2021-22 Saskatchewan Budget Highlights

On Tuesday, April 6, 2021, Saskatchewan’s Minister of Finance Donna Harpauer tabled the Province’s 2021-22 Budget. Promising to protect, build and grow Saskatchewan, the Government forecasts a deficit of $2.6 billion for 2021-22 and projects it will not see a balanced budget until 2026-27. 

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: 

As previously announced, the small business tax rate was temporarily reduced from 2.0 percent to zero effective October 1, 2020. The rate will increase to 1.0 percent on July 1, 2022 and return to 2.0 percent on July 1, 2023. 

Extended Saskatchewan Technology Start-up Incentive (STSI) 

The STSI program is being extended for an additional five years, through to 2025-26. The program provides for a non-refundable 45-percent income tax credit for individual, corporate or venture capital corporation investments in eligible start-up businesses (ESBs) that are developing new technologies, or applying existing technologies in a new way, to create new proprietary products, services or processes that are repeatable and scalable.

Other changes to the program were announced as follows: 

• The amount that an ESB can raise under the program will double from $1 million to $2 million; 
• The carry-forward period to claim unused tax credits will increase from four years to seven years; and, 
• An annual cap of $2.5 million per year is established on the maximum value of tax credits that can be issued. 

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 Saskatchewan is 14.50 percent for 2021. The current top combined federal and Saskatchewan marginal rates for 2021 are outlined below: 

New Saskatchewan Home Renovation Tax Credit

Previously announced in the fall of 2020, the Government introduced a new home renovation tax credit. Homeowners may claim the 10 percent non-refundable tax credit on up to $20,000 of eligible home renovation expenses. Eligible expenses include the cost of labour and professional services, building materials, fixtures, equipment rentals and permits.

Renovation expenses must be incurred between October 1, 2020, and December 31, 2022 and the credit applies only to renovations to a homeowner’s principal residence. 

Reinstated Active Families Benefit (AFB)

The Government is reinstating the AFB to provide a refundable income tax credit, of up to $150 per year per child, to assist families with the cost of registering children in cultural, recreational and sports activities. Families of children with a disability can claim an additional $50, for a total tax credit of up to $200 per year per child.

Eligible programs are those that require children to actively participate, are offered by a service provider located in Saskatchewan, involve instruction and supervision, and require registration and payment of a fee.

The AFB will be an income-tested tax credit, families must have a combined net income of $60,000 or less to be eligible. The AFB will be retroactive to January 1, 2021 and eligible families need to keep their receipts to claim the benefit with their 2021 income tax filings.

C. Other Measures

Vapour Products Tax (VPT)

To help prevent vapour products from being attractive to youth and non-smokers, Budget 2021-22 introduces a new VPT with a rate of 20 percent on the retail price of all vapour liquids, products and devices, effective September 1, 2021. 

Retailers selling vapour products will be required to obtain a VPT license and submit a VPT return. 

Heat-Not-Burn (HNB) Tobacco Products

To help maintain tax equity between different types of tobacco products and to bring HNB tobacco sticks in line with existing tobacco legislation, the 2021-22 Budget adds HNB tobacco as a separate category under The Tobacco Tax Act. HNB will be taxed at a rate of approximately 75 percent of the tax rate on cigarettes, effective June 1, 2021. The current tax rate on cigarettes is 27.0₵ per stick, resulting in a HNB tax rate of 20.5₵ per stick. 

Passenger Electric Vehicles (EVs) Tax

The 2021-22 Budget introduces a new annual tax of $150 for each passenger EV registered in Saskatchewan, effective October 1, 2021. The Province announced that EVs contribute to wear and tear on roadways but do not contribute to highway maintenance through the provincial Fuel Tax. This new tax will be dedicated to such provincial highway maintenance.

The tax will be collected by Saskatchewan Government Insurance when the EV is registered. The Government noted that it will also consider options to apply a tax at charging stations.

Education Property Tax (EPT) Mill Rates

The 2021-22 Budget introduces changes to EPT mill rates to slightly increase overall revenues to the Province in line with year-over-year inflation. The 2021 EPT mill rates for the various property classes will be: agricultural 1.36, residential 4.46, commercial / industrial 6.75, and resource 9.79. 

Associated Natural Gas Royalty Moratorium

The Province is implementing a royalty rate of zero percent for a period of five years on all natural gas produced in association with oil. The royalty moratorium begins April 1, 2021 and will remain in place for five years, with a sunset date of March 31, 2026.

Royalty Incentives

The 2021-22 Budget introduces an expanded High Water-Cut Program (HWCP), providing a new royalty benefit where substantial investments in water handling capacity are made. Eligible old, new, and third-tier HWCP oil wells will be assigned fourth-tier royalty status on their incremental oil production. Eligible fourth-tier HWCP oil wells will receive a two-percent royalty rate reduction on all production. The new HWCP begins April 1, 2021 and will remain in place for five years, until March 31, 2026.

Budget 2021-22 also introduces a new sodium sulphate royalty system which simplifies the existing royalty calculation. Retroactive to April 6, 2020, the scaled production-based royalty will be replaced with a flat royalty of three percent on all sodium sulphate production, and a credit of 10 percent of qualifying capital expenditures will be eligible for use against current year royalties otherwise payable.