How does the Low Income Tax Reduction Affect Me?

If you are a resident of New Brunswick on December 31 of a given tax year, you may qualify for the low income tax reduction if you meet the income threshold. You can claim the basic reduction of $590, a reduction for your partner of $590, and a reduction for an eligible dependant of $590, but only up to a maximum of $1,248, so effectively only the spouse or the dependant can be added. If you need less than $1,248 to reduce your provincial tax to zero, you can transfer the balance to your spouse.

Newfoundland and Labrador residents earning net incomes up to $18,955 for an individual and $32,052 for a family had provincial taxes eliminated in 2015 under the low income tax reduction.  The basic reduction for Newfoundland and Labrador is $698, and you can also claim an additional $388 for your partner, and $388 for an eligible dependant, but as in New Brunswick, this is capped. The $1,086 maximum equals the basic and one additional reduction. Unused portions of this $1,086 can be transferred to your spouse.

Nova Scotia doesn’t rely on earnings thresholds for its low income tax reduction program and operates a little differently than New Brunswick and Newfoundland. The basic low income tax reduction is $300, and a family can reduce by another $300, for either a spouse or an eligible dependent. In addition, you can claim $165 for each child under 18, with no maximum. As with the other provinces, you can choose which partner makes the low income tax reduction claim on behalf of the family. Unlike New Brunswick and Newfoundland, you can’t transfer an unused portion of the reduction to your partner.

Prince Edward Island also does not rely on net income thresholds, but uses similar calculations on its provincial tax form as the other provinces. If you are 19 years old or older, married or with a common-law partner, or have a child, you can claim the reduction. The basic reduction amount is $300, as are the reductions for both spouse or eligible dependant, only one of whom can be used, similar to the other provinces. PEI also adds $250 for each child under 18, excluding a child listed as an eligible dependant, if you used that method. Additionally, PEI also offers an age amount for both you and your spouse. Any unused portion of the reduction on the primary partner’s return can be transferred for the other partner’s use.