On April 12, 2011, Finance Minister Rosann Wowchuk presented the 2011 Manitoba Budget. This budget builds on the five-year economic plan, “Manitoba Moves Forward”, introduced in the 2010 budget. The province will continue to invest responsibly in infrastructure, while protecting front-line services, such as health care, education and training, culture and the arts, and support for families. The province surpassed the targets for the 2010 budget and is on track to a balanced budget by 2014.
Manitoba’s budget includes several significant tax changes.
Commodity Tax Measures
Retail Sales Tax
Exemption on Biomass Materials
To promote the use of biomass materials as a value-added resource, commencing May 1, 2011, the current sales tax exemption on straw pellets used for heating or cooking will be expanded to include other biomass materials, such as products made entirely out of wood, hemp, wheat, flax, corn or other grains.
Exemption for Municipal Flood Protection
The sales tax exemption for bags designed and purchased for use as sandbags for flood control by municipalities will be amended, effective March 1, 2011, to include sandbag-filling services and flood protection materials, such as flood tubes, sand/salt mixtures for sandbags, and sandbag ties. Municipalities that have paid sales tax on these items on or after March 1, 2011 are eligible for a refund upon application to the Taxation Division.
Other Exemptions
Effective May 1, 2011, water softener salts used by municipalities to treat water for sale to ratepayers will be exempt from sales tax. In addition, effective the same date, kiln strips used for curing wood products being manufactured for sale will be exempt from sales tax.
Temporary Use Formula for Goods Brought into Manitoba
Effective May 1, 2011, the formula for calculating sales tax payable on business assets brought into Manitoba on a temporary basis will be amended to prorate the tax payable on assets in the province for 15 days or less in a month. The calculation of sales tax payable in such situations will be prorated based on the following formula:
Tax = 7% x A x B/30; where:
A = monthly lease payment or 1/36 of fair value of owned assets; and
B = number of days in the province in the month.
This amendment reduces the sales tax payable for businesses bringing assets into the province for 15 days or less. However, sales tax will continue to apply on the full fair value for the month, where assets are temporarily in the province for more than 15 days in a month.
Tobacco Tax
Effective midnight April 12, 2011, tobacco tax rates will be increased as follows: the tax per cigarette will rise by 2 cents from 20.5 cents to 22.5 cents; the tax per gram of fine-cut tobacco will increase by 2 cents from 19.5 cents to 21.5 cents; and the tax per gram of raw leaf tobacco will rise by 2 cents from 18 cents to 20 cents. The tax rate on cigars will remain at 75% of the retail price, to a maximum of $5.00 per cigar.
Emissions Tax on Coal
Effective January 1, 2012, Manitoba will introduce a new Emissions Tax on coal equal to $10 per tonne of carbon-dioxide equivalent emissions.
This tax has been introduced to curb the use of this fuel, as burning coal is believed to generate the highest level of greenhouse gas emissions when compared to other fossil fuels. As of January 1, 2014, coal used for space and water heating will be banned in Manitoba. However, coal used for generating electricity, or for industrial purposes, will continue to be subject to the Emissions Tax after that date.
Income Tax Measures
No changes were announced to Manitoba’s general corporate tax rate of 12%. The following tax credit changes were announced:
- Green Energy Tax Credit – The tax credit for geothermal heating systems has been increased from 10% to 15%, effective April 12, 2011.
- Book Publishing Tax Credit – The credit has been extended to December 31, 2014, and has been expanded to include costs related to digital versions of literary works. Also, the tax credit for printing using recycled content has been increased from 10% to 15%.
- Neighbours Alive! – A new tax credit designed to encourage corporations to work with charitable organizations has been introduced to promote community economic development.
- Cultural Industries Printing Tax Credit – A 15% refundable tax credit for Manitoba printers has been announced.
In addition, a number of other Manitoba tax credits have been extended.
Further information on the Manitoba budget may be found on the province’s web site at Manitoba Budget 2011, and in the links below to two notices and an information bulletin, which summarize the taxation changes.
MB Notice Biomass Materials
MB Notice Tobacco Tax Rates
MB Bulletin No. 111