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Government: Recent Strategic Tax Incentives

Tax Incentives: Recent Manufacturing R & D Film & Video Education Mining Federal

Summary of Strategic Tax Incentives announced in the last three Manitoba budgets.

2008

• Corporation Income Tax: The general rate is reduced to 13% in 2008, and will be further reduced to 12% in 2009, with a reduction to 11%* planned for the future. The small business tax will be reduced to 1% in 2009.

• Accelerated Capital Cost Allowance (CCA) for Machinery and Equipment: The 50% straight-line accelerated CCA for manufacturing equipment will be extended for an additional year. After 2010, CCA calculation will return to a declining balance basis, with a 50% rate for 2010, a 40% rate for 2011 and 30% rate for subsequent years.

• Corporation Capital Tax:  CCT is eliminated for manufacturers, effective July 2008.  The general CCT will be phased-out (except for Crown corporations) over the next two years and eliminated by Dec.31, 2010.

• Journeypersons Hiring Incentive added to Co-op Education & Apprenticeship Tax Credits:  The new credit is available to employers that hire recent apprenticeship graduates. The credit is equal to 5% of each journeyperson’s salary/wages (net of other government assistance), up to $2,500 for each of the first two 12-month periods of permanent, full-time employment.

• Manufacturing Investment Tax Credit: The refundable portion of the credit increased from 35% to 70% on January 1, 2008. The credit will be extended until December 31, 2011.

• Film and Video Production Tax Credit: The credit now provides a 5% bonus credit for films with a Manitoba producer. The frequent filming bonus is doubled to 10%, and the percentage of eligible salaries paid to non-residents eligible for the credit has increased to 30% of eligible salaries paid to Manitobans.

• Interactive Digital Media Tax Credit:  Eligible companies that develop and produce interactive digital media projects in Manitoba may receive a refundable corporate income tax credit equal to 40% of Manitoba labour costs on eligible projects.

• Book Publishing Tax Credit: The credit provides a refundable income tax credit equal to 40% of eligible Manitoba labour costs, and a 10% bonus for all books printed on forest-friendly paper.

* Subject to requirements of Balanced Budget legislation

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2007

• Corporation Income Tax: The general rate is reduced to 14.0% in 2007, and will be further reduced to 13.0% in 2008, and to 12.0%* in 2009. The small business rate is reduced to 3.0% in 2007, and will be further reduced to 2.0% in 2008 and to 1.0% in 2009*.

• Corporation Capital Tax: In 2008, the capital tax rate for corporations with taxable paid-up capital between $10 million and $20 million will be reduced to 0.2% from 0.3%; and the rate for corporations with taxable paid-up capital over $21 million, will be reduced to 0.4% from 0.5%. There is a notch provision for total paid-up capital between $20 million and $21 million. The 2007 Budget commits to eliminate the general CCT, except for Crown corporations, by December 31, 2010.

• Capital Cost Allowance for manufacturing equipment: CCA for manufacturing equipment is changed from 30% declining balance to 50% straight line on assets acquired after March 18, 2007 and before 2009; CCA for Manufacturing buildings is increased from 4% to 10% on assets acquired after March 18, 2007.

• Health and Post Secondary Education Levy (Payroll Tax): Effective January 1, 2008, the exemption threshold will increase to $1.25 million, and the $2.0 million threshold will increase to $2.5 million.

• Tax Credit Program adjustments:

  • Manufacturing Investment Tax Credit -- The refundable portion will be increased to 50% of earned credits for qualified property purchased on or after January 1, 2008.

  • Green Energy Manufacturing Tax Credit -- A new 10% refundable credit for purchase of new equipment used to generate renewable energy

  • Film & Video Production Tax Credit -- is extended to March 1, 2011.

  • Community Enterprise Development Tax Credit -- is broadened to include a new 30% provincial non-refundable income tax credit for individuals and corporations who invest directly in emerging enterprises that require larger amounts of investment capital than community ownership could provide. The credit will apply to eligible securities acquired on or after January 1, 2008.

* Subject to requirements of Balanced Budget legislation

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2006

• Corporation Income Tax: The general rate is reduced to 14.5% in 2006, and will be further reduced to 14.0% in 2007, and to 13.0%* in 2008. The small business rate is reduced to 4.5% in 2006, and will be further reduced to 3.0% in 2007 (superseding the 2005 announcement to reduce the small business tax to 4.0%).

• Corporation Capital Tax: The $5 million deduction announced in the 2003 Budget will be increased to $10 million in 2007. For corporations with taxable paid-up capital between $10 million and $20 million, the capital tax rate will be 0.3%, and for corporations with taxable paid-up capital over $20 million, the rate will be 0.5%. In 2008, the 0.3% rate will be reduced to 0.2%* and the 0.5% rate will be reduced to 0.4%.*

• Tax Credit Program adjustments:
  
  

  • Manufacturing Investment Tax Credit -- The Manufacturing Investment Tax Credit is renewed for three years to 2009 and the refundable portion is increased to 35% of the earned credit.

  • Co-operative Education Tax Credit -- A parallel incentive is now offered to unincorporated employers.

  • Co-op Graduates Hiring Incentive -- Under this new incentive, Manitoba employers who hire and retain recent graduates from recognized post-secondary co-operative education programs can receive 5% of wages and salaries paid to the graduates in each of the first two full years of employment, to a maximum of $2,500 for each year.

*Subject to requirements of Balanced Budget legislation