

Elsewhere in Canada, the Newfoundland and Labrador small business corporate tax rate was reduced from four percent to three percent, effective July 1, 2014. British Columbia recently extended its scientific research and experimental development (SR&ED) tax credit and improved its film and television tax credit, while Manitoba extended creative industry tax credits that were set to expire at the end of this year.

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The Report

Offshore Trusts Guide: Introduction

The History of Offshore Trusts
Development of Professional Competence in the Jurisdictions
What Future for the Trust?
The New Age of Transparency
The Swiss Association of Trust Companies
The Society of Trusts and Estates Practitioners

Offshore Trusts Guide: Jurisdictions

Bahamas

Bahamas: Legal Framework and Formation Rules and Fees
Bahamas: 2006 Private Trust Companies Legislation

Barbados

Barbados: Legal Framework and Formation Rules and Fees
Barbados: Supervisory and Licensing Regime and Fees

Bermuda

Bermuda: Legal Framework and Formation Rules and Fees
Bermuda: Supervisory and Licensing Regime and Fees

British Virgin Islands

British Virgin Islands: Legal Framework and Formation Rules and Fees
British Virgin Islands: Special Trusts Act 2003
British Virgin Islands: The Trustee Act 2003
British Virgin Islands: :Supervisory and Licensing Regime and Fees
British Virgin Islands: New Laws on Private Trust Companies
British Virgin Islands: New Private Trust Company Regulations

Cayman Islands

Cayman Islands: Legal Framework and Formation Rules and Fees
Cayman Islands: Supervisory and Licensing Regime and Fees

Cook Islands

Cook Islands: Legal Framework and Formation Rules and Fees
Cook Islands: Supervisory and Licensing Regime and Fees

Cyprus

Cyprus: Legal Framework and Formation Rules and Fees
Cyprus: Supervision, Licensing and Tax

Gibraltar

Gibraltar: Legal Framework and Formation Rules and Fees
Gibraltar: Legislation, Regulation and Supervision

Guernsey

Guernsey: Legal Framework and Formation Rules and Fees
Guernsey: Trusts Law 2007

Isle of Man

Isle of Man: Legal Framework and Formation Rules and Fees
Isle of Man: Supervisory and Licensing Regime
Isle of Man: Uses Clients and Tax Treatment

Jersey

Jersey: Legal Framework and Formation Rules and Fees
Jersey: Supervisory and Licensing Regime
Jersey: Trusts Amendment Act 2006
Jersey: Foundations

Liechtenstein

Liechtenstein: Legal Framework and Formation Rules and Fees
Liechtenstein: Regulation Supervision and Transparency
Liechtenstein: Characteristics of Liechtenstein Trusts
Liechtenstein: Foundations

Madeira

Madeira: Legal Framework and Formation Rules and Fees

Malta

Malta: Legal Framework and Formation Rules and Fees
Malta: The Trust and Trustees Act 2004

Mauritius

Mauritius: Legal Framework and Formation Rules and Fees
Mauritius: Characteristics of the 2001 Trusts Act
Mauritius: Additional Provisions of the 2001 Trusts Act
Mauritius: Tax Treatment

Monaco

Monaco: Legal Framework and Formation Rules and Fees

Nevis

Nevis: Legal Framework and Formation Rules and Fees

Panama

Panama: Legal Framework and Formation Rules and Fees
Panama: Requirements for Acting as Trust Company in Panama

Seychelles

Seychelles: Legal Framework and Formation Rules and Fees

Turks & Caicos

Turks & Caicos: Legal Framework and Formation Rules and Fees
Turks & Caicos: The Voidable Dispositions Ordinance

Vanuatu

Vanuatu Legal Framework and Formation Rules and Fees




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