Ryan Tax Alert - Newfoundland and Labrador Budget 2008

On April 29, 2008, in St. John’s, the Honourable Thomas Marshall, Minister of Finance, presented Newfoundland and Labrador’s 2008 budget. Bolstered by soaring oil prices, the province is forecasting its second consecutive budget surplus, with spending increases earmarked for health care, education and debt reduction. However, the budget for the current year includes only one significant commodity tax change.

As previously announced, the province will eliminate the 15 per cent retail sales tax on insurance premiums, effective April 22, 2008. This change will be retroactive to January 1, 2008. Consequently, insurers will be required to refund any tax collected on new contracts and renewals purchased on or after January 1, 2008 and then apply to the Department of Finance in order to recover the amounts refunded. The refund may be processed as a direct payment to the client, a reduction in monthly installments, or a credit against accounts receivable. No refunds will be available on policies purchased or renewed prior to the effective date of the change. The province has acknowledged that insurance companies will need time to implement the technical and administrative requirements to reflect this change and is hopeful that most refunds will be processed within 90 days.

The province also announced that, effective January 1, 2008, the exemption threshold for payroll tax will be increased to $1,000,000, which is intended to provide tax relief to small and medium-sized businesses and create new jobs.

Additional information on the 2008 Newfoundland and Labrador Budget is available on the province’s web site at: http://www.budget.gov.nl.ca/budget2008

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