2023 Manitoba budget tax highlights

On March 7, the Manitoba government released its 2023 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 2023 are outlined below:

Basic personal amount (BPA)

Effective for the 2023 tax year, the BPA ⁠–⁠ a non‑refundable tax credit ⁠–⁠ will be increased to $15,000 ($10,145 for 2022).

Tax bracket thresholds

Effective for the 2024 tax year, Manitoba’s tax bracket thresholds will increase to $47,000 and $100,000, with a return to annual indexing in 2025.

Education Property Tax Rebate (EPTR)

Manitoba continues to phase out education property taxes by increasing the EPTR. The rebate for residential and farm properties increases to 50 per cent in 2023 (37.5 per cent in 2022), while other properties will continue to receive 10 per cent rebates.

Rebates are calculated based on the gross education property taxes on property tax statements, including both the school division special levy and education support levy. Property owners will continue to pay education property taxes but will receive the EPTR cheque in the same month municipal property taxes are due. No application is necessary and cheques are automatically sent.

Corporate tax measures

No corporate income tax rate changes were announced in this year’s budget. The current corporate income tax rates for 2023 are outlined below:

Health and Post‑Secondary Education Tax Levy (HE Levy)

Effective Jan. 1, 2024, the HE Levy, imposed on wages paid (i.e., payroll tax) by employers with a permanent establishment in Manitoba, will be reduced.

• Exemption threshold is increased from $2.0 million to $2.25 million of annual remuneration
• Annual payroll threshold below which employers pay a reduced rate is increased from $4.0 million to $4.5 million

Sectors that will primarily benefit from the reduced levy include construction, manufacturing, retailers, wholesalers, professionals and restaurants.

In addition, if fiscal updates later in 2023 show better than expected revenue performance, the government will reduce the tax levy for 2024, from 4.3 per cent to 4.0 per cent on payroll between $2.25 million and $4.5 million, and from 2.15 per cent to 2.0 per cent on total payroll if payroll exceeds $4.5 million. This rate reduction will be confirmed prior to Jan. 1, 2024.

Interactive Digital Media Tax Credit

Effective April 1, 2023, eligible expenditures for this credit will be expanded to include more flexible forms of employee compensation and incentives as eligible labour expenditures. This does not include expenditures such as bonuses tied to profits or revenues, stock options and signing bonuses, which remain ineligible.

Mineral Exploration Tax Credit (METC)

This tax credit, scheduled to expire Dec. 31, 2023, has been made permanent. Furthermore, due to changes to the Canada Income Tax Act establishing a new Critical Mineral Exploration Tax Credit respecting critical minerals (including copper, nickel, lithium, cobalt, graphite, rare earth elements, scandium, titanium, gallium, vanadium, tellurium, magnesium, zinc, platinum group metals and uranium), minor amendments to Manitoba’s Income Tax Act are required to ensure exploration expenses related to critical minerals remain eligible for Manitoba’s METC.

Green Energy Equipment Tax Credit

This tax credit, scheduled to expire June 30, 2023, has been made permanent. This credit supports the production and purchase of machinery and equipment used to generate renewable energy in Manitoba.

Next steps

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