2021 Manitoba Budget Highlights

On Wednesday, April 7, 2021, Manitoba’s Minister of Finance Scott Fielding tabled the Province’s 2021 Budget. Promising to protect Manitobans and set the foundation for economic recovery, Budget 2021 forecasts a deficit of $1.597 billion for 2021-22. 

Below are highlights from the announcements: 

A. Corporate Tax Measures

Corporate Tax Rates 

No new corporate income tax rate changes were announced in this year’s Budget. The current corporate income tax rates for 2021 are outlined below: 

Health and Post-Secondary Education Tax Levy (Payroll Tax Exemption) 

Effective January 1, 2022, the exemption threshold is raised from $1.5 million to $1.75 million of annual remuneration. In addition, the threshold below which employers pay a reduced rate is raised from $3.0 million to $3.5 million. 

Interactive Digital Media Tax Credit 

The eligible activities for the Interactive Digital Media Tax Credit will be expanded to allow add-on digital media and content, such as downloadable content, on-going maintenance and updates, and data management and analysis that are complementary to the main product being developed. This measure is effective as of the 2021 taxation year. 

Budget 2021 also made permanent the Interactive Digital Media Tax Credit, which was scheduled to expire on December 31, 2022.

Small Business Venture Capital Tax Credit 

Effective as of the 2021 taxation year, the maximum eligible investment by an investor increases from $450,000 to $500,000. In addition, the maximum tax credit claimable against Manitoba income tax in a given year increases from $67,500 to $120,000. 

Film and Video Production Tax Credit

As part of the Cost-of-Salaries Tax Credit, Manitoba producers that produce three or more productions in a two-year period are eligible for a frequent filming bonus of 10 percent. 

Budget 2021 announces the frequent filming bonus is temporarily paused for two years, due to the COVID-19 pandemic and the impact of public health orders on production activity. All companies that were eligible for the bonus on March 31, 2020, will have that status remain in effect until March 31, 2022, at which point their frequent filming status resumes. Production companies that continue to produce will have their time period continue as normal. 

Extensions to Existing Tax Credits

Budget 2021 extends the following tax credits: 

• The Book Publishing Tax Credit, scheduled to expire on December 31, 2024, is made permanent. 
• The Cultural Industries Printing Tax Credit, scheduled to expire on December 31, 2021, is extended for one year to December 31, 2022. 
• The Community Enterprise Development Tax Credit, scheduled to expire on December 31, 2021, is extended for one year to December 31, 2022. 

B. Personal Tax Measures

Personal Tax Rates 

No new personal income tax rate changes have been announced in this year’s Budget. The top marginal personal income tax rate for Manitoba is 17.40 percent for 2021. The current top combined Federal and Manitoba marginal rates for 2021 are outlined below: 

New Teaching Expense Tax Credit 

Budget 2021 introduces a new tax credit that will apply to purchases of eligible teaching supplies made by educators who are not reimbursed by their employer. The new Manitoba tax credit, effective as of the 2021 taxation year, will be a 15-percent refund for up to $1,000 in supplies ($150 maximum refund) and will parallel the eligibility criteria of the existing federal Eligible Educator School Supply Tax Credit. 

C. Other Measures

Retail Sales Tax (RST) 

Exemption for Personal Services 

Personal services, including hair services, non-medical skin care and aesthetician services, body modifications and spa services will be exempted from RST effective December 1, 2021. RST will continue to apply to tanning services provided by a device that uses ultraviolet radiation. 

Streaming Services 

RST will apply to audio and video streaming services effective December 1, 2021. Streaming service providers will be required to collect and remit the tax. 

Online Marketplaces 

Online marketplaces will be required to collect and remit RST on the sale of taxable goods sold by third parties on their electronic platforms, effective December 1, 2021. 

Online Accommodation Platforms 

Online accommodation platforms will be required to collect and remit RST on the booking of taxable accommodations, effective December 1, 2021. 

Education Property Tax Rebate 

Manitoba will begin phasing out the education property taxes that are included on annual property tax statements; rebates will be provided to property owners as follows: 

• Owners of residential and farm properties will receive a 25-percent rebate of the school division special levy and the community revitalization levy payable.
• Owners of other properties (such as commercial, industrial, railway, institutional, pipelines and designated recreational) will receive a 10-percent rebate of the total of both the school division levy and the education support levy payable.

Property owners will continue to pay education property taxes but will automatically receive the Education Property Tax Rebate cheque in the same month (or earlier) that municipal property taxes are due. 

Existing education property tax offsets including the Education Property Tax Credit and Advance, Seniors School Tax Rebate, Seniors Education Property Tax Credit and Farmland School Tax Rebate will be proportionately reduced by 25 percent in 2021. 

Reduction in Vehicle Registration Fees

Vehicle registration fees will be reduced by further 10 percent, beginning with renewals after June 30, 2021. This measure follows a 10-percent reduction in Budget 2020 and is part of the Government’s commitment to roll back the increase to vehicle registration fees by 30 percent by 2023. 

The vehicle registration fee reduction applies to non-commercial vehicles, including passenger vehicles, trucks, trailers, motorcycles / mopeds, and off-road vehicles.