Annual review of tax changes by PwC shows that loopholes have been tightened, corporate rates are on the decline and new personal tax credits introduced

TORONTO, Sept. 12, 2011 /CNW/ - Every year in Canada it hurts to hand over a percentage of our earnings to the taxman. The amount of tax will vary depending on which province you live in or where your corporation does business. The federal government and the provinces provide an array of incentives or credits to spur investment and spending.

"While there were no sweeping tax changes in budget pronouncements this year, some perceived loopholes have been tightened and inequities have been eliminated. The good news for taxpayers is that we've escaped relatively unscathed this year. The federal government and some provinces are reducing corporate tax rates and have introduced various family-friendly credits," says Christopher Kong, National Tax Leader for PwC.

Below PwC outlines some of the tax reductions and incentives that are offered. The information is from its annual Tax Facts and Figures publication; a reference tool for understanding personal and corporate tax rates and changes across Canada.

British Columbia
If you earn $70,000 in ordinary income (e.g., salary or interest) in 2011, you will have the lowest tax bite if you reside in British Columbia where your combined federal and provincial tax will be below $14,788. Ontario is the second lowest province at $15,373, while Alberta is third at $16,215.

British Columbia is among seven provinces that are reducing corporate tax rates: its general and manufacturing and processing rate declined from 10.5% to 10% on January 1, 2011; and its small business rate will be reduced from 2.5% to 0% on April 1, 2012. Provincial incentives include a refundable 17.5% tax credit for digital animation or visual effects tax, a refundable 17.5% interactive digital media tax credit and a 35% (or higher) Film Incentive BC tax credit.

Alberta
Alberta has the lowest probate fees of all the provinces (excluding Quebec, which does not levy probate fees). Its fees are $400, regardless of the value of the estate. For estates valued at $500,000, Prince Edward Island's and New Brunswick's probate fees are $2,000 and $2,500 respectively; the provincial average across Canada is over $3,500.

If you earn $150,000 in ordinary income (e.g. salary or interest) in 2011, you will pay the lowest income taxes if you live in Alberta; your combined federal and provincial tax bite will be $45,128. For December 31, 2011 year ends, Alberta's combined general corporate tax rate is the lowest among the provinces; it is 26.5%, down from 28% in 2010. Alberta also has a Multimedia Development Fund that permits 20 to 29% of Alberta production costs to be recovered as a non-recoupable grant.

Ontario
Announced in November of 2010, Ontario offers a refundable Children's Activity Tax Credit. Of interest to corporations, Ontario has extended and enhanced its book publishing tax credit and offers generous tax incentives for research and development. Ontario corporations will also benefit from scheduled corporate tax reductions; Ontario's generate corporate tax rate is decreasing in stages from 14% before July 1, 2010, to 10% by July 1, 2013.

The province provides a tax "holiday" for businesses that commercialize intellectual property developed by Canadian universities, colleges or research institutions. Its tax incentives for the entertainment and media industry include a 20% computer animation and special effects tax credit, a 40% interactive digital media tax credit, a 35% (or more) film and television tax credit and a 25% production services tax credit.

Quebec
Quebec is in line with the Canadian average for general corporate income taxes with a combined federal provincial rate of 28.4% for December 31 2011 year ends. British Columbia and Alberta have the lowest general rates at 26.5%, while Nova Scotia's is the highest at 32.5%.

Starting 2012, a new tax credit for experienced workers will eliminate or reduce the income tax paid by individuals 65 or over on eligible work income. The province has enhanced its refundable tax credits for book publishing and for sound recording and has introduced a refundable credit for the production of cellulosic ethanol. Quebec offers a tax credit for film and television productions (maximum 65%), film and television dubbing (35%) and a 25% Production Services Tax Credit. Incentives are also available for producing multimedia titles (varies) and computer animation and special effects.

New Brunswick
If you want to purchase a new home, New Brunswick land transfer tax rates are the lowest in the eastern Canadian provinces; you'll pay only $1,075 for a $400,000 home. This compares to $1,698 in Newfoundland and Labrador.

The province is phasing out its film tax credit but intends to replace it with a digital media tax credit. For December 31, 2011, New Brunswick's combined federal-provincial income tax rate of 27% is among the lowest in Canada. This rate will decrease to 25% by 2012. The small business rate will be reduced in stages from 5% to 2.5 % over the next four years. Similar to two other Atlantic Provinces, New Brunswick offers a fully refundable 15% research and development tax credit to corporations that incur qualified SR&ED expenditures in the province.

Firm Description
PwC firms provide industry-focused assurance, tax and advisory services to enhance value for their clients. More than 161,000 people in 154 countries in firms across the PwC network share their thinking, experience and solutions to develop fresh perspectives and practical advice. See www.pwc.com for more information. In Canada, PricewaterhouseCoopers LLP (www.pwc.com/ca) and its related entities have more than 5,700 partners and staff in offices across the country.

"PwC" is the brand under which member firms of PricewaterhouseCoopers International Limited (PwCIL) operate and provide services. Together, these firms form the PwC network. Each firm in the network is a separate legal entity and does not act as agent of PwCIL or any other member firm. PwCIL does not provide any services to clients. PwCIL is not responsible or liable for the acts or omissions of any of its member firms nor can it control the exercise of their professional judgment or bind them in any way.

"PwC" refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership, which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity.

SOURCE PwC

For further information:

Media Contacts
There are regional tax specialists available to speak to specific provincial tax laws and regulations. Please try one of our regional communications personnel to connect:

Kiran Chauhan - Ontario/National, 416 947 8983
David Rowney - Atlantic, 416 365 8858
Olivia Boucherie - Quebec, 514 205 5335
Melissa Homenuik - Alberta, 403 509 7590
Jim Nelson - British Columbia, 604 806 7047

Follow PwC on Twitter @PwC_Canada_LLP and on Facebook at http://www.facebook.com/pwccanada.

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