2021 Manitoba budget: Tax highlights

Issue 2021-07

In brief

On April 7, 2021, Manitoba’s Minister of Finance, Scott Fielding, presented the province’s budget. The budget does not change corporate or personal income tax rates, but does:

• introduce, enhance and extend certain corporate and personal tax credits 

• increase the thresholds at which the Health and Post-Secondary Education Tax Levy applies, effective January 1, 2022

• require streaming service providers, online marketplaces and online accommodation platforms to collect and remit provincial sales tax on sales of certain goods and services to Manitoban consumers, effective December 1, 2021

• begin phasing out education property taxes in 2021

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

In detail

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.

Small Business Venture Capital Tax Credit (SBVCTC)

The SBVCTC provides a 45% non-refundable tax credit to eligible investors. Beginning in the 2021 taxation year, the SBVCTC is enhanced by increasing:

• the maximum eligible investment by an investor from $450,000 to $500,000

• the maximum annual tax credit that can be claimed from $67,500 to $120,000

Interactive Digital Media Tax Credit (IDMTC)

The IDMTC, which was scheduled to expire on December 31, 2022, is made permanent.

In addition, beginning in the 2021 taxation year, the eligible activities for this tax credit will be expanded to allow add-on digital media and content (i.e. downloadable content, ongoing maintenance and updates, and data management and analysis that are complementary to the main product being developed).

Film and Video Production Tax Credit

The budget temporarily pauses the frequent filming bonus (which is part of the Cost-of-Salaries Tax Credit) for two years, due to the COVID-19 pandemic and its impact on production activity. All companies that were eligible for the 10% frequent filming bonus on March 31, 2020, will have that status remain in effect until March 31, 2022, at which point the frequent filming status resumes. The temporary pause will not apply to production companies that continue to produce during this time period. The frequent filming bonus applies to Manitoba producers that produce three or more productions in a two year period.

Other business tax credits

The budget extends the following business tax credits by one year, to December 31, 2022:

• Cultural Industries Printing Tax Credit 

• Community Enterprise Development Tax Credit 

In addition, the Book Publishing Tax Credit, which was scheduled to expire on December 31, 2024, is made permanent. 

Health and Post-Secondary Education Tax Levy (payroll tax)

Effective January 1, 2022, the thresholds at which employers are subject to this payroll tax will increase, as shown in the table below. The tax is imposed on wages paid by employers with a permanent establishment in the province. Associated employers with annual payroll of less than $3.5 million will save up to $10,750 in payroll tax annually.

1. Associated employers must aggregate their payroll costs to apply the thresholds.

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 $216,511 in 2021 ($214,368 in 2020).

Teaching Expense Tax Credit

The budget introduces the Teaching Expense Tax Credit, effective starting the 2021 taxation year. Individual educators can claim a 15% refundable tax credit on up to $1,000 of teaching supplies (maximum refund of $150), which have not been reimbursed by their employer. Eligibility for this credit is the same as that for the federal Eligible Educator School Supply Tax Credit. 

Small Business Venture Capital Tax Credit (SBVCTC)

The SBVCTC has been enhanced, as discussed above in the Business tax measures section. 

Community Enterprise Development Tax Credit

The Community Enterprise Development Tax Credit is extended by one year to December 31, 2022. 

Sales tax measures

Provincial sales tax (PST)

Effective December 1, 2021, PST will apply on:

• audio and video streaming services

• sale of taxable goods sold by third parties through online marketplaces

• booking of taxable accommodations through online platforms

Businesses providing these services, and facilitating these marketplaces and platforms for sales, to Manitoba consumers will be required to collect and remit PST, regardless of whether they have a physical presence in Manitoba. The Manitoba government will provide further details at a later date. These new e-commerce measures are similar to those that have been, or will be, implemented by Alberta (online accommodation platforms only), British Columbia, Saskatchewan, Quebec and the federal government. 

PST exemptions

Personal care services (e.g. haircuts and salon services) will be exempt from PST, effective December 1, 2021. PST will continue to apply to tanning services provided by a device that uses ultraviolet radiation.

Other measures

Education property tax

As previously announced, the budget proposes to eliminate the education property tax over several years, beginning 2021. Education Property Tax Rebates will be provided as follows:

• for owners of residential and farm properties, a 25% rebate of the school division special levy and community revitalization levy payable

• for owners of other properties, a 10% rebate of the total of both the school division special levy and education support levy payable 

Tax competitiveness review 

The government will initiate a review of the provincial taxation system to ensure its competitiveness, seeking input from Manitobans.