Manitoba Budget Report 2019

Manitoba Budget Report 2019

On March 7, 2019, the Honourable Scott Fielding presented his first budget as Minister of Finance. The budget contains several tax measures affecting individuals and corporations.

The 2018-2019 deficit is estimated to be $470 million. The budgeted deficit is estimated to be $360 million for 2019-2020, with revenues projected to increase by 1.4% and expenditures projected to increase by 0.3%.

Highlights

  • Deficit of $470 million projected for 2018-19
  • Deficit of $360 million forecast for 2019-20
  • Manitoba Sales Tax Rate will be reduced from 8% to 7%, effective July 1, 2019.

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Personal Tax Measures

Manitoba did not announce any changes to its personal income tax rates for 2019. 

As a result, 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

 

2018

2019

Interest and regular income

50.40%

50.40%

Capital gains

25.20%

25.20%

Eligible dividends

Non-Eligible dividends

37.78%

45.92%

37.78%

46.67%

 

2018/2019 Manitoba Personal Tax Rates

Brackets

2018 Tax Rate

Brackets

2019 Tax Rates

$0 to 31,843

10.80%

$0 to $32,670

10.80%

$31,843 to 68,821

12.75%

$32,670 to $70,610

12.75%

Over $68,821

17.40%

Over $70,610

17.40%

For taxable income in excess of $95,259, the 2019 combined federal-Manitoba personal income tax rates are outlined as follows:

Combined 2019 Federal & Manitoba Personal Tax Rates

Bracket

Ordinary
Income

Eligible Dividends

Ineligible Dividends

$95,259 to $147,667

43.40%

28.12%

38.62%

$147,677 to $210,371

46.40%

32.26%

42.07%

Above $210,371

50.40%

37.78%

46.67%


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Ineligible Dividends

The top marginal rate for ineligible dividends is higher than in 2018 as a result of the decrease in the federal tax rate on small business corporations.

Personal Tax Credits:  Basic Personal Amount

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

Effective for the 2019 tax year, the basic personal amount will be increased from $9,382 to $9,626, and for the 2020 tax year it will be increased from $9,626 to $9,809.

Tax on Split Income (TOSI)

Manitoba intends to harmonize with the federal “TOSI” (tax on split income) rules implemented in 2018. These rules are designed to tax certain types of income at the top federal rate if the income was paid by a related business to family members with lower income. Manitoba residents will pay tax at the top rates noted above if these rules apply.

Personal Tax Credits For 2018

The maximum tax credit amounts and actual Manitoba tax credits for 2018 and 2019 are set out below.

Manitoba Non-Refundable Tax Credits

 

2018

2019

Maximum Amount

Manitoba
Tax Credit

Maximum Amount

Manitoba Tax Credit

Basic Personal Amount

$9,382

1,013

$9,626

1,040

Spousal Amount

9,382

1,013

9,626

1,040

Eligible dependent amount

9,382

1,013

9,626

1,040

Age amount

3,728

403

3,728

403

Infirm dependent amount

3,605

389

3,605

389

CPP Contributions

2,594

280

2,749

297

EI Contributions

858

93

860

93

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)

Manitoba did not announce any changes to its corporate income tax rates for 2019.  As a result, Manitoba’s corporate income tax rates remain as follows:

Corporate Tax Rates

 

2018

2019

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 $450,000 of active business income (on first $500,000 of active business income, as of January 1, 2019)

** On 24 October 2017, the federal government tabled a notice of ways and means motion to implement reductions in the small-business corporate income tax rate, which were announced on 16 October 2017. The federal small-business rate is reduced from 10.5% to 10.0% effective 1 January 2018 and will be further reduced to 9.0% effective 1 January 2019.

Manufacturing Investment Tax Credit

The refundable portion of the Manufacturing Investment Tax Credit will be reduced from 8% to 7% for qualified property acquired on or after July 1, 2019. This change will not affect the 1% non-refundable Manufacturing Investment Tax Credit.

This measure is intended to ensure alignment of the refundable credit with the retail sales tax rate reduction.

Extensions to Existing Tax Credits

Book Publishing Tax Credit

The Book Publishing Tax Credit, scheduled to expire on December 31, 2019, is extended to December 31, 2024.  

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.

Cultural Industries Printing Tax Credit

The Cultural Industries Printing Tax Credit, scheduled to expire on December 31, 2019, is extended for 5 years to December 31, 2024.

This program assists the development of Manitoba’s printing industry.

The Film and Video Production Tax Credit

The Film and Video Production Tax Credit, scheduled to expire on December 31, 2019.  This credit has been made permanent. 

This program assists the development of Manitoba’s film and video production.

The Small Business Venture Capital Tax Credit

The Small Business Venture Capital Tax Credit, set to expire on December 31, 2019, has been extended to December 31, 2022.

This credit is available to individuals and corporations that acquire equity capital in eligible Manitoba enterprises.

