Business in Canada

$15 Minimum Wage Would Lift All Nova Scotians Out of Low Tax Bracket

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Similar to the recent NCP campaign in Alberta that rose the minimum wage to $15, Nova Scotia NDP leader Gary Burrill has launched a “Fight for 15” campaign, but, critics have pointed out, while the bigger number has proved popular with minimum wage workers, it would mean important tax increases for those same workers while making it more difficult for small businesses and students.

Jordi Morgan, vice-president for Atlantic Canada at the Canadian Federation of Independent Business (CFIB), has pointed out that the increase from Nova Scotia’s $10.70 minimum wage to $15.00 would be enough to push many part-time workers, who are below the province’s basic personal exemption level (BPE), to a level where they would be taxed on income. A $15 minimum wage would also push all full time workers out of the lowest tax bracket.

At $8,481, Nova Scotia’s BPE is the second-lowest in Canada. The alternative to a wage increase, according to Morgan, is raising the BPE.

“Our premise to this point is an increase to the BPE is a better policy lever because it would have a desirable impact by reducing the tax burden for all citizens, not create downward pressure on employment for youth, and it would not have a negative impact on the growth of small- and medium-sized business,” Morgan told The Speaker.

Morgan also noted that a wage increase to $15 in Nova Scotia would not be the same as the one that happened in Alberta. “[I]t would stand to reason that the tax payable would be much higher here than Alberta because our BPE is nearly $10,000 lower and at 15.00/hr, it would push the provincial personal marginal tax rate from just under 8.79% to almost 14.95%. Alberta has a 10% tax rate up to $125,000.”

Jordi Morgan, Vice-President, Atlantic Canada
Jordi Morgan, Vice-President, Atlantic Canada

Currently, the just over $22,000 earned by minimum wage workers in Nova Scotia puts them in the lowest tax bracket, which means they are taxed under 9% provincially, and are taxed 11.43% total. Even if these workers get a raise, there is still room to remain in this low tax bracket.

The limit of this tax bracket is $29,590, so even at $14.00 workers still pay the lowest amount of taxes, grossing $29,120.

At $15.00, workers earn $31,200. They are in the next tax bracket, and are taxed just under 15% provincially, and are taxed 18.84% total.

How to Incorporate a Business in Canada

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Incorporating is fairly simple in Canada. It requires that you fill out a form and pay $200.

If you want a numbered company (a company that doesn’t have a name — they just give you a number) it’s easier.

If you want a corporate name, it’s more difficult because you can’t have the same name as someone else.

If you want a name:

  1. File a NUANS name search (costs $20). NUANS will email you their results for the name you esquire about.
  2. Use your NUANS search email to file a form with Corporations Canada for pre-approval of a corporate name (they’ll say the name is Ok to use before you pay $200 with your application to incorporate.
  3. If they reject your pre-approval, you can do some research by searching the internet for the websites of the similar names that came up on their check and by calling the provincial registrars for these names to ask them what those companies are doing (and if they even exist still). You just submit another application for pre-approval (the same form you just submitted) but with a letter (a regular text file from your computer — or is it a pdf of your text file? I forget) explaining the research you did and why they should let you use the name.
  4. Once Corporations Canada emails you saying your name is pre-approved, you can submit your application to incorporate and they won’t reject your application based on the name.

Now you’re back at the step you would be at if you didn’t want to check your name for pre-approval (and risk them rejecting your $200 application because the name isn’t acceptable) or if you just want a numbered company.

This is the step where you incorporate: Go to the Corporations Canada website (this page – click here) and select “Incorporate a business.” Fill out the fields — they ask for your address and phone number, and (if you have one) the two numbers Corporations Canada emailed you in your name pre-approval email. The final step is to give them the credit card / interact information so they can take payment. Now you wait for them to approve or reject your application.

 

NOTE: Rejection of a name for pre-approval doesn’t mean you can’t get the name. They rejected mine initially because there were three names that were somewhat similar. I searched the companies out online and called the provincial registrars in two provinces where the names were registered (the rejection letter has the information about the provinces) and just asked them what sort of business the companies were doing. The three companies were distinct in how people would understand their names and they did different business, I thought. One was no longer active, it seemed, according to the registrar. One wasn’t doing any public business (just a general holding company), it seemed. I reapplied with a short letter explaining my research and Corporations Canada approved the new application.