The newly released Newfoundland and Labrador budget confirms the continuation of the green technology tax credit, while associated expenditure statements show it hasn’t made a big dent in provincial finances thus far. Qualifying corporations can claim up to $1 million annually for a maximum of 20 per cent of the capital cost of designated equipment. However, the tax credit resulted in less than $50,000 in foregone revenue for the provincial government in the 2024-25 fiscal year.
“As a government, our commitment to safeguarding our environment and our residents has never been more resolute,” Newfoundland and Labrador’s Finance Minister, Siobhan Coady, stated in the budget speech. “Our goal is to be net zero by 2050.”
The tax credit was introduced in the 2022 provincial budget and applies on equipment in the Class 43.1 and 43.2 property categories of Canada’s Income Tax Act, which Canadian-controlled corporations purchase for use in Newfoundland and Labrador. Qualifying equipment includes electric vehicle chargers, ground-source and air-source heat pumps and equipment related to geothermal energy plants and pumped hydroelectric energy storage.
The tax credit is a mix of 40 per cent refundable and 60 per cent non-refundable. Unused portions in any tax year can be carried forwarded for up to 20 years from the purchase date of the equipment or carried back for up to three years beginning with the 2022 tax year.
The budget also promises homeowners a tax break. A list of “affordability” measures presented as 2025 budget highlights includes the elimination of the 15 per cent retail sales tax (RST) on home insurance, but there are few other details.
The move comes just two weeks after the Quebec budget announced an impending 0.975 per cent increase in the tax applied on premiums for property insurance to align it with the 9.975 per cent Quebec sales tax (QST) rate. Quebec’s budget document also specifically references Newfoundland and Labrador’s example of applying a uniform rate on insurance premiums and other types of goods and services subject to sales tax.
Insurance companies or insurer’s agents in Newfoundland and Labrador are responsible for registering with the Province, collecting and remitting the RST on contracts for property, risk, peril or events insurance. RST on personal property insurance, such as home furnishings, was initially temporarily lifted in 2022 and then permanently eliminated in the 2023 budget.
Insurance companies must separately remit a 5 per cent tax on all premiums generated in Newfoundland and Labrador for the tax year — translating into about $111 million of provincial revenue during the 2024-25 fiscal year. Statements released with the 2025 budget do not provide a breakdown of RST collected from insurance premiums, or specifically from home insurance, since it’s all lumped within a single figure for sales tax revenue.
