On April 7, 2021, the Manitoba government released its 2021 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 2021 are outlined below:

Teaching Expense Tax Credit

Effective as of the 2021 taxation year, Manitoba will introduce a new tax credit that will apply to purchases of eligible teaching supplies made by educators that are not reimbursed by their employer. The new Manitoba tax credit will be 15 per cent refundable for up to $1,000 in supplies ($150 maximum refund) and will parallel the eligibility criteria of the existing federal eligible educator school supply tax credit.

Education property tax

Manitoba will begin phasing out the education property taxes included on annual property tax statements. The following education property tax rebates will be provided to property owners in 2021:

• Owners of residential and farm properties will receive a 25 per cent rebate of the school division special levy and the community revitalization levy.
• Owners of other properties (such as commercial, industrial, railway, institutional, pipelines and designated recreational) will receive a 10 per cent rebate of the total of 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 municipal property taxes are due (or earlier). No application will be necessary by property owners, as the education property tax rebate will automatically be sent by the province. Farm property owners will still be required to apply for the Farmland School Tax Rebate (FSTR).

Existing education property tax offsets, including the Education Property Tax Credit and Advance, the Seniors School Tax Rebate, the Seniors Education Property Tax Credit and the Farmland School Tax Rebate will be proportionately reduced by 25 per cent in 2021.

Corporate tax measures

No corporate income tax rate changes were announced in this year’s budget. The current corporate income tax rates for 2021 are outlined below:

Health and Post-Secondary Education Tax Levy

Effective January 1, 2022, the exemption threshold for the Health and Post-Secondary Education Tax Levy is raised from $1.5 million to $1.75 million of annual remuneration. In addition, the threshold below which employers pay a reduced rate is raised from $3.0 million to $3.5 million.

Interactive Digital Media Tax Credit

Effective as of the 2021 taxation year, the eligible activities for the Interactive Digital Media Tax Credit (IDMTC) will be expanded to allow add-on digital media and content (such as downloadable content), ongoing maintenance and updates and data management and analysis that are complementary to the main product being developed. 

Small Business Venture Capital Tax Credit

Effective as of the 2021 taxation year, the maximum investment by an investor eligible for the Small Business Venture Capital Tax Credit increases from $450,000 to $500,000. In addition, the maximum tax credit claimable against Manitoba income tax in a given year increases from $67,500 to $120,000.

Film and Video Production Tax Credit

Manitoba producers that produce three or more productions in a two-year period are eligible for a frequent filming bonus of 10 per cent. The frequent filming bonus is temporarily paused for two years due to the COVID-19 pandemic and the impact of public health orders on production activity. All companies that were eligible for the bonus on March 31, 2020 will have that status remain in effect until March 31, 2022, at which point their frequent filming status resumes. For those production companies that continue to produce, their time period continues as normal so as to not disadvantage them.

Extensions to existing tax credits

The Interactive Digital Media Tax Credit – Originally scheduled to expire on December 31, 2022, this has been made permanent. This tax credit provides interactive digital media companies with an up to 40 per cent refundable credit on eligible project costs incurred to develop an interactive digital media product in Manitoba.

The Manitoba Book Publishing Tax Credit – Scheduled to expire on December 31, 2024, this has been made permanent. This tax credit provides Manitoba book publishers with a 40 per cent refundable credit on eligible Manitoba labour costs.

The Cultural Industries Printing Tax Credit – Scheduled to expire on December 31, 2021, this has been extended for one year to December 31, 2022. This tax credit provides Manitoba’s printing industry with a 35 per cent refundable credit on salary and wages paid to Manitoba employees.

The Community Enterprise Development Tax Credit – Scheduled to expire on December 31, 2021, that has been extended for one year to December 31, 2022. This tax credit assists community-based enterprise development projects by providing a 45 per cent refundable tax credit on eligible shares to Manitoba-resident investors that invest in business opportunities in their communities.

Retail sales tax measures

Retail sales tax exemption for personal services

Personal services – including hair services, non-medical skin care and aesthetician services, body modifications and spa services – will be exempted from retail sales tax effective December 1, 2021. Retail sales tax will continue to apply to tanning services provided by a device that uses ultraviolet radiation.

Streaming services

Retail sales tax will apply to audio and video streaming services effective December 1, 2021. Streaming service providers will be required to collect and remit the tax.

Online marketplaces

Online marketplaces will be required to collect and remit retail sales tax on the sale of taxable goods sold by third parties on their electronic platforms effective December 1, 2021.

Online accommodation platforms

Online accommodation platforms will be required to collect and remit retail sales tax on the booking of taxable accommodations effective December 1, 2021.

Other tax measures

Vehicle registration fees

Starting with vehicle registration renewals after June 30, 2021, the fee will be reduced by a further 10 per cent and will apply to non-commercial vehicles, including passenger vehicles, trucks, trailers, motorcycles/mopeds and off-road vehicles.

Next steps

Contact your Baker Tilly advisor to learn more about how we can help navigate the complexities of the Canadian tax system.