Manitoba Budget Report 2017

Responsible Recovery

On April 11, 2017, the Honourable Cameron Friesen presented his second budget as Minister of Finance.

In many respects, this is the first true budget of the Progressive Conservative government as last year’s budget was presented so soon after the provincial election.

Highlights

  • Deficit of $872 million projected for 2016-17
  • Deficit of $840 million forecast for 2017-18
  • Many boutique tax credits eliminated
  • Personal tax brackets and basic credit remains indexed

The revised budget deficit of $872 million is down slightly from the $911 million deficit predicted a year ago.

Personal Tax Measures

Manitoba did not announce any changes to its personal income tax rates for 2017. 

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

2016

2017

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%

45.74%

 

2017 Manitoba Personal Tax Rates

1st Bracket

2nd Bracket

3rd Bracket

$0 to $31,465

$31,466 to $68,005

Above $68,005

10.80%

12.75%

17.40%

For taxable income in excess of $91,831, the 2017 combined federal-Manitoba personal income tax rates are outlined as follows:

Combined 2017 Federal & Manitoba Personal Tax Rates

Bracket

Ordinary Income

Eligible Dividends

Ineligible Dividends

$91,832 to $142,353

43.40%

28.12%

37.55%

$142,354 to $202,800

46.40%

32.26%

41.06%

Above $202,800

50.40%

37.78%

45.74%

Indexing Personal Income Tax Brackets

As announced in last year’s budget, the personal income tax brackets and Basic Personal amount are indexed to inflation by the Manitoba Consumer Price starting in 2017. 

  • The index factor for 2017 is 1.5%.
  • 2018 is 1.8%
  • The projected index factor for each of the 2019 and 2020 years is 2.0%.

Tuition Fee Income Tax Rebate

The Tuition Fee Income Tax Rebate is being phased out commencing in 2017.

Effective for the 2017 tax year, the annual cap an individual graduate can claim for this rebate is the lesser of Manitoba income tax payable, 10% of eligible tuition fees, or $500 (reduced from $2,500).

The average claim amount was $1,100 in 2015. The rebate is fully eliminated for the 2018 tax year at which time no rebate credits will be claimable.

Any unclaimed rebate credits will lapse. The government is reprofiling the Manitoba Bursary Program to better serve students’ needs while in school.

Tuition Fee Income Tax Rebate - Advance

The Tuition Fee Income Tax Rebate Advance is eliminated effective for tuition and ancillary fees paid in relation to a school term that begins after April 2017.

Manitoba students will continue to benefit from the Education Amount and a basic tax credit on eligible tuition and ancillary fees. 

The federal government and some other provinces have already eliminated their Education Amount.

The Manitoba government plans to introduce technical amendments to maintain the provincial education amount following the elimination of the federal education amount.

Primary Caregiver Tax Credit

This credit is a refundable individual income tax credit recognizing the support unpaid caregivers provide in assisting care recipients – including spouses, relatives, neighbours or friends – to stay in their own homes longer.  

Manitoba is one of only two provinces offering this type of support. The Primary Caregiver Tax Credit will be amended as follows:

The annual credit claimable by a caregiver is capped at a maximum of $1,400 in 2017 and future years.  The limit of 3 care recipients is removed but the maximum credit cannot exceed $1,400. Over 90% of caregivers who benefit from this credit are not impacted by this change.

Eligibility for this credit now begins in the year that the application is submitted to the assessing authority (i.e., a Regional Health Authority or the Department of Families).

Starting this year, retroactive claims for years prior to 2017 are not permitted. However, if an application is submitted in 2017 but the credit is not claimed until 2019, the caregiver may still claim the credit for 2017 and 2018.

Political Contribution Tax Credit

Effective starting with the 2018 tax year, the Political Contributions Tax Credit is enhanced by increasing the maximum eligible contribution from $1,275 to $2,325. 

This will result in an increase in the total available annual credit from $650 to $1,000.

This credit is earned on eligible contributions made to a recognized provincial political party or candidate for election to the Manitoba Legislature. 

The credit offsets Manitoba personal income tax otherwise payable and is delivered through the income tax system.

2017 Manitoba Political Contribution Tax Credit

Contribution

Tax Credit

Maximum Credit

Cumulative & Maximum

$0 to $400

75.0%

$300

$300

$401 to $750

50.0%

$175

$475

$751 to $1,275

33.3%

$175

$650

 

2018 Manitoba Political Contribution Tax Credit

Contribution

Tax Credit

Maximum Credit

Cumulative & Maximum

$0 to $400

75.0%

$300

$300

$401 to $750

50.0%

$175

$475

$751 to $2,325

33.3%

$525

$1,000

Children’s Arts and Cultural Activity Tax Credit and the Fitness Tax Credit

The Manitoba government plans to introduce technical amendments to maintain the provincial Children’s Arts and Cultural Tax Credit and the Fitness Tax Credit following the elimination of the corresponding federal tax credits.

