2022 Manitoba provincial budget tax highlights
On April 12, the Manitoba government released their 2022 budget. The following are highlights of the key tax measures.
Personal tax measures
No personal income tax rate changes were announced in this year’s budget. The current personal combined income tax rates for 2022 are outlined below:
|
Personal (combined) federal and MB top marginal tax rates |
|
|
|
Rate |
|
Interest/regular income |
50.40% |
|
Capital gains |
25.20% |
|
Eligible dividends |
37.78% |
|
Non-eligible dividends |
46.67% |
Residential Renters Tax Credit
Effective starting in the 2022 taxation year, Manitoba will replace the renters’ component of the Education Property Tax Credit with a new tax credit that will apply to renters of residential properties. The new credit will fix the annual claim amount at $525 and will no longer be calculated based on 20% of annual rents paid and will instead be calculated as a fixed monthly maximum claim amount, based on the number of months spent renting in a given year. The monthly amount will be $43.75 and will not be income tested.
Education Property Tax
Manitoba continues to phase out the Education Property taxes by increasing the Education Property Tax rebate. The rebate for residential and farm properties will increase to 37.5 per cent in 2022 (25 per cent in 2021) and 50 per cent in 2023, while other properties will continue to get rebates of 10 per cent.
Rebates are calculated based on the gross education property taxes on property tax statements, including both the school division special levy and the education support levy. Property owners will continue to pay education property taxes, but will receive the Education Property Tax rebate cheque in the same month that municipal property taxes are due. No application is necessary, and cheques will be sent automatically.
Corporate tax measures
No corporate income tax rate changes were announced in this year’s budget. The current corporate income tax rates for 2022 are outlined below:
|
|
Small business corporations |
General corporations |
||
|
|
Rate |
Threshold |
Non-M&P |
M&P |
|
Manitoba |
0.0% |
$500,000 |
12.0% |
12.0% |
|
Combined Federal and Manitoba |
9.0% |
$500,000 |
27.0% |
27.0% |
Health and Post-Secondary Education Tax Levy
Effective January 1, 2023, the Health and Post-Secondary Education Tax Levy, which is imposed on wages paid (i.e., payroll tax) by employers with a permanent establishment in Manitoba, will be reduced.
- The exemption threshold is increased from $1.75 million to $2.0 million of annual remuneration, and
- The annual payroll threshold at which employers pay a reduced rate is increased from $3.5 million to $4.0 million
The sectors that will primarily benefit from the reduced levy will be construction, manufacturing, retailers, wholesalers, professionals and restaurants.
Fuel tax exemption for peat harvesting equipment
Effective May 1, 2022, fuel used in off-road operation of peat harvesting equipment is exempt from Manitoba’s Fuel Tax.
Small Business Venture Capital Tax Credit
Scheduled to expire on December 21, 2022, this tax credit will be made permanent. It provides a non-refundable Manitoba tax credit of up to 45 per cent to individuals and corporations who acquire equity capital in eligible Manitoba enterprises.
Community Enterprise Development Tax Credit
Scheduled to expire on December 21, 2022, this tax credit will be made permanent. It provides a refundable Manitoba tax credit of up to 45 per cent to individuals and corporations who acquire equity capital in community-based enterprises in Manitoba
Other tax measures
Vehicle registration fees
Vehicle registration fees for most non-commercial vehicles will be reduced by a further $10 starting with renewals after June 30, 2022. The vehicle registration fee reduction applies to most types of non-commercial vehicles, such as passenger vehicles, trucks, trailers and motorcycles/mopeds.
Administrative tax measures
Tax on Split Income (TOSI)
Based on an issue identified by the federal government with provincial income tax acts, a minor change will be made to eliminate potential confusion regarding how federal provisions respecting tax on split income will apply to individuals in Manitoba.
Research and Development Tax Credit
A change will be made to align the Research and Development Tax Credit with extended filing deadlines made by order under the Income Tax Act (Canada) in response to COVID-19.
Film and Video Production Tax Credit
Minor changes will be made to confirm that film producers are able to get advance credits prior to a film being completed, provided that proper documentation is submitted.
Tax credit validation
An extended service agreement will be entered into with the Canada Revenue Agency to undertake increased scrutiny and validation of Manitoba tax credits, following unusually high – and potentially improper – claims for certain credits. This builds upon work done in 2021 regarding 2020 tax returns where unusually high claims for some tax credits were found to be invalid.
Statutory limitations
Changes will establish a statute of limitations on audits and requests for change by taxpayers on taxes collected and administered by Manitoba Finance.
Next steps
Contact your Baker Tilly advisor to learn more about how we can help you navigate the complexities of the Canadian tax system.
Information is current to April 19, 2022. The information contained in this release 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.