Thousands of seniors, working single parents, and low-income Islanders will see their provincial income taxes reduced or eliminated under legislation introduced today, Finance Minister Allen Roach says.
“This government made a commitment during the recent campaign to provide tax relief to Islanders who need it the most, and I am pleased to announce that we are delivering on that promise,” Minister Roach said. “These changes will put money back into the pockets of 12,000 lower-income Island taxpayers, eliminating provincial income tax altogether for more than 2,500 of them.”
Proposed amendments to the Income Tax Act will do three things to the Low Income Tax Reduction program:
• increase the amounts of the basic credit and the spouse/equivalent-to-spouse credit by $50, to $300 (from the current $250) and the amount for each dependent child by $50 to $250 (from $200);
• add a new senior credit of $250 for Islanders aged 65 and older; and
• raise the income threshold at which someone will receive the full value of the credits to $17,000/year, from the current $15,000 (the value of each credit decreases by 5 per cent for every dollar of income earned above $17,000).
The changes will be in place back to the beginning of the 2015 tax year, so Islanders will see the savings when they file their 2015 taxes next April.
Backgrounder
Here’s how certain Islanders could save on their income taxes as a result of proposed amendments to the Income Tax Act:
Example No. 1 – single person, no children
Income: $17,000/year (maximum income for receiving full value of credits)
This person would see their income tax reduced from $814 to $514, a savings of $300.
Example No. 2 – single person, two children
Income: $22,000/year
This person’s personal income tax would decrease from $654 to $54, a savings of $600.
Example No. 3 – Married couple with two children
Income: $25,000/year
This single-earner family would see a reduction in personal income tax from $903 to $203, a savings of $700.
Example No. 4 – single senior
Income: $17,000/year (maximum income for receiving full value of credits)
This person’s personal income tax would be eliminated, from $542 to $0.