The Manitoba Provincial Budget, announced on March 25, 2009, largely confirmed last year's tax initiatives, but little else new, as outlined by Knowledge Bureau President Evelyn Jacks in her report from yesterday's Budget Lockup, commentary on province-wide CJOB radio and the Mapping Manitoba Post-Budget budget analysis:
TAX PROVISIONS IN THE BUDGET - By Evelyn Jacks
Good for Business, Ignores Storm Clouds
The very best that can be said about this year's Manitoba provincial budget is its continued support of lower tax rates for Manitoba businesses; the worst that it continues to subject individual taxpayers to bracket creep, a high tax rate on incomes over $67,000 and a tax free zone that continues to tax non-discretionary income for the working poor at a time when an economic stimulus is desired for all. Details follow:
Personal Tax Brackets and Rates (Line 428 on the Federal Return): For individuals there are no new changes over those announced last year. Noteworthy is that by 2010 the lowest provincial tax rate will be 10.70% and by 2011-10.50%. But it is in the failure to move on the indexation of tax brackets that Manitobans really lose out, a situation that can worsen if we are subjected to higher inflation rates in the future. This is, in fact, a hidden tax on the poor and in a time when economic stimulus is desired to aid ailing economies, counter-productive. Here's how Manitoba compares with other provinces:
Provincial Tax Brackets and Rates for 2009
Province
Tax Brackets
Rate
Surtax
British Columbia
$0 to $35,716$35,717 to $71,433$71,434 to $82,014$82,015 to $99,588Over $99,588
5.06%7.70%10.5%12.29%14.7%
Alberta
Flat tax of
10%
Saskatchewan
Up to $40,113$40,114 to $114,610Over $114,610
11.0%13.0%15.0%
Manitoba
$0 to $31,000$31,001 to $67,000Over $67,000
10.8%12.75%17.4%
Ontario
$0 to $36,848$36,849 to $73,698Over $73,698
6.05%9.15%11.16%
20% > $4,25736% > $5,370
Lagging Tax Free Zones. As mentioned, Manitoba continues to tax non-discretionary income of the working poor sooner than any province in Canada, as demonstrated below. The zero provincial tax rate represents the maximum income with no provincial tax for a single person, and includes all refundable and non-refundable credits that don't rely on other actions ñ like rent or property taxes, etc.
Province
Basic Personal Amount
Income for Zero Provincial Tax
BC
$ 9,373.00
$17,200
AB
$16,775.00
$16,775
SK
$13,269.00
$13,269
MB
$ 8,134.00
$10,020
ON
$ 8,881.00
$12,010
NB
$ 8,605.00
$14,020
NS
$ 7,981.00
$11,150
PE
$ 7,708.00
$10,260
NL
$ 7,778.00
$12,450
YT
$10,100.00
$10,100
NT
$12,664.00
$12,664
NU
$11,644.00
$11,644
Refundable Tax Credits (Line 479 on the Federal Return): Following the comments above, Manitoba's refundable tax credit system has featured a series of refundable tax credits that are income tested; now a new one will be added and it will not be income tested.
The Primary Caregiver Tax Credit will take effect in 2009 and provide volunteer primary caregivers, who are in that role for more than three consecutive months, will receive a refundable credit of $85 a month to a maximum of $1,020 for the year. The credit may be earned for no more than three qualifying dependants in the year. Qualifying dependants are a spouse, other relative, neighbour or friend who qualifies for Manitoba Home Care. Only one person may be the primary caregiver at any one time.
Other refundable Tax Credits. The following modest increases were announced to take effect in 2009, and in the only significant personal tax change over last year's announcements, the Education Property Tax Credit is increased from $600 in 2008 to $650 in 2009:
Provision
2008
2009
Basic Personal Credit for Self or Spouse
$190
$195
Age Credit for Self or Spouse
$110
$113
Disability Credit for self, spouse or dependant
$110
$113
Disability Credit for Dependants
$60
$62
Credit for Dependent Children
$25
$26
Education Property Tax Credit
$600
$650
Good News for Business. For Corporations, the general corporate tax rate will fall from 14% to 13% on July 1, 2008 and again to 12% on July 1, 2009. The goal is to drop the rate to 11% sometime after this, but that was not confirmed in this budget.
