2019 Manitoba budget: Tax highlights

March 07, 2019

Issue 2019-07

In brief

On March 7, 2019, Manitoba’s Minister of Finance, Scott Fielding, presented the province’s budget. The budget:

  • decreases the provincial sales tax (PST) rate from 8% to 7%, effective July 1, 2019
  • confirms that the PST will not apply on the federal carbon tax
  • makes the Film and Video Production Tax Credit permanent
  • extends several business tax credits

This Tax Insights discusses these and other tax initiatives outlined in the budget. 

In detail

Sales tax measures

Provincial sales tax (PST) rate

Manitoba’s PST rate will decrease from 8% to 7% on July 1, 2019.

The existing reduced PST rate charged on electricity used in manufacturing, mining and processing operations in Manitoba will also decrease from 1.6% to 1.4% on July 1, 2019.

PST and the federal carbon tax

The federal carbon tax that is scheduled to be levied on natural gas and coal beginning April 1, 2019, will be exempt from Manitoba’s PST.

Administrative measures

Commencing in 2020:

  • larger businesses that remit or pay PST of $5,000 or more per month will be required to file, remit and pay electronically
  • commissions will not be paid to any business filing monthly PST returns

Business tax measures

Corporate income tax rates

Manitoba’s corporate income tax rates will remain as shown in the table below. The table also shows combined federal/Manitoba corporate tax rates.

Federal and Manitoba corporate rates

Manitoba

Federal + Manitoba

 

2018 - 2020

2018

2019 - 2020

General and M&P income

12%

27%

Canadian-controlled private corporations (CCPCs)

active business income

to $450,000

0%

10%

 

9% (1)

$450,000 to $500,000

12% (2018)

0% (2019-2020)

22%

investment income

12%

50.67%

1.     The combined rate reflects:

  • the decline in the federal small business tax rate from 10% to 9% on January 1, 2019
  • the increase in Manitoba’s small business threshold from $450,000 to $500,000 on January 1, 2019
Manufacturing Investment Tax Credit (MITC)

As a result of the decrease in the PST rate from 8% to 7%, effective for qualifying property acquired after June 30, 2019, the MITC will decrease from 9% to 8%, as follows:

  •  the refundable portion of the MITC will decrease from 8% to 7%
  • the non-refundable portion of the MITC will remain 1%
Business tax credits

The budget makes the following announcements related to business tax credits:

  • Film and Video Production Tax Credit - made permanent with no fixed expiry date (previously scheduled to expire on December 31, 2019)
  • Small Business Venture Capital Tax Credit - extended three years to December 31, 2022, and regulatory amendments have been made to expand the share issuance registration period from six months to twelve months
  • Cultural Industries Printing Tax Credit – extended one year to December 31, 2020, and effective for qualified expenditures as of the 2019 tax year, the annual maximum tax credit is capped at $1.1 million per taxpayer
  • Book Publishing Tax Credit – extended five years to December 31, 2024

Personal tax measures

Personal income tax rates

The budget does not change Manitoba personal income tax rates. Top combined federal/Manitoba personal income tax rates are shown below. These rates apply to individuals with taxable incomes above $210,371 in 2019 ($205,842 in 2018)

Top combined federal/BC rates

2018

2019

Ordinary income & interest

50.40%

Capital gains

25.20%

Canadian dividends

eligible

37.78%

non-eligible

45.92%

46.67% (1)

1. The combined non-eligible dividend tax rate reflects the decline in the federal non-eligible dividend tax credit rate (which results from a decrease to the federal small business tax rate, as noted above).

Basic Personal Tax Credit

The increases to Manitoba’s basic personal amount that were announced in the province’s 2018 budget were not implemented. Instead, the basic personal amount only increased as a result of indexation, from $9,382 in 2018 to $9,626 in 2019.

Tax on split income (TOSI)

Manitoba will amend its Income Tax Act to parallel the federal TOSI rules that limit “income sprinkling” using private corporations, effective for 2018 and future taxation years, so that Manitoba personal tax at the top rate of 17.4% will apply to “split income” of an adult family member. Manitoba will also parallel the federal TOSI rules as it relates to various non‑refundable tax credits; the province will not harmonize with respect to various provincial refundable tax credits that would otherwise be impacted.

Primary Caregiver Tax Credit

To improve the registration process for caregivers, the registration due date for this credit will be moved from the calendar year end (December 31) to April 30 of the following year.

Other tax measures

Fuel tax exemption

Effective June 1, 2019, the fuel tax exemption for the forestry industry is expanded to include mill site equipment used for log handling and processing.

Fuel Tax, Tobacco Tax and Health and Post-Secondary Education Tax Levy

Starting in 2020, all businesses will be required to file, remit and pay the Fuel Tax, Tobacco Tax and Health and Post‑Secondary Education Tax Levy electronically.

Contact us

Danny Wright

Winnipeg Tax Leader , PwC Canada

Tel: +1 204 926 2427

Stephen May

Partner, M&A Tax / Corporate Tax, PwC Canada

Tel: +1 204 926 2451

Carol Stockwell

Associate Partner, PwC Canada

Tel: +1 204 926 2449

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