Summary: Manitoba Budget 2024

MB Budget 2024 increases the basic personal amount, introduces new tax credits for individuals and businesses, and extends relief on the gas tax, among other measures.

MB Budget 2024 estimates a deficit of $1.997 billion for the 2023-24 fiscal year, compared to the $363 million deficit projected in the previous budget. The significant increase to the deficit is mainly due to additional spending on health care, senior support, and long-term care. Manitoba anticipates balancing the budget by 2027-28.

Fiscal projections for the next four years are as follows:

Business tax measures

Corporate tax rates

MB Budget 2024 makes no changes to the corporate tax rates or the $500,000 small business limit.

2024 combined federal and MB corporate tax rates

Rental housing construction tax credit

MB Budget 2024 introduces a new tax credit for rental housing construction. The tax credit will provide $8,500 for the construction of new market-rate rental units and $13,500 for affordable units that maintain their affordable unit status for at least 10 years. For non-profit organizations, the tax credit will be fully refundable; however, for other businesses, $8,500 will be fully refundable with an additional $5,000 non-refundable credit provided over 10 years for affordable units. This measure is proposed to be effective for the 2024 tax year for construction that commences on or after January 1, 2024.

Data processing investment tax credit

MB Budget 2024 eliminates the data processing investment tax credit starting with the 2025 tax year.

Cultural industries printing tax credit

MB Budget 2024 extends the cultural industries printing tax credit for one year to December 31, 2025. This tax credit was scheduled to expire on December 31, 2024.

Personal tax measures

Basic personal amount

MB Budget 2024 increases the basic personal amount (BPA) for 2024 to $15,780 (from $15,000). This non-refundable tax credit, available to Manitoba residents, is calculated using the lowest personal income tax rate of 10.8%. Beginning in 2025, the province will gradually phase out the BPA for Manitobans whose net income ranges from $200,000 to $400,000.

MB Budget 2024 doesn’t change the personal rates. The personal tax brackets and the respective marginal tax rates for 2024 are as follows:

The tax brackets will return to annual indexing in 2025.

The top combined federal and provincial marginal tax rates for 2024 are as follows:

Renters tax credit

MB Budget 2024 increases the maximum tax credit amount for residential renters to $575 (from $525) and the senior top-up to $328 (from $300). This credit provides tax savings to individuals who rent their principal residence. This tax credit is also available to individuals renting a social housing property and individuals claiming non-employment and income assistance rent benefits.

The increased tax credit is proposed to apply in 2025.

Fertility treatment tax credit

MB Budget 2024 enhances the fertility treatment tax credit to support treatment expenses and related prescription drugs. The budget doubles the maximum annual eligible expense amount to $40,000, resulting in a refundable annual tax credit amount up to $16,000 (instead of $8,000) starting in the 2024 tax year.

This refundable tax credit is equal to 40% of the cost of fertility treatment fees paid to a Manitoba-licensed medical practitioner or a fertility treatment clinic and related costs of prescription drugs. This credit applies to the net amount of expenses after subtracting reimbursements from private health care coverage with no restriction on the number of eligible treatments Manitobans can claim.

Homeowners affordability tax credit

MB Budget 2024 introduces a new homeowners affordability tax credit which provides up to $1,500 to help offset education property taxes on principal residences. For example, this tax credit will completely offset education property taxes for homes valued under $285,000.

This new tax credit is proposed to start in 2025 and will replace certain school-tax related credits and rebates as outlined below.

School tax

MB Budget 2024 eliminates the education property tax credit (including the seniors top up), the school tax credit, and the school tax rebate for residential and commercial properties (except the school tax rebate for farm properties, which will stay at 50%).

These changes are proposed to start in 2025; however, the school tax rebate and education property tax credit for 2024 will be directly applied against the property tax instead of being refunded. The seniors school tax rebate will remain the same.

Sales and other tax measures

RST

MB Budget 2024 announces no changes to the current 7% retail sales tax (RST).

