Last updated: Mar. 13, 2018
Keeping Our Promises … Real Progress for Manitobans
On March 12, 2018, the Honourable Cameron Friesen presented his third budget as Minister of Finance.
The budget contains several tax measures affecting individuals and corporations.
Although the budget does not include any changes to Manitoba’s corporate or personal tax rates, it increases the amount of small business income eligible for the small business deduction to $500,000 (from $450,000), provides details of the province’s carbon tax regime and adjusts certain corporate and personal tax credits, among other changes.
The revised budget deficit for the 2017-18 fiscal year is now $726 million which is down slightly from the $840 million deficit predicted a year ago.
Highlights
- Deficit of $726 million projected for 2017-18
- Deficit of $521 million forecast for 2018-19
- Personal tax brackets and basic credit remains indexed
Personal Tax Measures
Manitoba did not announce any changes to its personal income tax rates for 2018.
As a result, Manitoba’s combined federal and provincial top marginal rates for income, capital gains and dividends is as follows:
|
Combined Federal/Provincial Top Marginal Tax Rates |
||
|
|
2017 |
2018 |
|
Interest and regular income…………………………………….. |
50.4% |
50.4% |
|
Capital gains………………………………..………………………….. |
25.2% |
25.2% |
|
Eligible dividends …………………………………………………….. |
37.78% |
37.78% |
|
Non-Eligible dividends……………………………………………… |
45.74% |
45.92% |
|
2018 Manitoba Personal Tax Rates |
|||
|
|
1st Bracket |
2nd Bracket |
3rd Bracket |
|
|
$0 to $31,843 |
$31,844 to $68,821 |
Above $68,821 |
|
|
10.80% |
12.75% |
17.40% |
For taxable income in excess of $93,209, the 2018 combined federal-Manitoba personal income tax rates are outlined as follows:
|
Combined 2018 Federal & Manitoba Personal Tax Rates |
|||
|
Bracket |
Ordinary Income |
Eligible Dividends |
Ineligible Dividends |
|
$93,209 to $144,489 |
43.40% |
28.12% |
37.80% |
|
$144,490 to $205,842 |
46.40% |
32.26% |
41.28% |
|
Above $205,842 |
50.40% |
37.78% |
45.92% |
Basic Personal Amount
Effective for the 2019 tax year, the basic personal amount will be increased from $9,382 to $10,392, and for the 2020 tax year it will be increased from $10,392 to $11,402.
Education Property Tax Credit
The budget changes the calculation of the Education Property Tax Credit and eliminates the $250 deductible, effective for 2019.
As of that date, the calculation of the Education Property Tax Credit will be based on school taxes.
This credit is intended to help cover taxpayers’ school taxes, or a portion of rent.
Under this credit, annual school taxes that are equal to or greater than $700 receive the full rebate amount, while a renter paying at least $3,500 of rent per year will be eligible for the full $700 basic credit.
The process that allows new or first-time homeowners who are eligible to apply the basic $700 Education Property Tax Credit on the property tax statement for their principal residence is being streamlined, reducing costs for Manitobans and the province.
Instead of applying to Manitoba Finance during a limited period of the year, homeowners will be able to self-assess and notify their municipal office at any time throughout the year.
- Homeowners who notify their municipality before the printing of the municipal property tax statement for the year will have the credit applied starting in that year.
- Homeowners who notify their municipality after the printing of the municipal property tax statement for the year may claim the credit on their personal income tax return for that year and will receive the credit on their property tax statement in subsequent years.
A new or first-time homeowner could include, for example, someone moving to Manitoba, someone leaving rental accommodations and moving into a home, or someone in a newly constructed home.
Homeowners who already receive the tax credit on their property tax statement are not impacted.
Seniors’ Education Property Tax Credit
The Seniors’ Education Property Tax Credit will also be calculated on the school tax portion, effective for 2019.
