Highlights of the 2015 Manitoba Budget

Transcription

1 Highlights of the 2015 Manitoba Budget April 30, 2015 No Today Manitoba Finance Minister Greg Dewar delivered the province s 2015 budget. The budget anticipates a deficit of $422 million for the current year, $328 million for and $185 million in The budget does not include any corporate or personal tax rate changes. However, the budget does increase Manitoba s small business income threshold for the small business deduction by $25,000 and enhances several business incentives, including the Co-op Education and Apprenticeship Tax Credit, Data Processing Investment Tax Credit and provincial film and digital media credits. The budget also announces sales tax changes including an increase in tobacco tax. Highlights of tax measures announced in the budget are summarized below. Business tax Corporate income tax rates No changes to corporate taxes were announced. As a result, Manitoba s corporate income tax rates effective January 1, 2015 remain as follows: Corporate Income Tax Rates As of January 1, 2015 Manitoba Combined Federal and Manitoba General 12.0% 27.0% M&P 12.0% 27.0% Small business 1 0.0% 11.0% 2 1 On first $425,000 of active business income (increases to $450,000 on January 1, 2016) 2 The 2015 federal budget will decrease the federal small business tax rate to 9% (from 11%) over four years, beginning January 1, 2016 Small business income threshold The budget increases Manitoba s small business income threshold for the small business deduction to $450,000 (from $425,000) on January 1, Page 1 of 5

2 Corporation Capital Tax for financial institutions The budget increases the Corporation Capital Tax on banks, trust corporations and loan corporations to 6% (from 5%), beginning for taxation years ending after April 30, Co-op Education and Apprenticeship Tax Credit The budget enhances the Co-op Students Hiring Incentive and high school apprentice component of the Co-op Education and Apprenticeship Tax Credit. The budget expands eligibility for these fully refundable credits to include eligible employers who hire a student in a wide range of registered high school vocational programs that are not connected with the apprenticeship system (e.g., programs in health care, child care, business and hospitality). This refundable tax credit for high school co-op students is worth 25% of eligible wages and salaries, up to a lifetime maximum of $5,000 per student. The budget increases the benefits as follows: High school apprentices 25% of wages and salaries (from 15%), to a maximum of $5,000 per apprentice per level Post-secondary co-op students 15% of wages and salaries (from 10%), to a maximum of $5,000 per student Co-op graduates 15% of wages and salaries (from 5%), to a maximum of $2,500 per graduate for the first two years of employment. Small Business Venture Capital Tax Credit The budget enhances the Small Business Venture Capital Tax Credit by increasing the maximum number of employees to 100 (from 50) and broadening the list of eligible business to include non-traditional farming ventures and brew pubs. These changes take effect for eligible shares issued after April 30, Data Processing Investment Tax Credits The budget broadens the Data Processing Tax Credits to include new data processing centres built in Manitoba and leased to another Manitoba company that is not affiliated with the lessor and will be made available to taxpayers data processing centres built using a business structure other than a corporation. The budget also extends the credit to the end of 2018 (from 2015). This refundable income tax credit is equal to 4.5% of the capital cost of new qualified property that is a building, and 8.0% of the cost of qualified machinery or equipment. Research and Development Tax Credit The budget extends the period for which unused Research and Development Tax Credits can be carried forward after they are earned to 20 years (from 10 years). Page 2 of 5

