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Manitoba Budget Report 2021

Last updated: Apr. 19, 2021 

On April 7, 2021, Finance Minister Scott Fielding presented Manitoba’s fiscal 2021-22 budget.

As expected, we’re seeing more health care spending, with $1.2 billion being allocated to a vaccine program, PPE, contact tracing and other costs related to fighting the pandemic.

On the small business side, the province will provide an education property tax rebate, and they’re once again easing up on the “payroll tax” for employers. They extended several tax credits, including the Small Business Venture Capital Tax Credit. No new support programs were announced for small business owners.

There have been no changes to the personal or corporate tax rates. We provide a summary of the measures that may impact you or your small business below.

HIGHLIGHTS

Personal Tax Measures

Personal income tax rates in Manitoba

As mentioned above, there are no changes to Manitoba’s personal income tax rates for 2021.  Manitoba’s combined federal and provincial top marginal rates for income, capital gains and dividends are set out below.

Combined Federal/Provincial Top Marginal Tax Rates
  2020 2021
 

Interest and regular income

 

50.40%

 

50.40%

Capital gains 25.20% 25.20%
Eligible dividends 

Non-Eligible dividends

37.78%

46.67%

37.78%

46.67%

 

2020/2021 Manitoba Personal Tax Rates
Brackets 2020 Tax Rate Brackets 2021 Tax Rates
$0 to $33,389 10.80% $0 to $33,723 10.80%
$33,389 to $72,164 12.75% $33,723 to $72,885 12.75%
Over $72,164 17.40% Over $72,885 17.40%

For taxable income in excess of $97,069, the 2020 combined federal-Manitoba personal income tax rates are outlined as follows:

Combined 2021 Federal & Manitoba Personal Tax Rates
Bracket Ordinary Income* Eligible Dividends Ineligible Dividends
$98,040 to $151,978 43.40% 28.12% 38.62%
$151,978 to $216,511** 46.62% 32.71% 42.44%
Above $216,511 50.40% 37.78% 46.67%

* The rate on capital gains is one-half the ordinary income tax rate.

** The federal basic personal amount comprises two elements: the base amount ($12,421 for 2021) and an additional amount ($1,387 for 2021). The additional amount is reduced for individuals with net income in excess of $151,978 and is fully eliminated for individuals with net income in excess of $216,511. Consequently, the additional amount is clawed back on net income in excess of $151,978 until the additional tax credit of $208 is eliminated; this results in additional federal income tax (e.g., 0.32% on ordinary income) on net income between $151,979 and $216,511.

Personal Tax Credits: Basic Personal Amount

As was previously announced in the 2016 budget, Manitoba personal income tax brackets and the basic personal amount are indexed to inflation by the Manitoba Consumer Price Index.

For the 2021 tax year, the basic personal amount will be increased from $9,838 to $9,936.

Personal tax credits for 2021

The maximum tax credit amounts and actual Manitoba tax credits for 2020 and 2021 are set out below.

Manitoba Non-Refundable Tax Credits
2020 2021
 

Maximum Amount

Manitoba

Tax

Credit

 

Maximum Amount

Manitoba

Tax

Credit

Basic Personal Amount $9,838 $1,063 $9,936 $1,073
Spousal Amount 9,838 1,063 9,936 1,073
Eligible dependent amount 9,838 1,063 9,936 1,073
Age amount 3,728 403 3,728 403
Infirm dependent amount 3,605 389 3,605 389
CPP Contributions 2,898 313 3,166 342
EI Contributions 857 93 890 96
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

-first $200

– over $200

 

200

75% of income

 

21.60

Variable

 

200

75% of income

 

21.60

Variable

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%

Corporate tax measures

Manitoba small business tax rate

There are no changes to Manitoba’s small business tax rates for 2021. The corporate income tax rates are set out below.

Corporate Tax Rates

  2020 2021
MB Federal and MB combined MB Federal and MB combined
Small business tax rate * 0.00% 9.00% 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 $500,000 of active business income.

Tax credits

The province announced they are enhancing or extending several tax credits available to corporations in Manitoba.

Small Business Venture Capital Tax Credit

The Small Business Venture Capital Tax Credit (SBVCTC) provides a non-refundable Manitoba tax credit of up to 45% to individuals and corporations who acquire equity capital in eligible Manitoba enterprises.

