Saskatchewan levies provincial
corporate income tax under the terms of a tax collection
agreement with the federal government (as do other provinces
and territories with the exception of Ontario, Quebec
and Alberta). Under the tax collection agreement, the
federal government administers the provincial income
tax system using the same determination of a corporation’s
taxable income for both federal and provincial tax purposes.
Saskatchewan's
corporate income tax is levied as a percentage of the
share of a corporation's taxable income that is allocated
to the Province. Saskatchewan's general tax rate on
corporate taxable income was reduced from 17 per
cent to 14 per cent effective July 1, 2006, and will be further reduced to 13 per
cent on July 1, 2007 and to 12 per cent effective July
1, 2008.
Saskatchewan small businesses,
defined as Canadian-controlled private corporations,
pay a reduced rate of 4.5 per cent (commonly known as
the small business rate) on eligible
business income. The eligible income threshold for the small
business tax rate was increased from $300,000 to $400,000 on July 1, 2006,
and will be further increased to $450,000 on July 1, 2007 and to $500,000 effective
July 1, 2008.
In
addition to the tax reduction for small businesses,
Saskatchewan provides corporations involved in manufacturing
and processing a reduction in the general tax rate to
as low as 10 per cent on M&P profits, depending
on the extent of the company’s presence in the
province.
Saskatchewan
also provides resource companies with compensation in
lieu of full deductibility of provincial royalties and
similar taxes for the purposes of provincial income
taxation, under the Saskatchewan Royalty Tax Rebate
Program. However, as a consequence of the federal government's
initiative to re-introduce full deductibility of provincial
resource royalties for federal and provincial income
taxation, the Saskatchewan Royalty Tax Rebate is no
longer necessary and will be allowed to wind down. Commencing
January 1, 2007, the carry forward period for any outstanding
Royalty Tax Rebate balances will be limited to seven
years.
In
addition to these tax reduction measures, Saskatchewan
also offers tax credits to encourage corporations to
make investments in M&P capital assets, research
and development activities and film production.
©2006