Personal Tax Credits For 2018
The maximum tax credits amounts and actual Manitoba tax credits for 2017 and 2018 are set out below.
|
Manitoba Non-Refundable Tax Credits |
||||
|
|
2017 |
2018 |
||
|
Maximum Amount |
Manitoba Tax Credit |
Maximum Amount |
Manitoba Tax Credit |
|
|
Basic Personal Amount |
$9,271 |
1,001 |
$9,382 |
1,013 |
|
Spousal Amount |
9,271 |
1,001 |
9,382 |
1,013 |
|
Eligible dependent amount |
9,271 |
1,001 |
9,382 |
1,013 |
|
Age amount |
3,728 |
403 |
3,728 |
403 |
|
Infirm dependent amount |
3,605 |
389 |
3,605 |
389 |
|
CPP Contributions |
2,564 |
277 |
2,594 |
280 |
|
EI Contributions |
836 |
90 |
858 |
93 |
|
Pension income amount |
1,000 |
108 |
1,000 |
108 |
|
Disability amount |
6,180 |
667 |
6,180 |
667 |
|
Disability supplement |
3,605 |
389 |
3,605 |
389 |
|
Tuition and education amounts |
Variable |
Variable |
Variable |
Variable |
|
Adoption expenses (max) |
10,000 |
1,080 |
10,000 |
1,080 |
|
Medical expenses |
N/A |
Variable |
N/A |
Variable |
|
Medical expenses (other dependents) |
Variable |
Variable |
Variable |
Variable |
|
Caregiver amount |
3,605 |
389 |
3,605 |
389 |
|
Interest on student loans |
Variable |
Variable |
Variable |
Variable |
|
Donations & Gifts |
200 |
21.60 |
200 |
21.60 |
|
In general, credits are multiplied by 10.8% to arrive at the deduction from Manitoba Tax. In the case of donations and gifts over $200, the credit is 17.40% |
||||
Primary Caregiver Tax Credit
Effective as of the budget date, the process for claiming the Primary Caregiver Tax Credit will be simplified through the removal of the complicated paperwork and will instead require eligible caregivers to complete a registration form, submit a copy of the form to Manitoba Finance and claim the credit on the income tax return.
All previous Manitoba Health or Families applications from 1 January 2018 to the budget date will be forwarded to Manitoba Finance for processing.
Further streamlining measures will be imposed through implementing a flat $1,400 annual credit, available to all eligible caregivers with no change to the minimum 90-day requirement of care before eligibility commences.
Corporate Tax Measures
Corporate Tax Rates (No Change)
Although the budget does not announce changes to the province’s corporate tax rates, it does increase the small business income limit eligible for the small business deduction to $500,000 (from $450,000) on January 1, 2019.
As a result, Manitoba’s corporate income tax rates remain as follows:
Corporate Tax Rates
|
|
2018 |
2019 |
||
|
MB |
Federal and |
MB |
Federal and |
|
|
Small business tax rate * |
0.00% |
10.00% |
0.00% |
9.00% |
|
General corporate tax rate ** |
12.00% |
27.00% |
12.00% |
27.00% |
* The small-business rate is prorated based on a 31 December year end.
In addition the rate is based on first $450,000 of active business income (on first $500,000 of active business income, as of January 1, 2019)
** On 24 October 2017, the federal government tabled a notice of ways and means motion to implement reductions in the small-business corporate income tax rate, which were announced on 16 October 2017. The federal small-business rate is reduced from 10.5% to 10.0% effective 1 January 2018 and will be further reduced to 9.0% effective 1 January 2019.
Small Business Deduction
Budget 2018 increases the small business income limit eligible for the small business deduction from $450,000 to $500,000 on January 1, 2019.
Canadian-controlled private corporations that qualify for the small business deduction pay a 0% rate of Manitoba corporation income tax. The savings for a corporation as a result of this enhancement are up to $6,000 per year.
Small Business Venture Capital Tax Credit
The budget proposes changes to simplify the Small Business Venture Capital Tax Credit.
Specifically, the budget eliminates the $15 million revenue cap on the size of an eligible corporation and lowers the investment minimum to $10,000 (from $20,000), effective March 12, 2018.
This 45% investment tax credit is intended to promote the acquisition of equity capital in emerging enterprises that require larger amounts of capital.
Credit Unions Special Deduction
The budget introduces a five-year phase-out of the special tax deduction that currently allows credit unions and caisses populaires to pay a lower rate of tax on a portion of their income.
The phase out will begin on January 1, 2019.
Child Care Centre Development Tax Credit
The budget introduces a new refundable corporation income tax credit to encourage the creation of licensed child care centres in work places.
The tax credit will be available for private corporations that create new child care centres for a total benefit of $10,000 per new infant or preschool space created, claimable over five years.
The credit would be available for licensed spaces created by a taxable corporation that is not primarily engaged in child care services, effective after March 12, 2018 and before 2021. Under the new program, the total number of spaces is limited to 200, which Manitoba says may increase over time.
Extensions to Existing Tax Credits
Book Publishing Tax Credit
The Book Publishing Tax Credit, scheduled to expire on December 31, 2018, is extended to December 31, 2019. This credit supports the development of the book publishing industry in Manitoba by providing a refundable tax credit equal to 40% of eligible Manitoba labour costs.
Cultural Industries Printing Tax Credit
The Cultural Industries Printing Tax Credit, scheduled to expire on December 31, 2018, is extended for one year to December 31, 2019. This program assists the development of Manitoba’s printing industry.
Eliminations to Existing Tax Credits
Rental Housing Construction Tax Credit:
The budget eliminates the Rental Housing Construction Tax Credit, effective for January 1, 2019.
Manitoba notes that although projects currently under provincial review or with provincial approvals are not affected, it will not process new project applications after 2018 and any future projects must be available for use before 2021.
Labour-Sponsored Funds Tax Credit:
The budget eliminates this tax credit effective for shares acquired after 2018.
Retail Sales Tax
The following exemptions will be applied effective May 1, 2018:
- Drill bits designed specifically for oil or gas exploration or development; and
- Fertilizer bins used in a farming operation.
Administrative and Technical Tax Measures
Income Tax Act
Community Enterprise Development Tax Credit
Community Enterprise Development Tax Credit regulations will be amended to remove ambiguity respecting Cooperative’s access to the program and improve administration.
Research and Development Tax Credit
Research and Development Tax Credit provisions will be updated to ensure consistency with changes that have been made to the federal Income Tax Act.
Small Business Deduction for Credit Union
Small business deduction for credit union provisions are being amended retroactively to ensure that the administration of this credit reflects Manitoba’s legislation and policy.
Right-Of-Recovery Provisions
Right-of-recovery provisions are amended to reflect the federal administration of the deduction of Manitoba tax credits from taxpayers who have taxes owing in other provinces.
Green Energy Equipment Tax Credit
Green Energy Equipment Tax Credit regulation making powers are amended to allow the Minister of Finance to create retroactive regulations for this tax credit.
Other Measures
(Not related to income tax)
Tobacco tax
The tobacco tax rate for fine cut tobacco is increased from 28.5 cents per gram to 45 cents per gram effective at midnight, 12 March 2018.
Carbon Tax
Beginning on 1 September 2018, Manitoba’s carbon tax will impose a $25 tax per tonne of greenhouse gas emissions and will apply to gas, liquid and solid fuel products intended for combustion in Manitoba. The carbon tax is estimated to generate $248m in government revenue during the first 12 months.
Households and businesses will be impacted by the carbon tax in different ways, proportional to their use of carbon-emitting fuels. The majority of the costs incurred by the tax come from space heating and transportation fuels.
Figure 1 illustrates the increased costs for the main types of fuel consumed in Manitoba, with the full list of fuels to be outlined in legislation.
Figure 1. Carbon Tax Rates by Select Fuel Type (2018–2022)
|
Fuel Type: |
Carbon Tax: Rate per unit |
|
Gasoline |
5.32 ¢/L |
|
Diesel |
6.71 ¢/L |
|
Natural Gas |
4.74 ¢/m3 |
|
Propane |
3.87 ¢/L |
The existing International Fuel Tax Agreement (IFTA) rules for commercial transportation and trucking that prorate fuel-use charges to a jurisdiction will also apply to the carbon tax in Manitoba.
Certain fuel uses will not be subject to the carbon tax. Exemptions are provided to protect Manitoba sectors and industries that are trade-exposed to jurisdictions which do not have a comparable carbon price, to protect Manitoba’s agricultural sector, and to only apply the carbon tax on emissions occurring in Manitoba.
In addition to these fossil fuel exemptions, other emissions, including from agricultural processes, as well as from landfills and other sources, will also be exempted. An overview of the main exemptions is outlined below.
Agricultural process emissions:
All agricultural process-related emissions are exempted from the carbon tax (e.g., emissions from soil and animals).
Marked fuels:
All marked fuels, including marked gasoline and marked diesel, will be exempted from the carbon tax.
It’s estimated that 90 per cent of marked fuels in Manitoba are consumed in the agricultural sector, with the remainder consumed by the fishing, forestry, mining and other sectors. Exempting all eligible marked fuel uses from the tax will ease the compliance requirement on fuel providers and users.
