|Download the budget highlights as a PDF file.|
On Tuesday, April 16, 2013, Manitoba’s Minister of Finance, Stan Struthers, presented the province’s 2013 budget. The budget:
This Tax memo discusses these and other tax changes announced in the budget.
For help determining how the changes affect you or your company, please contact your PricewaterhouseCoopers LLP advisor, or:
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Manitoba’s provincial sales tax rate will increase from 7% to 8% from July 1, 2013, for a ten-year period ending June 30, 2023.
For the same ten-year period, the following retail sales tax rates will also increase:
Effective July 1, 2013, the following will be exempt from provincial sales tax:
Furthermore, the sales tax exemption for qualifying sand and salt mixtures purchased by municipalities will be expanded.
Manitoba’s corporate income tax rates will remain as follows:
Small Business Income Limit
The income eligible for the 0% small business rate will increase from $400,000 to $425,000 on January 1, 2014.
Combined Corporate Income Tax Rates
The following combined federal/Manitoba rates apply to years ending December 31, 2012, and later:
Manitoba’s Corporation Capital Tax on Financial Institutions rate will increase from 4% to 5%, for taxation years ending after April 16, 2013. It had increased from 3% to 4% for taxation years ending after April 17, 2012.
Banks and trust and loan corporations with taxable paid-up capital (on an associated basis) under $4 billion will continue to be exempt.
The following changes to the Manitoba Research and Development Tax Credit parallel changes to the federal Scientific Research and Experimental Development Tax Credit:
Manitoba will not adopt federal changes that remove capital expenditures from the investment tax credit base.
Technical amendments will be made to Manitoba’s credit to ensure it operates as intended.
As a result of the increase in the sales tax rate from 7% to 8%, the refundable portion of the 10% Manufacturing Investment Tax Credit will increase from seven-tenths to eight-tenths refundable for qualified property acquired after June 30, 2013.
In addition, technical amendments will be made to this credit to ensure it operates as intended.
The Data Processing Investment Tax Credit is extended to companies that are not engaged primarily in data processing in Manitoba but that make a significant incremental investment in data processing equipment in Manitoba.
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 data processing equipment purchased, leased and made available for use in Manitoba after April 16, 2013, and before 2016.
Because the credit effectively offsets Manitoba sales tax on data processing equipment and buildings commensurate with the increase in the sales tax rate, the credit for corporations that are primarily engaged 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.”
A new tax credit is introduced, equal to 8% of the capital cost of new rental housing construction in Manitoba. The credit is intended to offset Manitoba sales tax payable by landlords on new rental housing construction.
Eligible landlords must be residents of Manitoba or have a permanent establishment in Manitoba, and can operate as a:
Eligible projects include the construction of five or more new residential rental units. The maximum credit is $12,000 per eligible rental unit. At least 10% of the units on an eligible project must qualify as affordable rental housing units.
The Manitoba Film and Video Production Tax Credit will expire on December 31, 2016, instead of on March 1, 2014, as previously scheduled.
The Interactive Digital Media Tax Credit will be extended three years and will expire December 31, 2016, instead of on December 31, 2013.
In addition, the following enhancements will be made for projects that have been issued an eligibility certificate by Manitoba Innovation, Energy and Mines after 2011, and that commence production after 2012:
The Small Business Venture Capital Tax Credit, which was set to expire December 31, 2013, is extended to December 31, 2016.
Manitoba’s dividend tax credit on non-eligible dividends will decline from 1.75% to 0.83%, starting 2014. This change “offsets the federal changes to the dividend gross-up.” As a result of the federal and Manitoba changes, the top tax rate on non-eligible dividends will increase as shown in the table under “Top Personal Tax Rates” below.
See our Tax memo “2013 Federal budget: Staying the course” for more on the federal changes.
Top combined federal/Manitoba rates follow:
The budget provides a reminder that Manitoba’s basic tax credit increased by $250 for 2013 and will increase a further $250 for 2014.
Manitoba will eliminate the school division special levy paid by eligible senior homeowners on qualifying residential properties.
In 2014, 50% of the estimated total savings will be delivered to seniors. Additional details (e.g., on eligible seniors and qualifying residences) are forthcoming.
To reduce the administration requirements for retail fuel dealers, a fuel tax licence will no longer be required.
Land Transfer Tax will be amended to provide the Registrar-General authority to, among other things, exempt property subject to Retail Sales Tax from Land Transfer Tax.
The following measures affect farmers:
Effective midnight April 16, 2013, the tobacco tax will increase by 4¢ per cigarette, and per gram of fine-cut tobacco and raw leaf tobacco.
A fuel tax rate for natural gas used in motor vehicles will be phased in as follows: