Do you run an accounting business in Manitoba or have clients in this province? If so, you need to know about Manitoba’s new tax laws effective in 2018. According to the provincial government’s press release, these changes are designed to provide relief to families and businesses. They lower income taxes for many citizens and extend a number of tax credits to businesses. Here’s what’s happening.
New Personal Amount
For 2018, the basic personal amount goes up to $9,382. For tax year 2017, the personal amount in Manitoba was $9,271. That was the first year the province pegged this amount to inflation, and from 2016 to 2017, the personal amount increased by 1.5%. As a result, 2,100 additional Manitobans didn’t have to pay income tax, and they collectively saved $21 million. For tax year 2018, the government anticipates that residents will save $17 million, and by 2020, it projects cumulative savings of $113 million.
Adjusted Tax Brackets
The province also adjusts tax brackets based on inflation. For tax year 2018, taxable income up to $31,843 is taxed at 10.8%; income over that amount up to $68,821 is taxed at 12.75%; and income over $68,821 is taxed at 17.4%. These are the same rates the province used for the last few years, but the income thresholds are higher.
For clients with taxable income of $68,005 or higher, this shift saves them $71 for tax year 2017, and even taxpayers who only report income in the lowest tax bracket can save up to $15. Your individual clients should save even more in 2018.
Extension of Tax Credits
For 2018, Manitoba also extended three tax credits that were set to expire on the last day of 2017. Here are the details:
- Designed to offset the cost of manufacturing equipment and stimulate manufacturing in Manitoba, the Manufacturing Investment Tax Credit was extended to the end of 2020.
- Also extended to Dec. 31, 2020, the Mineral Exploration Tax Credit will continue to give investors a 30% credit for buying flow-through shares of exploration companies.
- The Book Publishing Tax Credit was extended another 12 months to Dec. 31, 2020. Qualifying publishers can claim a 40% credit on labour costs.
The government also jumped in a couple years early and extended the Interactive Digital Media Tax Credit. Set to expire Dec. 31, 2019, this credit now runs to Dec. 31, 2022. If you’ve got clients who are thinking about creating video games or other interactive digital media products, keep these dates in mind.
Red Tape Reduction
Through the Red Tape Reduction program, Manitoba is actively eliminating contradictory laws or ineffective requirements. As part of the province’s multi-pronged approach to this endeavor, as of 2018, it is only requiring corporations to pay taxes when filing an annual return. To make the process even easier, corporations can use the online filing system.
Although Manitoba didn’t make a lot of changes for 2018, you still need to know what’s happening. Armed with this information, you should be able to answer clients’ questions about why their tax liability wasn’t as high or what they should expect for 2018.