Retail Sales Tax

The Manitoba retail sales tax rate will be reduced from 8% to 7%, effective July 1, 2019.

There are only three provinces that currently have a provincial retail sales tax, and this change will put Manitoba’s rate in line with that of British Columbia and higher than Saskatchewan’s 6% rate.

The delay in the rate change until July is intended to give businesses time to change their point-of-sale systems.

It is estimated by the government that this amendment will save the average household of four individuals $239 in 2019, and approximately $500 annually thereafter.

The retail sales tax will not be applied to the federal carbon tax that is scheduled to be levied on natural gas and coal beginning on April 1, 2019.

Effective 2020, large businesses with retail sales tax remittances greater than $5,000 per month will be required to file returns electronically.

Administrative and Technical Tax Measures

As part of the Manitoba Government’s ongoing efforts to increase efficiency and reduce administrative burden, commencing in 2020:

  • With respect to the fuel tax, tobacco tax, and health and post-secondary education tax levy, all businesses will be required to file, remit and pay electronically.
  • For businesses remitting or paying retail sales tax of $5,000 or more per month, filing, remittances and payment will be required electronically.

Other Measures (Not Related to Income Tax)

Expanded Fuel Tax Exemption for the Forestry Industry

Effective 1 June 2019, the exemption will be expanded to include mill site equipment operated for log handling and processing.

Interprovincial Comparison of Tax Rates

(Applicable to end of 2019/2020)
As of February 20, 2019

 

CAN

BC

AB

SK

MB

ON

Personal Income Tax

 

 

 

 

 

 

      Basic Personal Amount

$12,069

$10,682

$18,369

$16,065

$9,626

$10,582

      Top rate (%)

33

16.80

15

14.50

17.40

20.53

 

 

 

 

 

 

 

Health Care Premiums

 

$450

 

 

 

$900

Health and Education Tax (%)

 

1.95%

 

 

2.15%

1.95%

 

 

 

 

 

 

 

Corporate Income Tax (%)

 

 

 

 

 

 

     Small

9

2

2

2

0

3.50

     Large

15

12

12

12

12

11.50

     Manufacturing

15

12

12

10

12

10

     Small business limit ($000)

500

500

500

600

500

500

 

 

 

 

 

 

 

Capital Tax on Banks (%)

 

 

 

4

6

 

 

 

 

 

 

 

 

Sales Tax (%)

5

7

 

6

7 C

8

 

 

 

 

 

 

 

Fuel Tax

 

 

 

 

 

 

     Gasoline (cents/ltr)

10

14.5

13

15

14

14.7

     Diesel (cents/ltr)

4

15

13

15

14

14.3

 

 

 

 

 

 

 

Carbon Tax

 

B

 

 

 

 

     Gasoline (cents/ltr)

4.42

8.89

6.73

0

0

0

     Diesel (cents/ltr)

5.37

10.23

8.03

0

0

0

Interprovincial Comparison of Tax Rates (cont’d)

(Applicable to end of 2019/2020)
As of February 20, 2019

 

QC

NB

NS

PE

NL

Personal Income Tax

 

 

 

 

 

      Basic Personal Amount

$15,269

$10,264

$8,481

$9,160

$9,414

      Top rate (%)

25.75

20.3

21

16.7

18.3

 

 

 

 

 

 

Health Care Premiums

 

 

 

 

 

Health and Education Tax (%)

4.26%

 

 

 

2.00%

 

 

 

 

 

 

Corporate Income Tax (%)

 

 

 

 

 

     Small

6

2.5

3

3.5

3

     Large

11.6

14

16

16

15

     Manufacturing

11.6

14

16

16

15

     Small business limit ($000)

500

500

500

500

500

 

 

 

 

 

 

Capital Tax on Banks (%)

 

5

4

5

6

 

 

 

 

 

 

Sales Tax (%)

9.975

10

10

10

10

 

 

 

 

 

 

Fuel Tax

 

 

 

 

 

     Gasoline (cents/ltr)

19.2

15.5

15.5

13.1

20.5

     Diesel (cents/ltr)

20.2

21.5

15.4

20.2

21.5

 

 

 

 

 

 

Carbon Tax

 

 

 

B

D

     Gasoline (cents/ltr)

 

 

 

4.42

4.42

     Diesel (cents/ltr)

 

 

 

5.37

5.37

  1. Beginning on April 1, 2019, the federal government’s carbon pricing backstop will apply in any jurisdiction that does not comply with the benchmark.
    As of January 1, 2019 the backstop is expected to apply in MB, SK, ON and NB. 
    NL and PE indicated they will be matching the federal rates. 
    QC and NS are utilizing a cap and trade system.
  2. BC and PE carbon rate effective April 1, 2019.
  3. MB retail sales tax effective July 1, 2019.
  4. NL carbon tax rate effective January 1, 2019.

(Source: Manitoba Government)

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