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2009 Manitoba Budget
The Manitoba government brought down its tenth straight balanced budget forecasting a $48 million summary surplus for the fiscal year 2008-09. A $110 million draw was made from the Fiscal Stabilization Fund with a balance of $634 million at the end of 2008-09. The budget contained a number of tax measures for individuals and businesses, which are summarized below. Tax Rates – The budget reaffirmed commitments made in previous budgets to lower income taxes in 2009 by increasing the personal, spousal and eligible dependent amounts by $100 each, decreasing the lowest tax rate to 10.8% and increasing the income levels for the first and second tax brackets to $31,000 and $67,000. Education Property Tax Credit – The basic amount of the Education Property Tax Credit has been increased from $600 to $650 for 2009. Homeowners with sufficient property taxes will have this amount subtracted from their 2009 property taxes, while renters with sufficient occupancy costs will receive the increased amount on their 2009 income tax returns. Dividend Tax Credit – The dividend tax credit on ineligible taxable Canadian dividends will be reduced to 2.5% in 2009 and to 1.75% in 2011. Manitoba Mineral Exploration Tax Credit (METC) – The Manitoba METC is extended by three years, to flow-through share agreements entered into before April 1, 2012. Also, the tax credit rate has been increased from 10% to 20% for flow-through share agreements into after March 31, 2009 and before April 1, 2010. The credit will be further increased to 30% for agreements entered into after March 31, 2010 and before April 1, 2012. Community Enterprise Development (CED) Tax Credit – The maximum value of issuable shares that a business can apply for under the CED Tax Credit program is doubled from $500,000 to $1 million, starting in 2009. This non-refundable personal income tax credit is equal to 30% on a maximum $30,000 investment in equity capital. Registered Disability Savings Plans (RDSPs) – The taxable portion of withdrawals from RDSPs will be excluded from family net income for the purposes of calculating the Education Property Tax Credit, the School Tax Credit for Homeowners and the Personal Tax Credit. Tax-Free Savings Accounts (TFSAs) – Individuals who acquire through a TFSA, eligible shares issued by a Manitoba-registered labour-sponsored fund, or shares approved under the Community Enterprise Development Tax Credit will qualify for Manitoba tax credits. Small Business Tax Rate – Effective December 1, 2010, the small business rate will be reduced from 1% to zero. Manitoba Finance will release a discussion paper and start consultations with the private sector on how best to treat non-refundable tax credits carried forward after 2010 and earned after 2010 by corporations no longer paying Manitoba corporate income tax because of the zero rate. Research and Development (R&D) Tax Credit – The R&D Tax Credit will be made refundable for eligible expenditures incurred after 2009 by a corporation with a permanent establishment in Manitoba. Eligible expenditures must be carried on in Manitoba under an eligible contract with a qualifying research institute. The refundable credit will benefit qualifying corporations conducting R&D in prescribed priority areas involving biotechnologies, and new technologies in such fields as medical science, the environment, agriculture, information, communications and computers. Co-op Education and Apprenticeship Tax Credit – The Co-op Education and Apprenticeship Tax Credit has been extended to December 30, 2011. Green Energy Equipment Tax Credit – The Green Energy Tax Credit has been extended to solar thermal energy systems purchased for use in Manitoba starting in 2009. Specified equipment must be new and be conventional active solar heating equipment that is used primarily for the purpose of heating liquid or gas, including: Solar collectors; Solar energy conversion equipment; Solar water heaters; Energy storage equipment; Control equipment; and Equipment designed to interface solar heating equipment with other heating equipment. Odour Control Tax Credit – The Odour Control Tax Credit, which was scheduled to expire at the end of 2009, has been extended to the end of 2011. Community Enterprise Investment (CEI) Tax Credit – The maximum annual approval limit for the CEI Tax Credit will be increased from $16,667,000 to $33,000,000, starting in 2009. The maximum annual investment limit by an investor remains at $450,000 and the maximum tax credit amount that can be applied against Manitoba income tax payable in a given year remains at $45,000. Federal Tax Changes – Manitoba will parallel business tax reductions announced in the 2009 federal budget including increased CCA rates for manufacturing machinery and equipment and computer systems.