Increased threshold

MB Budget 2024 increases the RST registration threshold for taxable sales to $30,000 (from $10,000). Businesses with taxable sales under this threshold aren’t required to register and collect sales tax in Manitoba. This threshold is consistent with the federal government’s GST/HST registration threshold.

This measure is proposed to retroactively apply from January 1, 2024.

Other clarifications

MB Budget 2024 includes the following technical clarifications:

• Interior window coverings remain tangible goods and don’t become part of real property when applying RST.
• Businesses selling electricity through electric vehicle chargers don’t have to collect sales tax if the business has already paid sales tax on the electricity.
• The restriction on sales tax refunds for vehicles bought in Manitoba and subsequently sold out-of-province within six months is eliminated.
• Sales tax refunds for vehicle appraisals are calculated using the purchase price when appraisal values are lower than the purchase price.

Sales tax commissions

MB Budget 2024 eliminates sales tax commissions. Businesses currently benefit from a commission for collecting and remitting RST. This commission is 15% of the first $200 of tax collected and 1% of the remaining tax (up to $3,000) per return.

This measure is proposed to be eliminated for filing periods after April 2024.

Vaping tax

MB Budget 2024 introduces a vaping tax that will double the duty rate on vaping substances sold in Manitoba. The provincial tax rates are $1 per 2mL for the first 10mL, and $1 per 10mL for volume exceeding 10mL. These rates are consistent with the existing federal vaping duty rates. The provincial vaping tax is proposed to apply from January 1, 2025.

Gas tax cut extension

MB Budget 2024 extends its relief on the gas tax to September 30, 2024 (from June 30, 2024). This tax cut eliminates the tax on diesel, gasoline, and marked gasoline. Marked diesel continues to be exempt from tax.

Other administrative changes

MB Budget 2024 proposes the following tax administrative changes:

• The provincial tax audit statutory limitation period will be a maximum of six years from the date of notification; however, there’s no limit if taxes have been collected and not remitted, or where a person made a misrepresentation due to gross negligence.
• The $50 tax clearance certificate fee and the provincial advance ruling fee will be eliminated as of May 1, 2024.
• A recovery tax will be charged to retroactively remove the preferential tax treatment if the funds aren’t distributed to the intended qualified beneficiary of a qualified disability trust.
• A non-compliance penalty will be charged if an inaccurate fair market value is provided for land transfer tax purposes.
• Oil and gas production tax records must be kept for six years (up from four years).

Other notable measures

Electric vehicle incentive – MB Budget 2024 introduces a new rebate of up to $4,000 for eligible new electric vehicles and up to $2,500 for eligible used electric vehicles purchased from August 1, 2023 to March 31, 2026. This incentive only applies to electric vehicles under $70,000 and less than four years old, and certain other criteria must be met. For leased electric vehicles, the incentive is proportional to the length of ownership.

Health care – MB Budget 2024 invests $980 million in health care, representing a 13.5% increase from last year. This spending will be used to hire 1,000 new health care workers, add more hospital and ICU beds, invest in better health care for rural and northern communities, modernize health records, and introduce plastic health cards.

Affordability – MB Budget 2024 introduces free prescription birth control, reduced auto insurance rates, agricultural Crown land lease freezes, and increased financial aid for post-secondary students. Additionally, the budget allocates $116 million to building and maintaining affordable social housing.

Education and child care – MB Budget 2024 proposes to provide year-round $10/day child care (including non-school days), invest $160 million to build more schools, and provide $104.2 million in education funding.

Infrastructure - MB Budget 2024 invests $540 million to repair and build highways and other public infrastructure.

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_Disclaimer  

_{The information contained herein is general in nature and is based on proposals that are subject to change. It is not, and should not be construed as, accounting, legal or tax advice or an opinion provided by Doane Grant Thornton LLP to the reader. This material may not be applicable to, or suitable for, specific circumstances or needs and may require consideration of other factors not described herein.}