Tax Insights: 2017 Saskatchewan throne speech – Tax highlights

October 25, 2017

In brief

Saskatchewan’s throne speech, delivered today by the Honourable Lieutenant Governor Vaughn Solomon Schofield:

  • returns the general corporate income tax rate to 12% and the minimum manufacturing and processing (M&P) income tax rate to 10%
  • raises the small business income tax threshold to $600,000 on January 1, 2018
  • announces the introduction of an income-tested Seniors Education Property Tax Deferral Program 

In detail

Corporate income tax rates

  • General corporate income tax rate – The March 22, 2017 budget had reduced this rate from 12% to 11.5% on July 1, 2017, and to 11% on July 1, 2019. A Saskatchewan Department of Finance official confirmed that, on January 1, 2018, the rate will increase from 11.5% to 12%. Also, the July 1, 2019 rate reduction is cancelled. General corporate rates for December 31 year ends will be as follows:
     

General corporate income tax rate

SK

Federal + SK

Taxation 

year ending

December 31, 2016

12%

27%

December 31, 2017

11.75%

26.75%

December 31, 2018

12%

27%

  • M&P income tax rate – The March 22, 2017 budget had reduced the minimum M&P income tax rate from 10% to 9.5% on July 1, 2017, and to 9% on July 1, 2019. This rate will increase from 9.5% to 10% on January 1, 2018; the July 1, 2019 rate reduction is cancelled. Minimum M&P rates for December 31 year ends will be as follows: 
     

M&P corporate income tax rate

SK

Federal + SK

Taxation 

year ending

December 31, 2016

10%

25%

December 31, 2017

9.75%

24.75%

December 31, 2018

10%

25%

  • Small business income taxes – 
    • Small business income tax rate – This rate will remain 2%. The combined federal/Saskatchewan small business income tax rate will decline, as shown in the table below, due to federal tax reductions.
    • Small business income tax threshold – On January 1, 2018, Saskatchewan’s small business threshold will increase from $500,000 to $600,000 – the highest threshold in Canada. Therefore, the maximum amount of income on which Canadian-controlled private corporations can pay tax at the 2% small business income tax rate will be $600,000.
       

Small business income tax rate

SK

Federal + SK

Taxation 

year ending

December 31, 2016




2%


12.5%

December 31, 2017

December 31, 2018

12%

December 31, 2019
 
11%

Personal tax measures

Personal taxes on eligible dividends 

Because reductions to the general corporate income tax rate (discussed above) will be cancelled, it is uncertain whether reductions to the eligible dividend tax credit rate, scheduled for 2017 to 2020, will proceed. This rate is to decline annually from 11.0% in 2016 to 10% in 2020 to maintain integration between the provincial corporate and personal income tax systems for eligible dividends. The throne speech is silent on this issue. 

Top personal income tax rates

Top combined federal/Saskatchewan personal income tax rates are shown in the table below. These rates apply to individuals with taxable incomes above $202,800 in 2017 ($200,000 in 2016; to be indexed after 2017). 
 

Top combined federal/SK rates

2016

2017

2018

2019 2020

Ordinary income & interest 

48.00%

47.75%

47.50% 

47.25% 47.00%

Capital gains

24.00%

23.88%

23.75%

23.63% 23.50%

Canadian dividends

eligible

        30.33%(1)

non-eligible

39.91%

39.62%

39.75%(2)

40.48%(2) 40.19%(2)

(1)  As discussed above, it is uncertain whether reductions to the eligible dividend tax credit rate will proceed. It is assumed they will, in which case the top combined rate on eligible dividends will remain 30.33%.

(2)  The non-eligible dividend rates for 2018 to 2020 reflect the 2018 and 2019 federal increases to this rate, implemented by a Notice of Ways and Means Motion released on October 24, 2017.

Seniors Education Property Tax Deferral Program

In the coming months, the Seniors Education Property Tax Deferral Program will be introduced. This program will allow seniors with household incomes under $70,000 to defer the education portion of the property taxes on their home.

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