On April 12, 2022, Minister of Finance Cameron Friesen presented Manitoba’s 2022 budget. Projecting a deficit of $548 million, this year’s budget focuses on five key priorities, as stated by the province: strengthening healthcare, building the economy, protecting the environment, investing in communities, and making life more affordable.
While no new taxes or significant tax increases were included in the budget, the government did announce several interesting tax changes, as outlined below.
Property Tax Measure
Education Property Tax Rebate Increase
As part of the province’s plan to eventually eliminate its education property tax, the budget includes further tax savings for residential and farm property owners. The Education Property Tax Rebate for these property owners will increase to 37.5% in 2022 (up from 25% in 2021) and 50% in 2023. Owners of all other properties (e.g., commercial and industrial) will continue to receive a 10% rebate.
Taxpayers should note that 2022 is the start of a new property tax assessment cycle in Manitoba—the first since 2019—as the previous cycle was extended by a year because of the COVID-19 pandemic.
Corporate Tax Measures
Extension and Enhancement of Tax Credits
In this year’s budget, the province announced that both the Community Enterprise Development Tax Credit and Small Business Venture Capital Tax Credit, which were set to expire at the end of the calendar year, will be made permanent. In addition, the province noted that the latter credit will be enhanced (with further details to be released), as will the Film and Video Production Tax Credit, which will be adjusted to allow film producers to access the credit in advance of film completion, subject to certain documentary requirements.
Research and Development Tax Credit
A change will be made to extend the filing deadlines for the province’s research and development tax credit, aligning them with the federal time limits that were extended because of the COVID-19 pandemic.
Tax Credit Validation
In an interesting undertaking, the government announced that the province will enter into an extended service agreement with the Canada Revenue Agency to validate certain Manitoba tax credits for which the province has noted “unusually high” and “potentially improper” claims.
Commodity Tax Measure
Fuel Tax Exemption for Peat Harvesting Equipment
To support the peat harvesting equipment industry in Manitoba, the budget announced that fuel used in the off-road operation of peat harvesting equipment will be exempt from fuel tax, effective May 1, 2022. Extending the fuel tax exemption to this industry is consistent with the tax treatment in other Canadian jurisdictions.
Currently, marked fuel is only tax-exempt when purchased for use in off-road machinery and equipment operated by the farming, mining, commercial logging, commercial fishing, and trapping industries.
Payroll Tax Measure
Increase to Health and Post-Secondary Education Tax Levy Exemption Threshold
The province announced that, effective January 1, 2023, the exemption threshold for the health and post-secondary education tax levy will be increased to $2 million (from $1.75 million) of annual remuneration. Furthermore, the threshold at or below which a reduced tax rate applies to remuneration will be raised to $4 million (from $3.5 million). These changes are expected to benefit almost 1,000 employers in Manitoba.
Tax Administration Measure
The province has announced that amendments will be made to establish a “statute of limitations” on audits (i.e., legislate a standard audit period) and limit requests for changes by taxpayers in respect of all taxes collected and administered by Manitoba Finance, with further details to be released in the coming days.
For information on new and extended government funding initiatives included in this year’s Manitoba budget, please navigate to Mentor Works news at: Manitoba Budget 2022: Recover Together.
Further details on Manitoba’s 2022 budget may be found on the province’s website at: https://www.gov.mb.ca/budget2022/index.html.
If you have any questions about how these proposed changes might impact your organization, please do not hesitate to call the Ryan TaxDirect® line at 1.800.667.1600.