April 12, 2011 - Budget 2011 projects a summary deficit of $438 million for the current fiscal year 2011/2012. The deficit is still expected to be eliminated over the course of Manitoba’s Five-Year Economic Plan introduced in last year’s budget that will see the province return to surplus by 2014/2015.
The budget contained a number of tax measures for individuals and businesses, which are summarized below.
Personal Tax Changes
Basic Personal, Spousal and Eligible Dependent Amounts Increased – The 2011 Budget announced plans to incrementally increase the value for all three amounts by $1,000 over four years. The amounts are going from $8,134 to $8,384 in 2011, $8,634 in 2012, $8,884 in 2013 and $9,134 in 2014.
Basic Education Property Tax Credit Increased – The basic Education Property Tax Credit is increased from $650 to $700 beginning in 2011. The basic tax credit is a refundable tax credit that reduces property taxes payable by homeowners and provides residential tenants with an annual income tax benefit. Homeowners with sufficient property taxes will have the basic tax credit subtracted from their property tax bill, starting in 2011. Residential tenants who pay at least $4,750 in annual rent ($395 monthly on average) will benefit from the increased basic credit when they file their income tax return, starting with their 2011 returns.
Seniors’ Education Property Tax Credit Increased – The maximum tax credit for seniors is increased from $800 to $950 in 2011, $1,025 in 2012, and $1,100. The increased benefits are in addition to the $50 increase in the basic tax credit.
New Children’s Arts and Cultural Activity Tax Credit – A new Children’s Arts and Cultural Activity Tax Credit is introduced in 2011 that will provide a 10.8% non-refundable income tax credit on eligible activities costs of up to $500 annually for a child under the age of 16. This provides a family up to $54 in income tax savings for each child. For a child with a disability under the age of 18 on whom at least $100 is spent on eligible activities, the family qualifies for an additional $54 in income tax savings.
Eligible activities recognize organized and supervised arts and cultural activities taking place in Manitoba and outside a school’s regular program, including: lessons in music, dramatic arts, dance and visual arts; language instruction; natural environment and wilderness activities; private tutoring in school subjects; and the development of interpersonal skills. Children’s organizations, including Girl Guides, Scouts, 4-H and Cadets will also qualify.
The Manitoba Fitness Tax Credit, which is currently available for children and young adults under age 25, is not affected by this change.
Primary Caregiver Tax Credit Increased – The Primary Caregiver Tax Credit is increased by 25% from a maximum annual amount of $1,020 to $1,275 starting in 2011. The tax credit was introduced in 2009 to provide a tax credit to Manitobans who serve as volunteer primary caregivers to assist care recipients to live independently in their own homes.
Mineral Exploration Tax Credit (METC) Extended – The 30% non-refundable METC, scheduled to expire with respect to flow-through share agreements entered into before April 1, 2012, will be extended another three years to cover flow-through share agreements entered into before April 1, 2015.
Community Enterprise Development (CED) Tax Credit Extended – The 30% non-refundable CED tax credit, scheduled to expire on December 31, 2011, will be extended to December 31, 2014.
Business Tax Changes
New Cultural Industries Printing Tax Credit – The Cultural Industries Printing Tax Credit is a new 15% refundable credit for Manitoba printers based on eligible printing costs incurred and paid after April 12, 2011 and before 2015 in the production of eligible books. Qualifying costs are amounts invoiced by the
Manitoba printer to a qualifying publisher of a book for printing, assembly and binding services, performed in Manitoba. A qualifying publisher must not be related to the Manitoba printer and may be carrying on business anywhere in Canada.
Eligible books include hardcover or paperback Canadian-authored non-periodical publications categorized as fiction, non-fiction, poetry, drama, biography, or children’s book. The following types of books are not eligible: corporate and vanity publications, directories, agendas, catalogues, calendars, looseleaf publications, colouring, sticker, and activity books, and those containing advertising other than the publisher’s own promotional material.
New Neighbourhoods Alive! Tax Credit- Manitoba will introduce a new Neighbourhoods Alive! Tax Credit. This 30% corporate income tax credit will be available to corporations who partner with charitable organizations to establish new social enterprises in Manitoba, whose mandate includes hiring hard-to-employ Manitobans facing multiple barriers to employment.
Eligible corporate donations must be made after April 12, 2011 and before 2020. The maximum tax credit will be $15,000 per year, based on a minimum $50,000 donation. Donations provided in the year prior to the establishment of the social enterprise and during its first three years are eligible for the tax credit. The corporation must provide in-kind support to develop, manage and operate the new social enterprise, which must be fully owned and controlled by a charitable organization. Although the credit is non-refundable, unused credits can be carried forward up to ten years, or carried back up to three years, but no earlier than a tax year ending after April 12, 2011.
