On March 7, 2023, Finance Minister Cliff Cullen presented Manitoba’s 2023 budget. Projecting a deficit of $363 million, this year’s budget pledges historic support for Manitobans, including measures to strengthen healthcare, make life more affordable, improve public safety, build stronger communities, and transform the province’s economy.
With a provincial election looming in the fall, the budget also includes more than $350 million in tax reductions for Manitoba residents. In addition to an increase to the basic personal amount non-refundable tax credit for 2023 and a commitment to raise the personal income tax bracket thresholds for 2024, several other significant tax changes were announced, as outlined below.
Corporate Tax Measures
Extension and Enhancement of Tax Credits
Consistent with last year’s budget, the province has announced plans to improve certain corporate income tax credits. Specifically, amendments will be introduced to:
- Expand the Interactive Digital Media Tax Credit to permit more types of employee compensation to be claimed as eligible labour expenditures, effective April 1, 2023;
- Adjust the Mineral Exploration Tax Credit to preserve eligibility for certain critical minerals, which are now eligible for the federal Critical Mineral Exploration Tax Credit, and make the revised credit permanent; and
- Make the Green Energy Equipment Tax Credit permanent (it was previously set to expire on June 30, 2023).
Payroll Tax Measure
Health and Post-Secondary Education Tax Levy Exemption Thresholds and Rates
The province is proposing that, effective January 1, 2024, the exemption threshold for the Health and Post-Secondary Education Tax Levy be increased to $2.25 million (from $2 million) of annual remuneration. Furthermore, the threshold at or below which a reduced tax rate applies to remuneration will be raised to $4.5 million (from $4 million). This is the fourth consecutive increase to the annual remuneration exemption thresholds, and the latest change is expected to benefit almost 900 employers in Manitoba.
The government also announced plans to reduce the tax levy rate for 2024 to 4% (from 4.3%) where total payroll falls between $2.25 million and $4.5 million and to 2% (from 2.15%) where total payroll exceeds $4.5 million, contingent upon the province achieving revenue performance in 2023 that exceeds expectations. A decision on whether to move to the proposed new rates will be made before January 1, 2024.
Property Tax Measure
Continuation of School Tax Rebate
The government confirmed that property owners will continue to receive the School Tax Rebate, as announced in last year’s budget. Under the province’s plan to eventually eliminate education property taxes, the 2023 rebate rates will be 50% for residential and farm properties and 10% for all other property types (e.g., commercial and industrial properties).
Tax Administration Measure
Refund Administration
The limitation period for tax refunds administered by the province and identified during an audit will be harmonized with the audit period. Currently, the time limits for many tax refunds are much shorter than the statutory audit period. For example, the audit period for Manitoba Retail Sales Tax (RST) is six years, but RST refund claims must generally be submitted within two years of the purchase date. The proposed change should allow any refunds uncovered during the audit process to be credited to the taxpayer.
More Information
For information on new and extended government funding initiatives included in this year’s Manitoba budget, please navigate to Mentor Works news at:
https://www.mentorworks.ca/blog/government-funding/manitoba-2023-budget/
Further details on Manitoba’s 2023 budget may be found on the province’s website at:
https://www.gov.mb.ca/budget2023/index.html.
To read key updates from Canada’s 2023 provincial budgets, please navigate to Key Changes | 2023 Canadian Federal and Provincial Budgets.
If you have any questions about how these proposed changes might impact your organization, please do not hesitate to contact the Ryan TaxDirect® line at 1.800.667.1600 or taxdirect@ryan.com.