The Small Business Rate charged on taxable income under $400,000 will be reduced from 3% to 2% in 2008 and then to 1% in 2009, falling to 0% in 2010.
In addition the following provisions were announced:
Interactive Digital Media Tax Credit. This new credit, announced in 2008, is available to corporations which produce interactive digital media projects in Manitoba, including videos and games and educational media/webcasts. The maximum credit on an eligible project is $500,000 and it is calculated as 40% of the remuneration paid to Manitobans on eligible projects as approved by Manitoba Science, Technology, Energy & Mines.
Book Publishing Tax Credit, also introduced in 2008, will provide 40% of eligible Manitoba labour costs including non-refundable author advances, salaries for editing, design and project management, fees paid to freelances for editing, design, research, artwork and development of prototypes. A maximum of $100,000 credit is available and at least 2 books must be published after April 9, 2008 and before 2012. When paper with a 30% recycled content is used a further 10% of Manitoba printing costs qualifies for the credit. This budget confirmed that books published in the time period April 9, 2008 to 2012 will qualify as well as those for which agreements had been entered into in this period.
Co-Op Education and Apprenticeship Tax Credits. A journeypersons Hiring Incentive became available last year for hirings after April 9, 2008 amounting to 5% of wages and salaries paid up to $2500. A Certificate of Qualification must have been received after this date and the employee must have been hired within 18 months of certification. A new component called the Advanced-Level Apprentices Hiring Incentive was introduced in December 2008 to ease bottlenecks in high demand trades. To be eligible the employer must hire an apprentice enrolling at an advanced level on January 1, 2009 or later and before the end of 2011. This is a fully refundable credit.
Film and Video Production Tax Credit. After 2007 a 5% Producer bonus is introduced as well as a Frequent Filming bonus. Eligible salaries paid to non-residents for work in Manitoba is increased from 20% to 30%.
Manufacturing Investment Tax Credit. A generous increase from 35% to 70% comes into effect retroactively on January 1, 2008 and this credit will be available until December 31, 2011.
The Community Enterprise Investment and Development Tax Credits. The se credits have been enhanced based on their fully subscribed status last year. The Community Enterprise Investment Tax Credit is a non-refundable one equal to 30% on a maximum $450,000 investment in equity capital, available to both individual and corporate investors who acquire equity capital in emerging enterprises after 2007 and 2011. The maximum annual approval limit for this program has been doubled to $33,000,000 starting in 2009.
The value of issuable shares that a business can apply for under the Community Enterprise Development Tax Credit has doubled from $500,000 to $1 Million, starting in 2009. This is a non-refundable personal income tax credit equal to 30% on a maximum $30,000 investment.
Other significant provisions:
The Home Buyer's Plan withdrawal limit from RRSPs will increase to $25,000 to mirror the federal tax changes.
CCA Rate On Manufacturing And Processing Machinery And Equipment is written off on a 50% straight line basis if acquired after March 18, 2007 and this rate change will continue as per the federal budget changes, on acquisitions before 2012.
CCA on computer hardware and systems software acquired in 2009 and 2010 will qualify for 100% CCA rates.
Corporation Capital Tax for manufacturing and processing companies will be eliminated effective July 1, 2008. There are phased in reductions in the tax from 2009 to December 31, 2010 when the tax will be eliminated for those corporations as well.
Retail sales tax exemptions: Service to direct agents (manufacturing process), welding tips & nozzles, rolls used in pulp and paper industries. Starting May 1, 2009 the sales tax exemption for books is expanded to include educational workbooks.
Tax on Coal Emissions: will be effective July 1, 2011.
Fuel Tax Changes; Effective July 1, 2009 the aviation fuel tax rate for domestic cargo flights will be reduced from 3.2 cents to 0.5 cents per litre and the fuel tax exemption for international flights is expanded to include direct and indirect cargo flights to and from the US, staring July 1, 2009. The fuel tax exemption for forestry companies is expanded effective May 1, 2009 to include fuel used for forest renewal.
Next time: Some Future Budget Considerations
