2012 Saskatchewan Budget

Tax Highlights

Download the budget highlights as a PDF file.


On March 21, 2012, Saskatchewan’s Minister of Finance, Ken Krawetz, presented the province’s 2012 budget. The budget does not change corporate or personal income tax rates, but does:

  • introduce a corporate income tax rebate on rental income from newly constructed multi-unit rental projects;
  • make the province’s Research and Development Tax Credit non-refundable, except for certain Canadian-controlled private corporations (CCPCs);
  • eliminate the Film Employment Tax Credit;
  • introduce a First-time Homebuyers’ Tax Credit;1
  • extend the Active Families Benefit to children under 18;1 and
  • introduce the Saskatchewan Advantage Grant for Education Savings.1

1. The measure was originally announced in the December 5, 2011 Throne Speech.

This Tax memo discusses these and other tax measures included in the budget. For help determining how these changes affect you or your company, please contact your PricewaterhouseCoopers LLP adviser, or:

  • Erick Preciado, Telephone: +1 306 668 5913, or via Email.
  • Glen Bailey, Telephone: +1 306 668 5936, or via Email.
  • Erick Preciado, Telephone: +1 306 668 5913, or via Email.
  • Troy Berdahl, Telephone: +1 306 688 5971, or via Email.

Business tax measures | Personal tax measures | Provincial sales taxes

Business tax measures

Corporate income tax rates

Saskatchewan’s corporate income tax rates will remain as follows:

 

Rate

General income

12%

Manufacturing and processing (M&P) income

10%

Small business income1

2%

1. The small business threshold remains $500,000.

Combined corporate income tax rates

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

 

General

M&P

Canadian-controlled private corporations (CCPCs)

Active business income to $500,000

Investment income

2011

28.5% 26.5% 14.24%
46.67%

2012

27% 25% 13%

Corporate income tax rebate on new rental housing

To encourage construction of new multi-unit rental housing projects, the budget introduces a corporate income tax rebate equal to 10% of the rental income generated from newly constructed multi-unit rental projects. The rebate will be earned for up to 10 consecutive years once eligible projects become available for rent. It does not apply to rental income that is subject to the small business rate.

Rental housing registered under a building permit dated after March 20, 2012, and before January 1, 2014, is eligible. A maximum of 10,000 rental units will qualify.

Applications for registering new units should be made to the Saskatchewan Housing Corporation. Projects that don’t specifically meet the eligibility conditions will be considered case by case.

Eligible corporations

Private and public corporations that have a permanent establishment in Saskatchewan and are solely engaged in the construction and rental of eligible new rental housing in Saskatchewan can qualify. The corporation must:

  • retain ownership of the new rental housing;
  • be the sole owner of the housing; and
  • be able to clearly identify the income earned from owning and renting the housing.

Eligible rental housing

The housing must be newly constructed and the units must be available for rent before the end of 2016. In addition, the housing must consist of at least eight rental units. Conversions of non-residential space to residential space can qualify.

Research and Development Tax Credit

Currently, Saskatchewan provides a 15% refundable Research and Development (R&D) Tax Credit for all corporations. For R&D expenditures incurred after March 31, 2012:

  • a 15% refundable R&D tax credit can be claimed by CCPCs on up to $3 million of qualifying expenditures annually; and
  • a 15% non-refundable credit can be claimed on qualifying expenditures incurred by:
    • CCPCs exceeding the above limit; and
    • other corporations.

Film Employment Tax Credit

The Film Employment Tax Credit is being eliminated for new productions. Film productions that have been registered by SaskFilm before April 1, 2012 will continue to be eligible.

Personal tax measures

Top personal tax rates

Top combined federal/Saskatchewan rates follow:

 

Ordinary income interest

Capital gains

Canadian dividends

Eligible

Non-eligible

2011


44%

22%
23.36% 32.08%

2012

24.81% 33.33%

First-time Homebuyers’ Tax Credit

Starting 2012, the First-time Homebuyers’ Tax Credit will provide a non-refundable credit of up to $1,100 on the first $10,000 of a qualifying home purchase that has a closing date after 2011.

The credit may be claimed by the individual who acquires the home or by that individual’s spouse or common-law partner. Any portion of the credit that the claimant cannot use can be claimed by the spouse or common-law partner.

An individual will be considered a first-time homebuyer if the individual or the individual’s spouse or common-law partner did not own and live in another home in Canada in:

  • the calendar year of the home purchase; or
  • the four previous years.

At least one of these individuals must intend to occupy the home as the principal place of residence not later than one year after acquisition.

Individuals eligible for the Disability Tax Credit

The First-time Homebuyers’ Tax Credit will also be available to individuals who acquire a more accessible or functional home and are eligible for the Disability Tax Credit (DTC) or related to DTC-eligible persons.

Active Families Benefit

The Active Families Benefit is a refundable income tax credit that has provided up to $150 per child aged six to 14 per year, for cultural, recreational and sports activity fees. The budget extends access to this credit to children under 18.

Saskatchewan Advantage Grant for Education Savings

Commencing January 2013, the Saskatchewan Advantage Grant for Education Savings will provide a 10% matching grant to Registered Education Savings Plan contributions, to a maximum of $250 per child per year.

Graduate Retention Program

The refundable tax credit provided by the Graduate Retention Program will be converted into a non-refundable tax credit. However, taxpayers that have insufficient income to use the non-refundable tax credit can claim a new refundable tax credit equal to the unused portion.

The program will continue to rebate up to $20,000 of tuition fees over seven years.

Invest in Saskatchewan Program

Over the next year, the government will conduct a review of the Invest in Saskatchewan Program, which provides a tax credit to individuals who invest in Labour-sponsored Venture Capital Corporations.

Provincial Sales Tax

Exemption on children’s clothing

The budget provides a reminder that on November 15, 2011, the Provincial Sales Tax exemption on children’s clothing was extended to children under 18. The previous age limit was 14.