March 07, 2019
Issue 2019-07
On March 7, 2019, Manitoba’s Minister of Finance, Scott Fielding, presented the province’s budget. The budget:
This Tax Insights discusses these and other tax initiatives outlined in the budget.
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.
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.
Commencing in 2020:
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:
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 budget makes the following announcements related to business tax credits:
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).
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.
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.
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.
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.
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.