Payroll tax clarified
Workers in Nunavut who earn less than $60,000 won’t feel the pain of increased income taxes.
MLAs gave third and final reading to Bill 29, An Act to Amend the Income Tax Act, on Tuesday. The act increases the territory’s payroll tax from one to two per cent. But the law also exempts workers who earn less than $60,000 from paying this, by providing a cost of living tax credit of $1,200.
That’s a change from an announcement Finance Minister David Simailak made to MLAs Nov. 21, during his mid-year fiscal update, which would have seen workers who earn as little as $45,000 annually paying more taxes.
Right now, workers are protected against the effect of payroll tax until they make a gross annual income that is greater than $75,000 – based on a one per cent tax and a credit of $750.
But Simailak initially proposed a two per cent tax and a $900 credit. That would have seen workers use up the credit after they start making more than $45,000.
The income tax changes take effect April 1, 2007.