Interprovincial Comparison of Tax Rates
(Applicable to end of 2018/2019)
As of March 1, 2018
|
|
CAN |
BC |
AB |
SK |
MB |
ON |
|
Personal Income Tax (Note A) |
|
|
|
|
|
|
|
Basic Personal Amount |
$11,809 |
$10,412 |
$18,915 |
$16,065 |
$10,392 |
$10,354 |
|
Top rate (%) |
33 |
16.8 |
15 |
14.5 |
17.4 |
20.53 |
|
|
|
|
|
|
|
|
|
Health Care Premiums |
|
$450 |
|
|
|
$900 |
|
Health and Education Tax (%) |
|
1.95% |
|
|
2.15% |
|
|
|
|
|
|
|
|
|
|
Corporate Income Tax (%) |
|
|
|
|
|
|
|
Small |
10 |
2 |
2 |
2 |
0 |
3.5 |
|
Large |
15 |
12 |
12 |
12 |
12 |
11.5 |
|
Manufacturing |
15 |
12 |
12 |
12 |
12 |
10 |
|
Small business limit ($000) |
500 |
500 |
500 |
500 |
500 |
500 |
|
|
|
|
|
|
|
|
|
Capital Tax on Banks (%) |
|
|
|
4 |
6 |
|
|
|
|
|
|
|
|
|
|
Sales Tax (%) |
5 |
7 |
|
6 |
8 |
8 |
|
|
|
|
|
|
|
|
|
Fuel Tax |
|
|
|
|
|
|
|
Gasoline (cents/ltr) |
10 |
14.5 |
13 |
15 |
14 |
14.7 |
|
Diesel (cents/ltr) |
4 |
15 |
13 |
15 |
14 |
14.3 |
|
|
|
|
|
|
|
|
|
Carbon Tax |
|
Note B |
|
|
|
Note C |
|
Gasoline (cents/ltr) |
2.33 |
6.67 |
6.73 |
0 |
5.32 |
|
|
Diesel (cents/ltr) |
2.74 |
7.67 |
8.03 |
0 |
6.71 |
|
|
|
|
|
|
|
|
|
|
Tobacco Tax (cents/cigarette) |
11.927 |
27.5 |
25 |
27 |
29.5 |
16.475D |
|
|
CAN |
QC |
NB |
NS |
PE |
NL |
|
Personal Income Tax (Note A) |
|
|
|
|
|
|
|
Basic Personal Amount |
$11,809 |
$15,012 |
$10,043 |
$8,160 |
$8,160 |
$9,247 |
|
Top rate (%) |
33 |
25.75 |
20.3 |
21 |
16.7 |
18.3 |
|
|
|
|
|
|
|
|
|
Health Care Premiums |
|
|
|
|
|
|
|
Health and Education Tax (%) |
|
4.26% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Income Tax (%) |
|
|
|
|
|
|
|
Small |
10 |
8 |
2.5 |
3 |
4.5 |
3 |
|
Large |
15 |
11.6 |
14 |
16 |
16 |
15 |
|
Manufacturing |
15 |
11.6 |
14 |
16 |
16 |
15 |
|
Small business limit ($000) |
500 |
500 |
500 |
500 |
500 |
500 |
|
|
|
|
|
|
|
|
|
Capital Tax on Banks (%) |
|
|
5 |
4 |
5 |
6 |
|
|
|
|
|
|
|
|
|
Sales Tax (%) |
5 |
9.975 |
10 |
10 |
10 |
10 |
|
|
|
|
|
|
|
|
|
Fuel Tax |
|
|
|
|
|
|
|
Gasoline (cents/ltr) |
10 |
19.2 |
15.5 (Note E) |
15.5 |
13.1 |
20.5 |
|
Diesel (cents/ltr) |
4 |
20.2 |
21.5 |
15.4 |
20.2 |
21.5 |
|
|
|
|
|
|
|
|
|
Carbon Tax |
|
Note C |
|
Note C |
Note C |
Note C |
|
Gasoline (cents/ltr) |
2.33 |
|
|
|
|
|
|
Diesel (cents/ltr) |
2.74 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tobacco Tax (cents/cigarette) |
11.927 |
14.9 |
25.52 |
27.52 |
25 |
24.5 |
Notes:
- Reflects MB Basic Personal Amount (BPA) effective January 1, 2019.
- BC carbon tax will be increased annually to reflect a $5 per tonne of CO2 emissions until $50 per tonne is reached in April 2021.
- ON, QC and NS indicated a cap and trade system. PE and NL unknown.
- ON 2018 and 2019 tobacco taxes will be increased by an additional 2 cents per cigarette or gram of tobacco each year.
- NB announced 2.33 cents per litre of existing gasoline taxes and 2.76 cents per litre of existing fuel taxes would be transferred to the Climate Change Fund.
(Source: Manitoba Government)