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A PDF version of the highlights can be accessed here.
On Tuesday, April 17, 2012, the Manitoba Finance Minister, Stan Struthers, presented the province’s 2012 Budget. The province plans to return to a balanced budget by 2014 and, therefore; contains a conservative spending plan, as well as revenue generating
tax measures. The following is a summary of the tax highlights from the 2012 Manitoba Budget.
No new personal income tax rate changes have been announced in this year’s budget.
Dividend Tax Credit Rate: Effective for the 2012 and future taxation years, the tax credit on eligible dividends paid to shareholders by companies subject to the general corporate income tax rate will be decreased from11%to 8%. This rate reduction effectively increases Manitoba’s eligible dividend rate for a top rate individual taxpayer to 32.26% and will apply retroactively to dividends paid after December 31, 2011.
No new corporate income tax rate changes have been announced in this year’s budget. The current Manitoba provincial corporate income tax rate is 12.0% for general corporate income and nil for small businesses with active business income up to the small business limit of $400,000.
Data Processing Investment Tax Credit: A refundable corporate income tax credit will be established for property purchased or leased, after April 17, 2012, by an eligible corporation for use in Manitoba. The corporation must have a permanent establishment in Manitoba and its primary business activity, including the activities of its affiliates,must be data processing. The tax credit will be equal to 4% of the capital cost of new qualified property that is a building and 7% on the capital cost of new qualified property that is machinery or equipment. This tax credit will effectively offset the Manitoba sales tax on the qualified property.
Film and Video Production Tax Credit: Companies starting a film or video production after April 17, 2012,may now claim accommodation costs incurred and paid to a maximum of $250 per night per unit as eligible tangible property expenditures for purposes of calculating the cost-of-production tax credit.
Co-op Education and Apprenticeship Tax Credits: The Early-Level Apprentice Hiring Incentive will be enhanced to 15%of wages and salaries up to a maximum of $3,000 per year (currently 10% to a maximum of $2,000). Both the Advanced-Level Apprentice Hiring Incentive and the Journey persons Hiring Incentive will double to 10% of wages and salaries up to a maximum of $5,000. These enhancements are available to employers of apprentices who complete a level after 2012, and employers of journey persons who become newly certified after 2012. Also, an additional 5% tax credit will be available for employers who hire early-level apprentices who normally reside outside of Winnipeg and who normally report to an employer’s office in rural and northern Manitoba.
The 3% Corporation Capital Tax on Financial Institutions is increased to 4%, commencing with taxation years ending after April 17, 2012.
Effective July 1, 2012, the following personal services will be taxable: spa treatments, non-medical skin and nail services, hair services (with the exception of haircuts that cost less than $50), tattooing and piercing. Also effective July 1, 2012, sales tax will be applied to prescribed insurance premiums under a contract of insurance, other than for health, accident or sickness, Autopac, or individual life insurance. This includes property and casualty insurance, group life insurance, trip cancellation insurance, baggage insurance, and land titles insurance.
Tobacco Tax: Effective midnight April 17, 2012, the rate per cigarette will increase from 22.5¢ to 25.0¢; the rate on fine-cut tobacco will increase from 21.5¢ to 24.0¢ per gram; and the rate on raw leaf tobacco will increase from 20.0¢ to 22.5¢ per gram.
Fuel Tax: Effective May 1, 2012, the fuel tax rate on unmarked gasoline and diesel fuel will increase from 11.5¢ per litre to 14.0¢ per litre; marked gasoline (farm fuel) will now be subject to a 3.0¢ per litre fuel tax rate.
Nutrient Management Tax Credit: Agricultural producers will be eligible for a new, refundable income tax credit equal to 10% of the capital cost of prescribed nutrient management equipment designed to meet water quality requirements. The assets must be acquired and available for use after April 17, 2012, and before 2016. Capital investments that qualify for the credit are environmentally sound systems installed for use in Manitoba that reduce the risk of nutrient transport of water and help to improve the water quality of Lake Winnipeg. Costs incurred and paid to acquire the system and make it operational are also included, such as engineering, design and installation costs. Both agribusiness corporations with a permanent establishment in Manitoba, and unincorporated individuals engaged in farming who are residents of Manitoba, are eligible for this support.
This communication contains a general overview of the subject matter and is current as of the date of publication. The information should not be regarded as a substitute for professional advice. MNP LLP accepts no responsibility for any loss or damage caused by your reliance on information contained in this publication.
Related Topics:Budget Announcements
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