Senior’s School Tax Rebate and the Volunteer Firefighter & Search & Rescue Tax Credit

The Manitoba government plans to introduce legislation to ensure that the Senior’s School Tax Rebate and the Volunteer Firefighter and Search & Rescue Tax Credit are targeted to Manitoba residents only.

Personal Tax Credits For 2017  

The maximum tax credits amounts and actual Manitoba tax credits for 2016 and 2017 are set out below.

Manitoba Non-Refundable Tax Credits

 

2016

2017

Maximum Amount

Manitoba Tax Credit

Maximum Amount

Manitoba Tax Credit

Basic Personal Amount

$9,134

986

$9,271

1,001

Spousal Amount

9,134

986

9,271

1,001

Eligible dependent amount

9,134

986

9,271

1,001

Age amount

3,728

403

3,728

403

Infirm dependent amount

3,605

389

3,605

389

CPP Contributions

2,544

275

2,564

277

EI Contributions

955

103

836

90

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

Corporate Tax Rates (No Change)

The budget did not announce any changes to the corporate tax rate.

Manitoba’s corporate income tax rates effective January 1, 2017 is as follows:

Corporate Income Tax Rates — As of January 1, 2017

 

Manitoba

Combined Federal
and Manitoba

General

12%

27%

M&P

12%

27%

Small business1

0.0%

10.5%

1On the first $450,000 of active business income.

Research & Development Tax Credit

Corporations that carry on eligible scientific research and experimental development in Manitoba are eligible for the Research & Development Tax Credit. 

Effective for eligible expenditures made after April 11, 2017, the Research and Development Tax Credit is reduced from 20% to 15%.

This will more closely align Manitoba’s support with other provinces for qualifying scientific research and development expenditures made by a corporation while maintaining Manitoba’s competitive position.

The credit is 100% refundable for research and development performed under contract with a prescribed Manitoba institution, including post-secondary institutions, and 50% refundable otherwise.

This change does not impact eligible expenditures made by corporations before April 12, 2017

Paid Work Experience Tax Credit

The Paid Work Experience Tax Credit is a family of tax credits that provides qualified employers with a percentage of the wages and salaries paid to certain types of trainee employees and recent graduates working in Manitoba.

Effective starting with the 2017 tax year, Crown corporations and other provincial government entities are no longer eligible for the Paid Work Experience Tax Credit. 

This does not affect the eligibility of other entities.

Corporation Capital Tax

The Corporation Capital Tax (CCT) is a tax on the annual paid up capital of banks, trust and loan corporations, and crown corporations that have a permanent establishment in Manitoba. 

Taxable corporations do not pay tax on their first $10 million of taxable paid-up capital, and associated corporation must share one $10 million deduction.

The capital tax deduction is eliminated effective for fiscal years ending after April 30, 2017.

Manufacturing Investment Tax Credit

Corporations can earn the Manufacturing Investment Tax Credit on eligible investments in manufacturing plant and equipment.

Effective for qualifying property acquired after April 11, 2017, the non-refundable portion of the Manufacturing Investment Tax Credit (MITC) is reduced from 2% to 1%.

This change does not impact the tax credit on qualified property acquired before April 12, 2017.  The 8% refundable MITC is not impacted by this change.

The following table provides an example of the impact of this change on $1,000 for qualified property.

Manufacturing Investment Tax Credit (MITC)

 

Before April 12, 2017

After April 11, 2017

Capital cost

$1,000

$1,000

Manitoba PST (8%)

     $80

      $80

 

$1,080

$1,080

 

 

 

Refundable MITC (8%)

$(86)

$(86)

Non-refundable MITC
(Down from 2% to 1%)

$(22)

$(11)

 

$(108)

$(97)

 

 

 

Net Capital Cost

$972

$983

Extensions to Existing Tax Credits

Manufacturing Investment Tax Credit

The Manufacturing Investment Tax Credit, scheduled to expire on December 31, 2017, is extended to December 31, 2020.  

This credit supports businesses that purchase qualified plant, machinery and equipment for use in manufacturing or processing in Manitoba.

Mineral Exploration Tax Credit

The Mineral Exploration Tax Credit, scheduled to expire on December 31, 2017, is extended to December 31, 2020.  

This credit supports Manitobans who invest in flow-through shares of qualifying mineral exploration companies and is equal to 30% of investments in flow-through shares.

Book Publishing Tax Credit

The Book Publishing Tax Credit, scheduled to expire on December 31, 2017, is extended to December 31, 2018.  

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.

Interactive Digital Media Tax Credit

The Interactive Digital Media Tax Credit, scheduled to expire on December 31, 2019, is extended to December 31, 2022.  

