Skills development, streamlining services and removing barriers for business are just some of the areas smaller enterprises have identified as important to on-going competitiveness. The government recognizes what is good for business is good for Manitoba and has been responding with new initiatives to assist small businesses.
Making business more competitive is a priority as the province moves into the future. The small business tax rate has been reduced by 63% since 1999 and in 2007 Manitoba will be tied for the second lowest rate in Canada.
Small business rate:
The rate has been reduced by 63% since 1999, dropping to 3.0% on January 1st, 2007. This ties Manitoba for the second-lowest rate in Canada.
Small business income threshold:
Has been doubled from $200,000 in 1999 to $400,000 in 2005 so that more than 90% of all taxable corporations in Manitoba now benefit from the small business rate.
General rate:
Since 1999 a series of unprecedented reductions to the general rate have been introduced dropping the rate to 14% effective January 1st, 2007.Budget 2005 announced the reduction in the general rate to 14.5% on July 1, 2006. This rate reduction was advanced to January 1, 2006. The 2006 Budget announced the further reduction of the general rate to 14.0% on January 1, 2007. Subject to balanced budget requirements, the rate will be reduced to 13.0%, effective July 1, 2008. This represents a 24% decrease in the rate since 2001.
Manufacturing Investment Tax Credit:
The credit was first made partially refundable in the 2005 budget and 35% of the MITC is now refundable.
The Manufacturing Investment Tax Credit (MITC) is renewed for a further three years to June 30, 2009. In 2006, the refundable portion of the MITC has been increased by 75%, from 20% to 35%. This Credit was first made partially refundable in the 2005 Budget, allowing firms without taxable income in the current year to take immediate advantage of the MITC.
Research and Development Tax Credit:
A 20% tax credit, up from 15% since 2005, supports innovation in Manitoba’s knowledge-based industries. This program targets scientific research and experimental development (as defined for federal purposes) carried on in Manitoba. Corporations earn a 20% tax credit which can be applied against Manitoba corporate income tax payable in the year earned, with unused credits available for a ten-year carry-forward and a three-year carry-back. This program is administered by Canada Revenue Agency on behalf of Manitoba.
Sales tax on oil and gas exploration and development equipment:
Effective April 1, 2006, geophysical survey equipment, drill rigs, and well-servicing equipment, used in oil and gas exploration and development are exempt from Retail Sales Tax. This includes equipment purchased for use in Manitoba and equipment brought into Manitoba on a temporary basis.
Mineral Exploration Tax Credit Extended :
The Manitoba Mineral Exploration Tax Credit is a 10% non-refundable personal income tax credit claimable by individuals who invest in flow-through shares to finance mineral exploration in Manitoba. The provincial credit is linked to the 15% federal mineral exploration investment tax credit. Flow-through shares are issued by qualifying corporations as a means to raise funding for exploration in Canada. It allows the company to renounce, or flow-through, exploration expenses to its individual investors, who deduct the expenditures for income tax purposes.
Community Enterprise Development Tax Credit:
The CED Tax Credit Program provides an a 30% personal income tax credit for Manitobans to invest in their communities, while offering community enterprises access to capital to get started, to expand or to make capital improvements. Investors are limited to 10% of a particular offering. The maximum investment an investor can claim under the Program is $30,000 per year providing a maximum credit of $9,000.
Corporation Capital tax:
Fors fiscal years commencing after January 1st, 2007, the deduction is doubled from $5 million to $10 million. In addition the Corporate Capital tax rate is dropping from 0.3% to 0.2% for corporations with taxable paid-up capital between $10 and $20 million, and from 0.5% to 0.4% for corporations with taxable paid-up capital over $20 million effective July 1, 2008 subject to balanced budget requirements.
This will benefit all 2,600 corporations that currently pay capital tax and eliminate the tax for approximately 500 of these corporations. With the increased deduction, the capital tax rate for corporations with taxable paid-up capital between $10 million and $20 million is 0.3% and the rate for corporations with taxable paid-up capital over $20 million is 0.5%, with the result that less than 4% of corporations in Manitoba pay Corporation Capital Tax.