Other Changes Exemption for Farm Manure Slurry Tanks and Lagoon Liners - The sales tax exemption for farm manure slurry tanks and lagoon liners scheduled to expire on June 30, 2009 has been made permanent. Exemption for Educational Workbooks – Effective May 1, 2009, the sales tax exemption for books will be expanded to include educational workbooks. Tobacco Tax – Effective March 26, 2009, the tax rates on tobacco products is increased as follows: The tax rate per cigar remains 75% of its price at retail to a maximum of $5.00 per cigar. Film and Video Production Tax Credit (2004, 2005 & 2007 Manitoba Budgets) – Changes were announced in the 2004 budget to extend the 35% credit another three years to March 1, 2008 and to add a new 5% frequent filming incentive and 5% rural and northern incentive. The 2005 budget increased the credit rate from 35% to 45% effective for productions that start principal photography after March 8, 2005. The boundary for the 5% rural and northern incentive was reduced from 40 km to 35 km for productions that start principal photography after April 19, 2004. The 2007 budget announced a further three-year extension of the credit until March 1, 2011. [Note: See additional changes announced to the Film and Video Production Tax Credit in the 2008 budget below.] Manitoba Equity Tax Credit (METC) (2005 Manitoba Budget) - The 5% Manitoba Equity Tax Credit, introduced in the 1999 budget available for eligible investments in Manitoba companies is extended to June 30, 2008 from June 30, 2005. Individual investors earn a 5% annual credit up to a maximum credit of $1,500 based on the cost of the eligible shares. The lifetime credit for a particular security by an investor is 15%, to a maximum of $4,500 over 36 months. Exemption for Bio-fuel (2006 Manitoba Budget) – Effective March 7, 2006, Manitoba-produced bio-fuel that meets the ASTM-6751 standard is exempt from sales tax for a five-year period, ending March 31, 2011. Manufacturing Investment Tax Credit (2006 & 2007 Manitoba Budgets) – The refundable portion of the 10% Manufacturing Investment Tax Credit (MITC) is increased from 20% to 35%. The eligibility for this credit is also broadened to include Class 43.1 renewable energy and energy conservation equipment that has been reclassified into new Class 43.2. The MITC is extended for a further three years to June 30, 2009. The 2007 budget increased the refundable portion of the 10% Manufacturing Investment Tax Credit (MITC) from 35% to 70% for qualified property acquired on or after January 1, 2008. Tax Rate and Bracket Changes (2007 Manitoba Budget) – The middle income tax rate is reduced from 13.0% to 12.75% and the top income threshold is raised from $65,000 to $66,000, effective January 1, 2008. Subject to budget balancing requirements, there is a multi-year plan to raise the middle and top income tax brackets to $35,000 and $70,000 respectively and reduce the first tax bracket rate to 10.5% by 2011 as follows:
First Bracket Rate Middle Bracket Threshold Middle Bracket Rate Top Bracket Rate 2007 10.9% $30,544 13.0% $65,000 2008 10.9% $30,544 12.75% $66,000 2009 10.8% $31,000 12.75% $67,000 2010 10.7% $32,000 12.75% $68,000 2011 10.5% $35,000 12.75% $70,000 Business Tax Changes (2007 Manitoba Budget)General Corporate Income Tax Rate – This budget confirms the reduction in the general corporate tax rate to 13% on July 1, 2008 and announces a further reduction to 12% on July 1, 2009, subject to budget balancing requirements. The reduction will be prorated for taxation years straddling July 1. [Note: Budget 2009 confirmed the further 1% rate cut to 12% on July 1, 2009. The province also announced its intention to reduce the rate further to11% at a future date to be determined.]
