Ryan Tax Alert - Nova Scotia Budget 2008spacer

On April 29, 2008, in Halifax, Finance Minister Michael Baker presented a cautious 2008-2009 budget containing relatively modest spending initiatives and somewhat meager tax relief. However, the province’s seventh consecutive balanced budget does include one significant commodity tax change.

The popular “Your Energy Rebate” program, which was introduced by the province two years ago and provides for a rebate of the 8 per cent provincial component of the HST on certain energy products, has proven to be very costly and will be revamped to restrict the rebate on electricity. Effective May 15, 2008, non-heating use of electricity will be removed from the rebate program. To accomplish this, the rebate on electricity will be temporarily suspended for the period from May 15 to August 31, 2008, in order to allow electric utilities in the province to incorporate system changes that will be required to administer the revised program.

Effective September 1, 2008, the rebate will only apply to electricity use in excess of 27.4 kWh per day (roughly 10,000 kWh per year – an estimate of the non-heating household use of electricity in Nova Scotia) and the basic electricity fee charged on all electric bills will be excluded from the rebate calculation. It is expected that this will result in savings for the province of approximately $28 million. Note that rebates under the program for all other home heating fuel sources will not change.

In addition, a new Heating Assistance Rebate Program (“HARP”) will be introduced to assist low-income earners with home heating costs. Individuals earning less than $15,000, and families with a combined income below $25,000, will be eligible for a rebate of $200 if oil, propane or natural gas is used to heat their homes, or $150 if electricity, wood or coal is used for the same purpose. The new rebate will also be available to those earning up to $2,000 more than the threshold amounts, at an amount reduced by $25 for each additional $500 of income, as well as seniors receiving guaranteed income supplements.

Further details on the 2008-2009 Nova Scotia Budget are available on the province’s web site at: http://www.gov.ns.ca/finance/en/home/budget/budgetdocuments/default.aspx

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