Manufacturing Investment Tax Credit Extended – The Manufacturing and Investment Tax Credit, which was scheduled to expire at the end of 2011, will be extended to December 31, 2014.
Odour Control Tax Credit Extended – The 10% non-refundable Odour Control Tax Credit, which was scheduled to expire at the end of 2011, will be extended to December 31, 2014.
Book Publishing Tax Credit Extended and Enhanced – The Book Publishing Tax Credit, which was scheduled to expire at the end of 2011, will be extended to December 31, 2014. The tax credit will also be expanded to include non-refundable monetary advances and labour costs related to publishing electronic or digital versions of eligible literary works. Additionally, the bonus for eligible books printed on recycled paper will be increased from 10% to 15%. These changes apply to printing expenses incurred and paid after April 12, 2011.
Co-op Education and Apprenticeship Tax Credits Extended – Components of the Co-op Education and Apprenticeship Tax Credits, scheduled to expire on December 31, 2011, will be extended to December 31, 2014.
Green Energy Equipment Tax Credit Enhanced – The Green Energy Tax Credit for Manitoba manufacturers and purchasers of qualifying geothermal heat pumps, that are manufactured and used in Manitoba, will increase from 5% to 7.5%. The purchaser’s tax credit for other geothermal heating equipment installation costs will also increase from 10% to 15%. These rate increases are effective for installations after April 12, 2011.
However, the tax credit for purchasers of solar heating systems will remain at 10%. The province is also considering broadening the 10% tax credit to made-in-Manitoba transformers and converters which are sold for use in Manitoba.
Other Changes
Farmland SchoolTax Rebate Increased – The Farmland School Tax Rebate is increased from 75% to 80% starting in 2011.
Tobacco Tax Rate Increases – Effective midnight, April 12, 2011, the tobacco tax rate is increased as follows:
Sales Tax Exemption on Biomass Products Expanded- Effective May 1, 2011, the sales tax exemption for straw pellets used for heating or cooking has been expanded to include biomass products made 100% from wood, wheat, flax, oats, barley, sunflower, hemp or corn.
Dividend Tax Credit (2009 Manitoba Budget) – The dividend tax credit on ineligible taxable Canadian dividends is reduced to 2.5% in 2009 (from 3.15%) and further reduced to 1.75% in 2011.
Small Business Tax Rate (2009 Manitoba Budget) – Effective December 1, 2010, the small business corporate rate was reduced from 1% to zero on the first $400,000 of active business income.
Fitness Tax credit Expanded (2010 Manitoba Budget) – Starting in 2011, the Children’s Fitness Tax Credit is renamed the Fitness Tax Credit and is expanded to include claims for fitness activities for young people ages 16 to 24. The annual cost of eligible fitness activities up to $500 can be claimed by the young adult, or by a spouse or parent that provides an annual benefit of $54 per young adult as a reduction to Manitoba income tax otherwise payable for the year. The annual benefit is doubled to $108 for young adults with a disability, as is currently the case for children.
Film and Video Production Tax Credit Extended (2010 Manitoba Budget) – The Film and Video Production Tax credit is extended another three years to March 1, 2014. Also, starting with productions which start principal photography after March 2010, production companies can elect to claim either the maximum 65% film tax credit based on eligible labour costs or a new 30% tax credit based on production costs incurred and paid for labour, goods and services provided in Manitoba that are directly attributable to the production of an eligible film. Additional administrative changes are also proposed, effective March 24, 2010.
Research and Development (R&D) Tax Credit Enhanced (2010 Manitoba Budget) – The refundable portion of the R&D Tax Credit will be expanded to include in-house R&D. Starting in 2011, one-quarter of the credit for in-house R&D will be refundable. This will be increased to one-half in 2012.
Co-op Education and Apprenticeship Tax Credits Expanded (2010 Manitoba Budget) – Starting in 2011, the Co-op Education and Apprenticeship Tax Credits will be expanded to include employers who are not eligible for the federal Apprenticeship Job Creation Tax Credit. This includes tax-exempt employers and taxable employers of non-Red Seal apprentices. This new tax credit will equal 10% of net wages and salaries paid to an apprentice, up to a maximum of $2,000.
Small Business Venture Capital Tax Credit (formerly the Community Enterprise Investment Tax Credit) Extended (2010 Manitoba Budget) – The Community Enterprise Investment Tax Credit introduced in the 2007 budget is renamed the Small Business Venture Capital Tax Credit and is extended to December 31, 2013.
Interactive Digital Media Tax Credit Extended (2010 Manitoba Budget) – The Interactive Digital Media Tax Credit is extended another three years to December 31, 2013. Several administrative changes are also proposed for certificates of eligibility and tax credit certificates issued after March 23, 2010.
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