2011 Manitoba Budget

Tax Highlights

Download the budget highlights as a PDF file.

On April 12, 2011, Manitoba’s Minister of Finance, Rosann Wowchuk, presented the province’s 2011 budget. Of interest to business, the budget introduces a capital tax exemption for small banks, enhances existing tax credits and introduces tax credits that assist Manitoba printers and encourage certain charitable activities. For individuals, the budget increases and
extends several tax credits and introduces a Children’s Arts and Cultural Activity Tax Credit. These and other key measures are discussed below and in the PDF above.

Business Tax Measures | Personal Tax Measures | Other Tax Measures

Business Tax Measures

Corporate income tax rates

The budget leaves intact Manitoba’s 12% general corporate rate, which also applies to manufacturing and processing (M&P) income. It does not provide the date for this rate to decline to 11%, as had been proposed in the 2008 budget.

As previously announced, Manitoba’s small business rate was eliminated on December 1, 2010. The rate had been 1%. The province’s small business limit will remain $400,000.

The following combined federal/Manitoba rates apply to December 31 year ends:

Capital tax

Banks with taxable capital under $4 billion will be exempt from Manitoba’s 3% Financial Institutions capital tax, for taxation years ending after April 12, 2011.

The general capital tax was eliminated on January 1, 2011 (July 1, 2008, for certain M&P corporations).

Tax credits

The following tax credits will expire on December 31, 2014, instead of on December 31, 2011:

• Manufacturing Investment Tax Credit;
• certain components of the Co-op Education and Apprenticeship Tax Credits (the province is also examining ways to simplify the application process);
• Odour Control Tax Credit; and
• Book Publishing Tax Credit (other enhancements to this credit are discussed below).

As well, taxpayers will be able to elect to renounce all or part of the Manitoba Investment Tax Credit and the Odour Control Tax Credit.

Other changes to tax credits are described below.

Publishing industry tax credits

The following changes affect publishers:

• Cultural Industries Printing Tax Credit – This new 15% refundable credit can be claimed on costs incurred and paid after April 12, 2011, and before 2015, for printing, assembly and binding performed in Manitoba, to produce eligible books (generally, Canadian-authored non-periodical publications).
• Book Publishing Tax Credit – As mentioned, this credit is extended three years to December 31,
  2014. It is also expanded to include non-refundable monetary advances and labour costs incurred and paid after April 12, 2011, to publish an electronic or digital version of an eligible literary work. In addition, the bonus for printing on paper with at least 30% recycled content will be 15% (up from 10%) for printing expenses incurred and paid after
  April 12, 2011.

Green Energy Equipment Tax Credit

The total Green Energy Equipment Tax Credit on geothermal heating systems will increase from 10% to 15% for installations after April 12, 2011. In addition, the tax credit will increase from:

• 5% to 7.5% for manufacturers of qualifying geothermal heat pumps and for purchasers of qualifying made-in-Manitoba geothermal heat pumps installed in Manitoba; and
• 10% to 15% on other eligible installation costs for geothermal heating systems installed in Manitoba.

Neighbourhoods Alive! Tax Credit

The new 30% Neighbourhoods Alive! Tax Credit is available to corporations with a permanent establishment in Manitoba that donate funds to charitable organizations to create new social enterprises:

• after April 12, 2011, and before 2020; and
• in the year before the social enterprise is created and/or during the subsequent three years.

The maximum annual tax credit of $15,000 (based on a minimum $50,000 donation in the previous year) offsets Manitoba income taxes payable in the year. Unused credits can be carried back three years (to tax years ending after April 12, 2011) or forward ten years. To claim the credit, the corporation must also provide in-kind services to the charity during the year that support developing, managing and operating the social enterprise.

The newly created social enterprise must be 100% owned and controlled by a charitable organization in Manitoba. Its charitable purpose must match the charity and its mandate must include hiring hard-to-employ Manitobans facing multiple barriers to employment.

Personal Tax Measures

Personal income tax rates

Top personal tax rates

Previously announced federal and Manitoba changes result in the following top combined federal/Manitoba personal tax rates:

Tax credits

The budget increases the following tax credits:

The following tax credits are extended by three years:

• Mineral Exploration Tax Credit – will apply to
  flow-through share agreements entered into before April 1, 2015.
• Community Enterprise Development Tax Credit –will expire December 31, 2014.

Other tax credit changes are described below.

Children’s Arts and Cultural Activity Tax Credit

Commencing 2011, a non-refundable income tax credit can be claimed on costs of up to $500 for eligible artistic and cultural activities for each child under 16. An additional $500 qualifies for the credit for each child under 18 with a disability on whom at least $100 is spent on eligible activities.

Fertility Treatment Tax Credit

Retroactive to October 1, 2010, the Fertility Treatment Tax Credit:

• can be claimed by either spouse or partner (but can’t be split between spouses or partners);
• recognizes fertility treatments provided by Manitoba physicians and clinics; and
• covers prescribed medications, even if they relate to treatments received outside Manitoba.

The rules will clarify that fertility treatments to reverse elective sterilization procedures will not qualify for
the credit. 

Other Tax Measures

Sales tax

Municipalities will be exempt from paying sales tax:

• retroactive to March 1, 2011, on sandbag-filling services, flood tubes, sand/salt mixtures for sandbags and sandbag ties; and
• starting May 1, 2011, on water softener salts used to treat water for sale to ratepayers.

Starting May 1, 2011, the following will not be subject to sales tax:

• all biomass materials used for cooking and heating; and
• kiln strips used for curing wood products being manufactured for sale.

Also starting May 1, 2011, sales tax will be reduced for business assets brought into Manitoba for 15 days or less.

Tobacco Tax

Effective midnight, April 12, 2011, the tobacco tax rate
will increase by 2¢ per cigarette and by 2¢ per gram on fine-cut tobacco and raw leaf tobacco.

Farmland School Tax Rebate

Commencing 2011, the Farmland School Tax Rebate will increase from 75% to 80%.

Emissions Tax

Starting January 1, 2012, an Emissions Tax equal to $10 per tonne of carbon-dioxide-equivalent emissions will apply to coal used in Manitoba. On January 1, 2014, Manitoba will ban coal used for space and water heating.

Land Transfer Tax

The Land Transfer Tax exemption on transfers of title between common-law partners will extend to partners registered under The Vital Statistics Act, retroactive to 2004. Transferees can apply for a refund of tax paid.

Online tax payments

Effective May 1, 2011, businesses can pay Manitoba taxes through financial institution online bill
payment systems.