Tax Insights: 2024 Saskatchewan budget – Tax highlights

Issue 2024-09

In brief

On March 20, 2024, Saskatchewan’s Deputy Premier and Minister of Finance, Donna Harpauer, presented the province’s budget. The budget:

• maintains the province’s Canadian-controlled private corporation (CCPC) small business tax rate at 1% until June 30, 2025
• enhances the Saskatchewan technology start-up incentive and extends various business tax incentives
• introduces two new incentive programs to encourage investment in critical minerals innovation and processing in the province

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

In detail

Business tax measures

Corporate income tax rates

The budget proposes to maintain Saskatchewan’s CCPC small business tax rate at 1% until June 30, 2025, instead of increasing it to 2% on July 1, 2024 as originally scheduled. The table below shows combined federal/Saskatchewan corporate tax rates and reflects the above noted budget measure that revises the scheduled increase of the province’s small business tax rate.

Business tax incentives

The budget extends Saskatchewan’s:

• technology start‑up incentive by one year, to March 31, 2027, and expands eligibility for the program to start‑up companies developing novel technologies in the cleantech sector (also, see STSI under “Personal tax measures” below)
•  petroleum innovation incentive by five years, to March 31, 2029
• commercial innovation incentive by one year, to June 30, 2025 (the province will also review this program in 2024, including engaging with stakeholders to identify opportunities to enhance the commercialization of intellectual property in Saskatchewan)
• oil and gas processing investment incentive by five years, to March 31, 2029

Saskatchewan critical minerals innovation incentive (SCMII)

The budget introduces the SCMII, for projects that feature the deployment of novel technologies that can:

• improve resource recovery rates
• manage environmental impacts
• increase value‑added processing, or
• commercialize a byproduct or waste product

Qualified innovation commercialization projects are eligible for transferable Crown royalty and freehold production tax credits, at a rate of 25% of eligible project costs. Eligible critical minerals include aluminium, cobalt, copper, gallium, helium, lithium, magnesium, nickel, all rare earth minerals and zinc. The program is open to both pilot and commercial scaling projects and will be administered by the Saskatchewan Ministry of Energy and Resources. It is expected to launch in late spring 2024, after a brief industry consultation period to finalize the SCMII regulations.

Critical minerals processing investment incentive (CMPII)

The budget introduces the CMPII, for new or expanded value-added processing projects across the province’s critical minerals sector, including byproduct commercialization opportunities at existing mine sites and processing facilities. Qualified greenfield or brownfield value-added processing projects are eligible for transferable Crown royalty and freehold production tax credits, at a rate of 15% of eligible project costs. Eligible critical minerals include aluminium, cobalt, copper, gallium, helium, lithium, magnesium, nickel, all rare earth minerals and zinc. The program will be administered by the Saskatchewan Ministry of Energy and Resources and is expected to launch in late spring 2024, after a brief industry consultation period to finalize the CMPII regulations.

Multi-lateral well program

The budget introduces the multi-lateral well program, which is intended to encourage new oil well drilling configurations, known as multi-lateral wells. The program will apply to eligible new wells drilled between April 1, 2024 and March 31, 2028. Crown royalty and freehold production tax incentives will be available for new oil wells, based on the following definitions:

• an eligible non‑deep well can receive a volumetric incentive to a maximum of 16,000 cubic metres (m³) produced
• an eligible deep well can receive a volumetric incentive to a maximum of 21,000 m³ produced
• an eligible appraisal/exploratory well within a new pre‑approved drilling project can receive a volumetric incentive to a maximum of 26,250 m³ produced, if at least 10 other new qualifying multi‑lateral wells are also drilled as part of the project plan

Personal tax measures

Personal income tax rates

The budget does not change Saskatchewan personal income tax rates (except as discussed under “Personal taxes on non‑eligible dividends” below). Top combined federal/Saskatchewan personal income tax rates are shown below. These rates apply to individuals with taxable income above $246,752 in 2024 ($246,752 to be indexed for 2025 and 2026; $235,675 in 2023).

Personal taxes on non-eligible dividends

It is expected that Saskatchewan will adjust its dividend tax credit rate for non‑eligible dividends for 2024 and 2025, as a result of maintaining the province’s CCPC small business rate at 1% until June 30, 2025, instead of increasing it to 2% on July 1, 2024 as originally scheduled (as noted above under “Corporate income tax rates”). Details of this anticipated change have not yet been announced.

Saskatchewan technology start-up incentive (STSI)

The budget extends the STSI by one year, to March 31, 2027, and expands eligibility for the program to start‑up companies developing novel technologies in the cleantech sector. The STSI offers a non‑refundable 45% tax credit to accredited individual or corporate investors that have taxes owing in Saskatchewan.

Other measures

Fair taxation

The budget announces measures to help ensure that taxpayers are treated fairly and that taxes are collected and remitted to the government. Legislative changes to modernize The Revenue and Financial Services Act, which will be introduced in the upcoming legislative session, include:

• enhancing collection tools
• increasing penalties
• preventing tax avoidance
• clarifying compliance obligations and increasing associated monitoring