2013 Manitoba Budget Summary

Transcription

1 Manitoba Region Tax BRANDON Shawn de Delley Stino Scaletta Michael Poole WINNIPEG Terry Speiss Christa Walkden Derek Innis Michael Kukelko Trevor Sprague Manitoba Budget Summary On Tuesday, April 16, 2013, the Manitoba Minister of Finance, Stan Struthers, presented the province s 2013 The following is a summary of the tax highlights from the 2013 Manitoba A. Sales Tax Measures The general provincial sales tax rate will increase from 7% to 8%, starting July 1, The following exemptions will be applied effective July 1, 2013 to: child safety restraint systems, such as car seats and booster seats; baby supplies, including diapers, strollers, cribs, gates, monitors, and items used for nursing, feeding or bathing; and bicycle helmets (both children and adults). The sales tax exemption for qualifying sand and salt mixtures purchased by municipalities will be expanded. B. Personal Income Tax Measures Personal Income Tax Rates No new personal income tax rate changes have been announced in this year s

2 Dividend Tax Credit In response to the federal government s announcement that the gross-up on non-eligible dividends paid by Canadian-controlled private corporations is being reduced from 25% to 18% beginning in 2014, Manitoba s dividend tax credit on non-eligible dividends will be adjusted from 1.75% to 0.83% of the grossed-up dividend to maintain integration. The new dividend tax credit will also apply beginning in The top marginal tax rate for non-eligible dividends, starting in 2014, is as follows: Federal rate 29.00% 29.00% Gross up 7.25% 5.22% Federal rate before DTC 36.25% 34.22% Dividend tax credit % % Federal rate after DTC 19.58% 21.22% Provincial rate 21.75% 20.53% Provincial dividend tax credit -2.19% -0.98% Seniors School Tax Rebate 39.15% 40.77% The Manitoba government maintains its commitment to eliminate the school tax paid by eligible senior homeowners on qualifying residential properties. Additional details on eligible seniors, qualifying residences and other parameters will be announced in the near future. C. Corporate Income Tax Measures Corporate Income Tax Rates No new corporate income tax rate changes have been announced in this year s Data Processing Investment Tax Credit The Data Processing Investment Tax Credit has been broadened to include companies that, although not engaged primarily in data processing in Manitoba, make a significant incremental investment in data processing equipment in the province.

3 A taxable Canadian corporation with a permanent establishment in Manitoba that acquires at least $10 million of incremental eligible data processing equipment in a taxation year will qualify for an 8% refundable investment tax credit. Eligible property includes Class 46 and Class 50 equipment purchased, leased and made available for use after April 16, 2013 and before The Data Processing Investment Tax Credit, available to companies engaged primarily in data processing in Manitoba, will increase from 7% to 8% on data processing centre equipment and from 4% to 4.5% on data processing buildings. Rental Housing Construction Tax Credit The Province has introduced a new tax credit equal to 8% of the capital cost of new rental housing construction in Manitoba. Eligible landlords must be resident of Manitoba or have a permanent establishment in Manitoba, and operate on either a for-profit or not-for-profit basis. Eligible properties include the construction of five or more new, or newly converted, residential rental units. The maximum credit will be $12,000 per eligible rental unit; at least 10% of the units must be affordable housing units for the unit type. The tax credit is earned on a project when it becomes available for rental and the affordable housing criteria are met. Eligible not-for-profit projects will receive a fully refundable tax credit in the year in which the tax credit is earned, as qualifying units are rented. The tax credit on for-profit projects will be nonrefundable, claimable over a minimum of five years, and capped annually by the amount of Manitoba income tax payable by the landlord. For five years, an annual attestation will be required to be filed identifying the affordable units, the monthly rents on those units and the total of any newly constructed units. Research and Development Tax Credit The Manitoba Research and Development Tax Credit is being amended to, in part, parallel the federal Scientific Research and Experimental Development Tax Credit changes. The Federal Budget removed capital expenditures from the federal investment tax credit base, but Manitoba is not adjusting its tax credit for this change. In addition, contract payments to eligible institutes will remain 100% eligible for the Manitoba tax credit.

