Manitoba Budget Announcement - 2019 MANITOBA BUDGET ANNOUNCEMENT - 2019 MANITOBA BUDGET HIGHLIGHTS On Thursday, March 7, 2019, Manitoba Finance Minister Scott Fielding presented the province’s 2019 Budget. Entitled “Getting the Job Done,” Budget 2019 delivers no new tax increases and projects a summary deficit of $360 million for the 2019/2020 fiscal year. A. Corporate Tax Measures Corporate Tax Rates No new corporate income tax rate changes have been announced in this year’s budget. The current corporate income tax rates for 2019 are outlined below: Small Business Rate General Rate Rate Threshold Non M&P M&P Federal 9.0% $500,000 15.0% 15.0% Manitoba 0.0% $500,000 12.0% 12.0% Manufacturing Investment Tax Credit (MITC) Effective for qualifying property acquired after June 30, 2019, the refundable portion of the MITC is reduced from 8 percent to 7 percent. The 1 percent non-refundable MITC is not affected by this change, therefore, the total credit is now 8 percent (7 percent refundable and 1 percent non-refundable). Extensions to Existing Tax Credits The following tax credits are extended: • The Film and Video Production Tax Credit, set to expire on December 31, 2019, is made permanent with no fixed expiry date. • The Small Business Venture Capital Tax Credit, scheduled to expire on December 31, 2019, is extended for three years to December 31, 2022. • The Book Publishing Tax Credit, scheduled to expire on December 31, 2019, is extended for five years to December 31, 2024. • The Cultural Industries Printing Tax Credit, scheduled to expire on December 31, 2019, is extended for one year to December 31, 2020. In addition, the annual maximum tax credit claim is capped at $1.1 million per taxpayer. B. Personal Tax Measures Personal Tax Rates No new personal income tax rate changes have been announced in this year’s budget. The top marginal personal income tax rate for Manitoba is 17.40 percent for 2019. The current top combined federal and Manitoba marginal rates for 2019 are outlined below: Salary, business income, interest 50.40% Capital gains 25.20% Eligible dividends 37.78% Non-eligible dividends 46.67% MANITOBA BUDGET ANNOUNCEMENT - 2019 Basic Personal Amount The Manitoba Basic Personal Amount will be indexed to $9,626 in 2019 and to $9,809 in 2020. Indexing of personal income tax brackets to inflation also continues as previously announced. C. Other Tax Measures Retail Sales Tax The general retail sales tax rate will decrease from 8 percent to 7 percent, effective July 1, 2019. The current list of sales tax exemptions will be maintained. The existing reduced rate of sales tax charged on electricity used in manufacturing, mining and processing operations in Manitoba will decrease from 1.6 percent to 1.4 percent, effective July 1, 2019. It was further announced that the federal carbon tax that is scheduled to be levied on natural gas and coal beginning on April 1, 2019, will be exempted from the Manitoba retail sales tax. Fuel Tax Exemption The fuel tax exemption for the forestry industry has been expanded to include mill site equipment used for log handling and processing, effective June 1, 2019. D. Administrative and Technical Tax Measures Provincially Administered Taxation Statutes As part of ongoing efforts to increase efficiency, the following requirements will commence in 2020: • All businesses will be required to file, remit and pay the Fuel Tax, Tobacco Tax and Health and Post-Secondary Education Tax Levy electronically. • Larger businesses remitting or paying retail sales tax of $5,000 or more per month will be required to file, remit and pay electronically. • Commissions will not be paid to any business filing monthly retail sales tax returns; there is no impact on businesses filing quarterly or annual returns under $3,000 per filing period. The Income Tax Act (Manitoba) Amendments are being made to parallel federal tax measures affecting private corporations and their shareholders, known as the Tax on Split Income (TOSI) rules. However, Manitoba will not harmonize with the TOSI rules related to various provincial refundable tax credits that would otherwise be impacted. Consequential amendments will also be made to the province’s pension income amount provisions to include income security benefits received under the Veterans’ Well-Being Act, to align with federal income tax amendments from 2018. Further changes include: • Employee Share Purchase Tax Credit legislative and program delivery authority has been transferred from Manitoba Finance to Manitoba Growth, Enterprise and MANITOBA BUDGET ANNOUNCEMENT - 2019 Trade. Provisions will be added to assign certain compliance authorities to Manitoba Finance. • Paid Work Experience Tax Credit provisions are being updated to reflect current legislative requirements. • Primary Caregiver Tax Credit provisions are being amended to align the registration due date with the personal income tax return filing due date. • Small Business Venture Capital Tax Credit regulatory amendments have been implemented to expand the share issuance registration period from six months to 12 months. ABOUT MNP MNP is a leading national accounting, tax and business consulting firm in Canada. We proudly serve and respond to the needs of our clients in the public, private and not-for-profit sectors. Through partner-led engagements, we provide a collaborative, cost-effective approach to doing business and personalized strategies to help organizations succeed across the country and around the world. Manitoba Region Contacts SOUTHERN MANITOBA Michael Poole T: 204.571.7641 Matt Bolley T: 204.571.7651 Stino Scaletta T: 204.571.7663 WINNIPEG Derek Innis T: 204.788.6093 Greg Huzel T: 204.336.6136 Trevor Sprague T: 204.336.6155 Jim Zihrul T: 204.336.6137 Todd Jenkins (International Tax) T: 204.336.6175 Visit us at MNP.ca Praxity AISBL is a global alliance of independent firms. Organised as an international not-for-profit entity under Belgium law, Praxity has its executive office in Epsom. 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