This credit supports and attracts companies that develop and produce eligible interactive digital media products in Manitoba.

Eliminations to Existing Tax Credits

Corporation Capital Tax

If you did not read this earlier, this tax is now eliminated effective for fiscal years ending after April 30, 2017.

The Co-operative Development Tax Credit

This partially refundable tax credit is available for co-operatives and credit unions that make financial contributions towards co-operative development in Manitoba. 

The Co-operative Development Tax Credit is eliminated for contributions made after April 11, 2017.  

This does not impact unused credits on eligible contributions, which are available to be carried forward.

The Odour Control Tax Credit

This 10% non-refundable corporate tax credit for businesses that invest in capital to control nuisance odours that arise or may arise from the use or production of organic waste.

The Odour Control Tax Credit is eliminated for expenditures made after April 11, 2017.

This does not impact unused credits on eligible expenditures made by businesses before April 12, 2017 that invested in capital property, which are available to be carried forward.

The Nutrient Management Tax Credit

The Nutrient Management Tax Credit is eliminated for expenditures made after April 11, 2017.

This does not impact the carry forward of unused credits for eligible expenditures made before April 12, 2017.

The Riparian Tax Credit

This property tax credit was designed to encourage farm operators to upgrade their management of lakeshores and river and stream banks.

The Riparian Tax Credit is eliminated effective immediately.

This does not impact eligibility for unused credits on five-year commitments made before April 12, 2017 by farm operators and livestock producers to protect a strip along a waterway on agricultural land.

The Neighbourhoods Alive! Tax Credit

This 30% non-refundable tax credit was available to corporations that partnered with charitable organizations to establish new social enterprises in Manitoba.

The Neighbourhoods Alive! Tax Credit is eliminated effective immediately.

There have been no claimants since the inception of the credit in 2011.

The Data Processing Investment Tax Credits

These refundable tax credits include the Data Processing Centre Investment Tax Credit and Data Processing Equipment Investment Tax Credit. 

These credits were introduced to position Manitoba as a location for investment in high-technology data processing; however, they are being eliminated effective immediately.

This does not impact credits earned but which remain unused and eligible to be carried forward by corporations or partnerships for qualified property purchased or leased before April 12, 2017.

Other Measures

(Not related to income tax)

Financial Administration Act & The Affordability Utility Rate Accountability Act

The Financial Administration Act is being amended to account for federal changes to the calculation methodology of the Bank of Canada’s foreign exchange rates. 

The Affordable Utility Rate Accountability Act is repealed for fiscal years after 2016/17.

How Manitoba Compares

The following chart compares top personal and corporate tax rates and sales taxes for all provinces and territories, as announced to April 11, 2017.

 

 

2017 Corporate Tax Rates

 

 

Top 2017 Personal Rates

General
%

M&P
%

Small Business
%

2017 Prov. Sales Tax

B.C.

47.70

26.00

26.00

12.50(2)

7.00

Alta.

48.00

27.00

27.00

12.50

-

Sask.

47.75

27.00(1)

25.00(1)

12.50

6.00(6)

Man.

50.40

27.00

27.00

10.50

8.00

Ont.

53.53

26.50

25.00

15.00

8.00(7)

Qué.

53.31

26.80

26.80

18.50(3) 

9.975(8)

N.B.

53.30

29.00 

29.00

13.50(4)

10.00(7)

N.S.

54.00

31.00

31.00

13.50

10.00(7)

P.E.I.

51.37

31.00

31.00

15.00

10.00(7)

N.L.

51.30

30.00

30.00

13.50

10.00(7)

Yukon

48.00

30.00

17.50

13.50(5)

-

N.W.T.

47.05

26.50

26.50

14.50

-

Nunavut

44.50

27.00

27.00

14.50

-

  1. The general business rate will decrease to 26.5% and the M&P tax rate will decrease to 24.5% effective July 1, 2017.
  2. The small business tax rate will decrease to 13% effective April 1, 2017.
  3. Quebec provides a rate reduction from the small business rate eligible manufacturing small and medium-size enterprises (SMEs).  Where certain conditions are met, the maximum reduction available is 4%, for a combined rate 14.5%.  Note that a lesser reduction from the small business rate may be available to certain manufacturing SMEs where some, but not all conditions are met.
  4. The small business tax rate will decrease to 14% effective April 1, 2017.
  5. The tax rate for M&P profits eligible for the small business deduction is 12%.
  6. The PST increased from 5% effective March 23, 2017.
  7. As part of the HST (combined rates are 15% in New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland & Labrador and 13% in Ontario).
  8. The QST system is harmonized with the GST, though two separate tax systems remain – the GST and the amended QST.  The combined rate is 14.975%.

(Source: Manitoba Government)

"FBC has done a very professional job. Good value for the work that they do for us."
- Henry Nyman, Prince Edward County, ON