MANITOBA BUDGET HIGHLIGHTS

Transcription

1 Manitoba Budget Announcement

2 MANITOBA BUDGET HIGHLIGHTS On Monday, March 12, 2018, Manitoba Finance Minister Cameron Friesen presented the Province s 2018 Budget. Delivered under the title Keeping Our Promises, Budget 2018 delivers no new tax increases and projects a summary deficit of $521 million for the 2018/2019 fiscal year. The government also confirmed they are on track for their planned one percent reduction to the provincial sales tax in 2020; however, no details were provided in today s announcements. A. Corporate Tax Measures Corporate Tax Rates No new corporate income tax rate changes have been announced in this year s Budget. The current corporate income tax rates for 2018 are outlined below: Small Business Rate General Rate Rate Threshold Non M&P M&P Federal 10.0% $500, % 15.0% Manitoba 0.0% $450, % 12.0% Small Business Deduction Budget 2018 increases the small business income limit eligible for the small business deduction from $450,000 to $500,000 effective January 1, Canadian-controlled private corporations that qualify for the small business deduction pay a zero percent rate of Manitoba corporation income tax. Credit Unions and Caisses Populaires Profits Tax Credit unions and caisses populaires in Manitoba are currently subject to a 1 percent profits tax on taxable income over $400,000. Effective January 1, 2019, the Credit Unions and Caisses Populaires Profits Tax is eliminated. Credit Unions Special Deduction Currently, credit unions and caisses populaires are allowed to pay a lower rate of tax on a portion of their income; this special deduction is being phased out over five years beginning on January 1, Credit unions will continue to have access to the small business deduction, similar to Canadian-controlled private corporations. Small Business Venture Capital Tax Credit Effective March 12, 2018, the $15 million revenue cap on the size of an eligible corporation is eliminated and the investment minimum is lowered from $20,000 to $10,000. These enhancements will allow investors in larger corporations to access the 45 percent investment tax credit while also allowing for smaller investments by shareholders. Child Care Centre Development Tax Credit A new refundable corporation income tax credit is introduced to encourage the creation of licensed child care centres in work places. The tax credit will be available for private corporations that create new child care centres for a total benefit of $10,000 per new infant or preschool space created, claimable over five years. The credit would be available for licensed spaces created by a taxable corporation that is not primarily engaged in child care services, effective after Budget day and before The total number of spaces will initially be limited to 200 under this program, but may be increased over time.

3 Retail Sales Tax The following exemptions will be applied effective May 1, 2018: Drill bits designed specifically for oil or gas exploration or development; and Fertilizer bins used in a farming operation. Labour-Sponsored Funds Tax Credit The Labour-Sponsored Funds Tax Credit is eliminated for shares acquired after Rental Housing Construction Tax Credit Effective January 1, 2019, the Rental Housing Construction Tax Credit is eliminated. Projects currently under provincial review or with provincial approvals are not affected. No new project applications will be processed after 2018; any future projects must be available for use before Extensions to Existing Tax Credits The following tax credits are extended: The Book Publishing Tax Credit, scheduled to expire on December 31, 2018, is extended to December 31, The Cultural Industries Printing Tax Credit, scheduled to expire on December 31, 2018, is extended to December 31, B. Personal Tax Measures Personal Tax Rates No new personal income tax rate changes have been announced in this year s Budget. The top marginal personal income tax rate for Manitoba is percent for The current top combined federal and Manitoba marginal rates for 2018 are outlined below: Salary, business income, interest 50.40% Capital gains 25.20% Eligible dividends 37.78% Non-eligible dividends 45.92% Indexing of personal income tax brackets to inflation also continues as previously announced. Basic Personal Amount The Manitoba Basic Personal Amount will be increased to $10,392 in 2019 and to $11,402 in This is an enhancement that goes beyond the expected indexation of this non-refundable tax credit.

4 Primary Caregiver Tax Credit The Manitoba Budget announced two changes to this refundable tax credit: The process to claim the Manitoba Primary Caregiver Tax Credit has been simplified. Effective immediately, the requirement to complete an application for pre-approval by the Regional Health Authorities or Manitoba Families has been eliminated. Caregivers will now only have to complete a registration form, submit a copy to Manitoba Finance and make a claim on their income tax return. The annual credit will now be a flat $1,400 available to all eligible caregivers. Previously, the credit was computed based on the number of days that care was provided, up to a maximum of $1,400. The requirement to provide a minimum of 90 days of eligible care remains in place before eligibility commences. Education Property Tax Credit Starting in 2019, the Education Property Tax Credit will be based on school taxes and the $250 deductible will be eliminated. The Seniors Education Property Tax Credit will also be based on the school tax portion. Annual school taxes that are $700 or more will receive the full rebate amount. With the elimination of the deductible, a renter paying $3,500 or more in rent per year will be eligible for the full $700 basic credit. C. Other Tax Measures Carbon Tax Manitoba s carbon tax will impose a $25 tax per tonne of greenhouse gas emissions beginning on September 1, 2018 and will apply to gas, liquid, and solid fuel products intended for combustion (referred to as fuels) in Manitoba. Households and businesses will be impacted by the carbon tax in different ways, proportional to their use of carbon-emitting fuels. The majority of the costs incurred by the tax come from space heating and transportation fuels. The carbon tax rates per unit ( ), by select fuel type, are as follows: Gasoline 5.32 / L Diesel 6.71 / L Natural Gas 4.74 / m³ Propane 3.87 / L Certain fuel uses will not be subject to the carbon tax. The main exemptions are the following: Agricultural process emissions Marked fuels (used primarily by the agricultural sector) Output-Based Pricing System Entities The carbon tax on transportation fuels will be collected and remitted through the existing fuel tax system. The carbon tax on natural gas will be collected by Manitoba Hydro. Carbon levies on other carbon-intensive fuels will be required to be collected and remitted by the purchaser to the province. Chiropractors Act Amendments will be made to allow chiropractors to provide their professional services through a professional corporation.

5 ABOUT MNP MNP is a leading national accounting, tax and business consulting firm in Canada. We proudly serve and respond to the needs of our clients in the public, private and not-forprofit sectors. Through partner-led engagements, we provide a collaborative, cost-effective approach to doing business and personalized strategies to help organizations succeed across the country and around the world. Manitoba Region Contacts SOUTHERN MANITOBA Michael Poole T: Matt Bolley T: Stino Scaletta T: WINNIPEG Derek Innis T: Greg Huzel T: Todd Jenkins (International Tax) T: Terry Speiss T: Trevor Sprague T:

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