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Tax Alert 2023 No. 09, 8 March 2023
“From historic investments to help better serve seniors, singles and families to historic tax changes that will help Manitobans make ends meet, this budget is about doing everything possible for Manitobans at a time when they need it most.”
Manitoba Finance Minister Cliff Cullen
2023-24 budget speech
On 7 March 2023, Manitoba Finance Minister Cliff Cullen tabled the province’s fiscal 2023–24 budget. The budget contains several tax measures affecting individuals and corporations.
The minister anticipates a deficit of $378 million and $363 million for the 2022-23 and 2023-24, respectively, and projects deficits for each of the next three years.
Following is a brief summary of the key tax measures.
Business tax measures
Corporate income tax rates
No changes are proposed to the corporate income tax rates or the $500,000 small-business limit.
Manitoba’s 2023 corporate income tax rates are summarized in Table A.
Table A – 2023 Manitoba corporate income tax rates1
|
Manitoba |
Federal and Manitoba combined |
|
|---|---|---|
|
Small-business tax rate2 |
0.00% |
9.00% |
|
General corporate tax rate2, 3 |
12.00% |
27.00% |
1 The rates represent calendar-year-end rates unless otherwise indicated.
2 The corporate income tax rates for manufacturers of qualifying zero-emission technology are reduced to 7.5% for eligible income otherwise subject to the 15% general corporate income tax rate or 4.5% for eligible income otherwise subject to the 9% small-business corporate income tax rate.
3 An additional tax applies to banks and life insurers at a rate of 1.5% on taxable income (subject to a $100 million exemption to be shared by group members), effective for taxation years ending after 7 April 2022 (prorated for taxation years straddling this effective date).
Other business tax measures
The minister also proposed changes to the following tax credits:
- The Mineral Exploration Tax Credit, previously set to expire on 31 December 2023, has been made permanent;
- The Green Energy Equipment Tax Credit, previously set to expire on 30 June 2023, has been made permanent; and
- Effective 1 April 2023, eligible labour expenditures for the Interactive Digital Media Tax Credit have been expanded to allow for more forms of employee compensation and incentives.
Personal tax
Personal income tax rates
The budget does not include any changes to personal income tax rates; however, the budget does include changes to the tax bracket thresholds. Manitoba’s tax bracket thresholds will increase to $47,000 and $100,000 effective for the 2024 tax year, with a return to annual indexing in 2025.
The 2023 and 2024 Manitoba personal income tax rates are summarized in Table B.
Table B – 2023 and 2024 Manitoba personal income tax rates
|
2023 |
2024 |
||||||||
|---|---|---|---|---|---|---|---|---|---|
|
First |
Second |
Third |
First bracket rate |
Second |
Third |
||||
|
$0 to $36,842 |
$36,843 to $79,625 |
Above $79,625 |
$0 to $47,000 |
$47,001 to $100,000 |
Above $100,000 |
||||
|
10.80% |
12.75% |
|
10.80% |
|
17.40% |
||||
For taxable income in excess of $106,717, the 2023 combined federal – Manitoba personal income tax rates are outlined in Table C.
Table C – Combined 2023 federal and Manitoba personal income tax rates
|
Bracket |
Ordinary income1 |
Eligible dividends |
Non-eligible dividends |
||||
|---|---|---|---|---|---|---|---|
|
$106,718 to $165,430 |
|
|
38.62% |
||||
|
$235,676 to $500,000 |
45.80% |
|
41.52% |
||||
|
46.72% |
32.70% |
42.44% |
||||
|
Above $235,675 |
50.40% |
37.78% |
46.67% |
||||
1 The rate on capital gains is one-half the ordinary income tax rate.
2 The federal basic personal amount comprises two elements: the base amount ($13,521 for 2023) and an additional amount ($1,479 for 2023). The additional amount is reduced for individuals with net income in excess of $165,430 and is fully eliminated for individuals with net income in excess of $235,675. Consequently, the additional amount is clawed back on net income in excess of $165,430 until the additional tax credit of $222 is eliminated; this results in additional federal income tax (e.g., 0.32% on ordinary income) on net income between $165,431 and $235,675.
Personal tax credits
The budget proposes to increase the basic personal amount from $10,855 to $15,000 for 2023.
Other tax measures
Health and Post-Secondary Education Tax Levy
- Effective 1 January 2024, the exemption threshold for the Health and Post-Secondary Education Tax Levy is increased from $2 million to $2.25 million of annual remuneration. In addition, the threshold below which employers pay a reduced effective rate is increased from $4 million to $4.5 million.
Property tax
- As previously announced, the Education Property Tax Rebate will increase from 37.5 percent to 50 per cent for 2023 for residential and farm properties, saving the average homeowner $774 in 2023.
Administrative tax measures
- Mineral Exploration Tax Credit - Amendments will be made to the Manitoba Income Tax Act to align with changes made to the federal Income Tax Act to ensure critical mineral exploration expenses continue to be eligible for the Mineral Exploration Tax Credit.
- Provincial administered tax refunds - Alignment of the tax refund limit period with the audit period for provincially-administered taxes for tax audits that result in a refund.
Learn more
For more information, please contact your EY or EY Law advisor or one of the following professionals:
Jason Burbank
+1 204 933 0240| jason.a.burbank@ca.ey.com
Matthew Lapka
+1 204 954 5541 | matthew.lapka@ca.ey.com
Nina Pekach
+1 204 933 0279 | nina.pekach@ca.ey.com
Download this tax alert
Budget information: For up-to-date information on the federal, provincial and territorial budgets, visit ey.com/ca/Budget.