For the 2021 tax year, the maximum eligible investment by an investor will be increased from $450,000 to $500,000 in the program. And the maximum tax credit that can be claimed against income tax will increase from $67,500 to $120,000 per year.

Interactive Digital Media Tax Credit

The Manitoba Interactive Digital Media Tax Credit (MIDMTC) is a refundable corporate income tax credit, which provides up to 40% credit on qualified expenses incurred in the development of eligible interactive digital media products.

The eligible activities for the Interactive Digital Media Tax Credit will be expanded this year to allow add-on digital media and content, such as downloadable content, on-going maintenance and updates, and data management and analysis. 

The credit was set to expire on December 31, 2022, but this year’s budget makes it a permanent tax credit.

Manitoba Book Publishing Tax Credit

This credit is equal to 40% of eligible Manitoba labour costs, including non-refundable monetary advances made in the tax year to authors of eligible books, to a maximum of $100,000 per year.

The credit also includes non-refundable monetary advances and labour costs related to publishing an electronic version of an eligible literary work.

It was initially scheduled to expire on December 31, 2024, but it’s now permanent.

Cultural Industries Printing Tax Credit

This refundable tax credit for Manitoba printers is based on the eligible printing costs incurred and paid before 2022 in producing eligible books.

The annual maximum tax credit that you can claim is $1.1 million per corporation. If two or more eligible printers are related to or associated with each other, the $1.1 million maximum is shared.

The Cultural Industries Printing Tax Credit was scheduled to expire on December 31, 2021, but will now be extended for 1 year to December 31, 2022.

Community Enterprise Development Tax Credit

The Community Enterprise Development Tax Credit (CEDTC) provides a refundable Manitoba tax credit of up to 45% to individuals and corporations who acquire equity capital in community-based enterprises in Manitoba.

There is no minimum investment requirement for companies or individual investors, but each investor is limited to 10% or less of the total tax credit issuance.

Investors can invest a maximum of $60,000 per year.

The Community Enterprise Development Tax Credit was scheduled to expire on December 31, 2021, but will now be extended for 1 year to December 31, 2022.

Retail sales tax

Starting Dec. 1, 2021, the province will remove the 7% PST on personal services such as hair services non-medical skin care and aesthetician services and body modifications and spa services.

Health and Post-Secondary Education Tax Levy (Payroll Tax Exemption)

As of Jan. 1, 2022, the threshold that exempts small business owners from paying the payroll tax will increase from $1.5 million to $1.75 million. The threshold below which employers pay a reduced rate will also increase from $3.0 million to $3.5 million.

Education Property Tax Rebate

Property owners will continue to pay education property taxes but they will automatically receive the Education Property Tax Rebate in the same month that their municipal property tax payments are due (or earlier). Farm property owners must continue to apply for the Farmland School Tax Rebate.

Residential and farm property owners will receive a 25% rebate of the school division special levy and community revitalization levy payable this year, and another 25% rebate in 2022. Other property owners (such as commercial, industrial, railways, pipelines, institutional and designated recreational) will receive a 10% rebate in 2021.

As mentioned above, existing education property tax offsets including the Education Property Tax Credit and Advance, Seniors School Tax Rebate, Seniors Education Property Tax Credit and Farmland School Tax Rebate will be proportionately reduced by 25 percent in 2021.

Tax Credit & Rebate Amount
  2020 2021
 

Education Property Tax Credit and Advance

 

Up to $700

 

 

Up to $525

 

Seniors School Tax Rebate

 

Up to $470

Minus 2.0% on net family income over $40,000

 

Up to $353

Minus 1.5% on net family income over $40,000

 

 

Seniors Education Property Tax Credit

 

 

Up to $400

Minus 1.0% of family net income

 

Up to $300

Minus 0.75% of family net income

 

 

Farmland School Tax Rebate

 

 

Up to 80% of school tax to a maximum of $5,000

 

 

Up to 60% of school tax to a maximum of $3,750

 

Contact FBC

Have questions about this or other COVID-19 programs for Canadian businesses? Unlimited consultation related to tax matters is a key benefit of FBC Membership. We’re offering a free consult where we get to know your business and determine next steps on saving you time and money. Book your appointment online.

You can also visit our COVID-19 Resource Centre for the latest information on Canadian small business grants and other resources that will support you and your business throughout this crisis.