Small Business Tax Rate – Effective January 1, 2008, the small business rate is reduced from 3% to 2% and will be cut again to 1% on January 1, 2009, subject to budget balancing requirements. The tax rate reduction is prorated for taxation years that straddle this effective date. [Note: Budget 2008 confirmed the further 1% rate cut to 1% on January 1, 2009.] Community Enterprise Investment (CEI) Tax Credit – The CEI tax credit is introduced to complement the Community Enterprise Development (CED) tax credit. It is a new 30% provincial non-refundable tax credit for individuals and corporations in Manitoba who invest a minimum of $20,000 directly in an emerging enterprise (start-ups and early expansions) on or after January 1, 2008 and before 2011. The maximum annual tax credit claimable by an investor is $45,000 based on a $150,000 investment. The 2008 budget confirms that the maximum annual investment limit by an investor is $450,000 which earns a $135,000 tax credit. This change does not affect the maximum amount of the tax credit deductible against Manitoba income tax otherwise payable in a given year ($45,000). Qualifying securities will not qualify as an eligible RRSP investment. The CEI Tax Credit is eligible for a three-year carry-back (but not before 2008) and a ten-year carry-forward. There is a penalty of 30% of the investment if the investment is returned as a return of capital within three years. Farmland School Tax Rebate (2007 Manitoba Budget) – The Farmland School Tax Rebate increases from 60% in 2006 to 65% in 2007. Further increases will take place - 2008 – 70%; 2009 – 75%; 2010 – 80%. Personal Tax Changes (2008 Manitoba Budget) Basic Personal, Spousal and Eligible Dependent Amounts – The Basic Personal Amount, Spousal Amount and Eligible Dependent Amounts are each increased by $100 to $8,134, effective January 1, 2009.
Primary Caregiver Tax Credit – The new refundable Primary Caregiver Tax Credit was introduced for the 2009 tax year, for individuals who serve as volunteer primary caregivers for more than three continuous months. The primary caregiver may be a spouse, other relative, neighbour or friend who provides care without remuneration to a Manitoba Home Care client assessed as requiring Care Level 2, 3, or 4 while living at home. After a 3-month qualifying period, the refundable credit is $85 per month to a maximum of $1,020 per year to the primary caregiver for each client. Only one person can be designated as the client’s primary caregiver at any one time. A caregiver cannot earn the credit for more than three clients for a given month. Personal Tax Credit – Starting with the 2009 tax year, the Personal Tax Credit is increased as shown in the following table:
Community Enterprise Development (CED) Tax Credit – The 30% CED tax credit is extended for another three years, to the end of 2011. Business Tax Changes (2008 Manitoba Budget) Manufacturing Investment Tax Credit – This credit, scheduled to expire on June 30, 2009, is extended to December 31, 2011. Film and Video Production Tax Credit – The following measures are effective for productions starting principal photography after 2007:
Interactive Digital Media Tax Credit – A new refundable corporation income tax credit was introduced for companies that develop and produce interactive digital media projects in Manitoba. The tax credit equals 40% of the remuneration paid to Manitobans on eligible projects approved by Manitoba Science, Technology, Energy and Mines. The maximum tax credit per eligible project is $500,000. Projects that begin prototyping and product development after April 9, 2008 and before 2011 will qualify for the credit. A qualifying company must be a taxable Canadian corporation with a permanent establishment in Manitoba. Book Publishing Tax Credit – A new refundable tax credit was introduced for book publishers, equal to 40% of eligible Manitoba labour costs incurred and paid after April 9, 2008 and before 2012. The maximum tax credit claimable by a publisher is $100,000 per year. An eligible publisher must have a permanent establishment or be resident in Manitoba, must pay at least 25% of its remuneration to employees who are Manitoba residents, and must have recently published at least two qualifying books. A qualifying book is a new, non-periodical publication that is Canadian-authored, and is published after April 9, 2008, and before 2012. Corporation Capital Tax (CCT) – The CCT is eliminated for manufacturing and processing corporations effective July 1, 2008. For other corporations subject to the general CCT, elimination as of December 31, 2010 is confirmed subject to the following rate reduction:
Manitoba’s Minimum Wage (December 23, 2008) - The Manitoba government announced a staggering of the increase to Manitoba’s minimum wage instead of implementing a single increase. On May 1, 2009, Manitoba’s minimum wage will increase by 25 cents to $8.75 an hour and, on Oct. 1, 2009, the rate will increase by another 25 cents to $9.00 an hour. |
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