4 The 2012 Federal Budget also announced that the Scientific Research and Experimental Development Tax Credit will be adjusted to reduce the prescribed proxy amount which recognizes overhead costs attributable to eligible projects from 65% to 60% of direct labour costs in 2013 and to 55% starting in In addition, contract payments will be 80% claimable instead of fully claimable, so that tax credits will no longer include the profit element under the contract fees. The Manitoba Research and Development Tax Credit will reflect these changes. Manufacturing Investment Tax Credit The refundable portion of the 10% Manufacturing Investment Tax Credit will increase from seven-tenths refundable to eight-tenths refundable commencing on qualified property acquired after June 30, Small Business Income Limit Canadian-controlled private corporations that qualify for the small business deduction pay a 0% rate of Manitoba Corporation Income Tax. This Budget increases Manitoba s small business income limit eligible for the small business deduction from $400,000 to $425,000 on January 1, Film and Video Production Tax Credit The Manitoba Film and Video Production Tax Credit is extended to December 31, The tax credit was originally set to expire March 1, Interactive Digital Media Tax Credit The Interactive Digital Media Tax Credit is extended to December 31, The tax credit was originally set to expire December 31, There will be additional enhancements to the program for projects that have been issued an eligibility certificate after 2011 and that commence production after Enhancements include additional eligible marketing and distribution expenses, exemption of certain financial support from treatment as government assistance, no requirement to demonstrate resale/license by purchaser, and broader interpretation of eligible commercialization projects. Small Business Venture Capital Tax Credit The Small Business Venture Capital Tax Credit is extended to December 31, The tax credit was originally set to expire December 31, The non-refundable 30% income tax credit is available for investors who acquire equity capital in emerging enterprises.

5 ABOUT MNP Founded in 1945, MNP has grown from a single office in Manitoba to over 75 full and part-time locations across Canada. MNP is now the seventh largest chartered accountancy and advisory firm in Canada. Our roots in our communities are a big part of how we do business. Because we live and work in the same communities as our clients, we understand the markets they deal with. When they talk, we listen. And we provide clear, straightforward business advice to help get you where you want to go. MNP has a proven track record providing traditional accounting and assurance services to our private and public clients. With our experiences, we have gained valuable insight into the Canadian business sector, and the specific requirements of our clients. A key strength of MNP is our approach to addressing your needs. We believe in teamwork and applying the appropriate resources to each engagement. This means when you have a need for a service, we will meet with you to understand your specific requirements and assemble the best team for the situation. Farmland School Tax Rebate Commencing with the 2013 property tax year, the rebate, capped at $5,000, will be available only to eligible farmland owners who are Manitoba residents. For the 2013 property tax year, application for a rebate must be filed no later than March 31 of the following year. Corporation Capital Tax on Financial Institutions The Corporation Capital Tax on Financial Institutions is changed from 4% to 5%, commencing for taxation years ending after April 16, D. Health and Environmental Measures Tobacco Tax Effective midnight, April 16, 2013, the rate per cigarette will change from 25.0 to 29.0 ; the rate on fine-cut tobacco will change from 24.0 to 28.0 per gram; and the rate on raw leaf tobacco will change from 22.5 to 26.5 per gram. Natural Gas Fuel Tax A fuel tax rate for natural gas being used in motor vehicles in Manitoba will be phased in as follows: 3 per cubic metre for sales after April 16, 2013 until March 31, 2014; 6 per cubic metre from April 1, 2014 to March 31, 2015; and 10 per cubic metre after March 31, Odour Control Tax Credit The Odour Control Tax Credit was established in 2004 to provide a 10% nonrefundable corporate income tax credit for businesses that invest in certain property to prevent, eliminate or reduce nuisance odours from the use or production of organic waste. The 10% credit was refundable to agricultural producers based on income tax and property tax on farmland paid by the farmer. Budget 2013 removes the income and property tax cap, making the credit fully refundable to agricultural producers (including individual farmers) for qualifying property acquired after DISCLAIMER This communication contains a general overview of the subject matter and is current as of the date of publication. The information should not be regarded as a substitute for professional advice. MNP LLP accepts no responsibility for any loss or damage caused by your reliance on information contained in this publication.