3 Green Energy Equipment Tax Credit The budget expands the Green Energy Equipment Tax Credit to include biomass fuel energy equipment installed in Manitoba and used in a business. The tax credit rate will be 15%. Credit extensions The budget extends the following existing tax credits: Manitoba Film and Video Production Tax Credit Extended to the end of 2019 (from 2016) Rental Housing Construction Tax Credit Extended to the end of 2019 (from 2017) Cultural Industries Printing Tax Credit Extended to the end of 2018 (from 2015) Interactive Digital Media Tax Credit Extended to the end of 2019 (from 2016) Nutrient Management Tax Credit Extended to the end of 2018 (from 2015). Personal tax Personal income tax rates Manitoba did not announce any changes to its personal income tax rates. As a result of changes to the gross-up factor and federal dividend tax credit rate that applies to non-eligible dividends announced in the 2015 federal budget, the combined Manitoba and federal tax rates for non-eligible dividends will increase between 2015 and The federal and Manitoba top marginal rates for non-eligible dividends are as follows: Federal and Manitoba Top Marginal Tax Rates for Non-Eligible Dividends Manitoba 19.6% 19.4% 19.4% 19.2% 19.1% Federal 21.2% 21.6% 22.2% 22.6% 23.0% Combined 40.8% 41.0% 41.6% 41.8% 42.1% The combined federal and Manitoba top marginal tax rates on income other than non-eligible dividends for 2015 are as follows: Combined Federal/Provincial Top Marginal Rates 2015 Interest and regular income 46.4% Capital gains 23.2% Eligible dividends 32.3% Primary Caregiver Tax Credit The budget increases the Primary Caregiver Tax Credit to a maximum annual amount of $1,400 (from $1,275), beginning in This credit is intended to financial support to Page 3 of 5

4 Manitobans who serve as volunteer primary caregivers to assist care recipients to live independently in their own homes. Community Enterprise Development Tax Credit The budget extends the eligible investment period for the Community Enterprise Development Tax Credit to the first 60 days following the end of the calendar year, beginning January 1, 2015 for the 2014 calendar year. As a result, a shareholder who makes an eligible investment through a qualifying trust that is a registered retirement savings plan can elect to retroactively claim the tax credit in the same taxation year as the deduction for the plan contribution. Volunteer Firefighters and Search and Rescue Volunteers Tax Credits The budget introduces a tax credit for eligible Manitobans who perform at least 200 hours of combined volunteer firefighting and volunteer search and rescue services in a year. These individuals will be eligible to claim a 10.8% non-refundable income tax credit on an amount of $3,000 (to a maximum annual benefit of $324). Other measures Fuel Tax Rebate The budget introduces a fuel tax rebate for qualifying commercial passenger flights that purchase fuel in Manitoba, effective July 1, To qualify, the commercial passenger flight must be regularly scheduled and fly non-stop to a destination outside North America after departing from Manitoba. Tobacco tax The budget increases the Tobacco Tax rate effective midnight, April 30, The rate will increase: Per cigarette 29.5 cents (from 29.0 cents) Fine-cut tobacco 28.5 cents per gram (from 28.0 cents) Raw leaf tobacco 27.0 cents per gram (from 26.5 cents). Sales tax Effective June 1, 2015, the budget makes changes to the sales tax rules to: Expand the exemption for flood prevention and control supplies to include sandbag filling machines Expand the exemption for commercial fishing boats to include related repair parts Clarify that the exemption for goods designed solely for use by a disabled person applies to both physical and mental Page 4 of 5

5 Expand the exemption for film and audio productions for public broadcast to include online video or audio content. Download KPMG s Tax Hub Canada app KPMG s Tax Hub Canada app provides timely and convenient tax news to your iphone, ipad, BlackBerry and Android. Download now. We can help Your KPMG adviser can help you assess the effect of the tax changes in this year s Manitoba budget on your personal finances or business affairs, and point out ways to take advantage of their benefits or ease their impact. We can also keep you abreast of the progress of these proposals as they make their way into law and help you bring any concerns you may have to the attention of the Manitoba Ministry of Finance. Information is current to April 30, The information contained in this TaxNewsFlash-Canada is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG s National Tax Centre at KPMG LLP, an Audit, Tax and Advisory firm (kpmg.ca) and a Canadian limited liability partnership established under the laws of Ontario, is the Canadian member firm of KPMG International Cooperative ( KPMG International ). KPMG member firms around the world have 162,000 professionals, in 155 countries. The independent member firms of the KPMG network are affiliated with KPMG International, a Swiss entity. Each KPMG firm is a legally distinct and separate entity, and describes itself as such. KPMG's Canadian web site is located at KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. The KPMG name, logo and cutting through complexity are registered trademarks or trademarks of KPMG International. Page 5 of 5