Canada

Provincial & territorial budgets 2018: An overview of changes

TAX ALERT  | 

Each of the provinces and territories has now tabled their 2018 budgets. In this tax alert, we’ve compiled business and personal tax changes of significance for each province and territory and centralized them here for quick reference.

Here are the official budget dates

Province/Territory

Date the budget was tabled

New Brunswick

Jan. 30. 2018

Northwest Territories

Feb. 8, 2018

British Columbia

Feb. 20, 2018

Yukon

March 1, 2018

Manitoba

March 12, 2018

Nova Scotia

March 20, 2018

Alberta

March 22, 2018

Québec

March 27, 2018

Newfoundland and Labrador

March 27, 2018

Ontario

March 28, 2018

Prince Edward Island

April 6, 2018

Saskatchewan

April 10, 2018

 

New Brunswick

New Brunswick’s 2018-2019 budget was tabled by Finance Minister Cathy Rogers. The budget does not contain any new taxes or tax increases.

Business Tax measures

Corporate tax rates

New Brunswick’s 2018 and 2019 corporate tax rates are as follows:

 

2018

2019

 

NB

Federal and NB combined

NB

Federal and NB combined

Small business tax rate

2.62%

12.62%

2.50%

11.50%

General corporate tax rate

14%

29%

14%

29%

 

Other business tax measures

The province announced that small businesses in the export category will receive more support, with details forthcoming.

Personal tax measures

New Brunswick’s 2018 personal tax rates are as follows:

Income tax brackets

New Brunswick personal tax rates

0% to $41,675

9.68%

$41,676 to $83,351

14.82%

$83,352 to $135,510

16.52%

$135,511 to $154,382

17.84%

Over $154,382

20.30%

 

For taxable income in excess of $154,382, the 2018 combined federal and New Brunswick personal income tax rates are as follows:

Income tax brackets

Ordinary income

Capital gain

Eligible dividend

Non-eligible dividends

$154,383 to 205,842

49.30%

24.65%

27.99%

42.24%

Over $205,842

53.30%

26.65%

33.51%

46.88%

 

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Northwest Territories

Northwest Territories’ 2018-2019 budget was tabled by Finance Minister Robert C. McLeod.

Business Tax Measures

Corporate tax rates

Northwest Territories’ 2018-2019 budget does not contain any changes to the corporate tax rates. Northwest Territories’ 2018 and 2019 corporate tax rates are as follows:

 

2018

2019

 

NWT

Federal and NWT combined

NWT

Federal and NWT combined

Small business tax rate

4%

14%

4%

13%

General corporate tax rate

11.50%

26.50%

11.50%

26.50%

 

Personal tax measures

The budget does not propose any changes to the personal income tax rates. Northwest Territories’ 2018 personal tax rates are as follows:

Income tax brackets

Northwest Territories personal tax rates

0% to $42,209

5.90%

$42,210 to $84,420

8.60%

$84,421 to $137,248

12.20%

Over $137,248

14.05%

 

For taxable income in excess of $137,248, the 2018 combined federal and Northwest Territories’ personal income tax rates are as follows:

 

Income tax brackets

Ordinary income

Capital gain

Eligible dividend

Non-eligible dividends

$137,249 to $144,489

40.05%

20.03%

18.67%

27.86%

$144,490 to $205,842

43.05%

21.53%

22.81%

31.34%

Over $205,842

47.05%

23.53%

28.33%

35.98%

 

Other tax measures
  • Sugary drinks tax - The sugary drinks tax proposed in last year’s budget is still under investigation.
  • Carbon pricing - The government plans to unveil carbon pricing later on in 2018 along with mitigating measures on the cost of living and business set to occur as a result.
  • Land transfer tax – During 2018-19, the government will be developing detailed proposals to implement a land transfer tax similar to other jurisdictions. This tax will raise an additional $3.1 million annually and can be structured progressively by levying a smaller per centage on the property of lower value to minimize the impact on modest income homeowners.

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British Columbia

British Columbia’s 2018-2019 budget was tabled by Finance Minister Carole James.

Business Tax Measures

Corporate tax rates

British Columbia’s 2018-2019 budget does not contain any new changes to the corporate tax rates. British Columbia’s 2018 and 2019 corporate tax rates are as follows:

 

2018

2019

 

BC

Federal and BC combined

BC

Federal and BC combined

Small business tax rate

2 %

12%

2%

11%

General corporate tax rate

12%

27%

12%

27%

Other business tax measures
  • Employer health tax - Beginning in 2019, employers with payroll exceeding $1.5 million will be subject to a 1.95 per cent tax on their total payroll. Employers with less than half a million in payroll are exempt. The tax will be phased in for companies with payroll between $500,000 and $1.5 million, up to the maximum of 1.95 per cent.
  • Film incentive BC tax credit expands to cover scriptwriting expenditures earned on or after February 21, 2018
  • Mining flow-through share tax credit continues to the end of 2018
  • The book publishing tax credit will be extended to March 31, 2021
  • The farmer’s food donation tax credit continues to the end of 2019
  • The interactive digital media credit extends to August 31, 2023

Personal tax changes

The budget does not propose any changes to the personal income tax rates. British Columbia’s 2018 personal tax rates are as follows:

Income tax brackets

British Columbia personal tax rates

0 to $39,676

5.06%

$39,677 to $79,353

7.70%

$79,354 to $91,107

10.50%

$91,108 to $110,630

12.29%

$110,631 to $150,000

14.70%

Over $150,000

16.80%

 

For taxable income in excess of $144,489, the 2018 combined federal and British Columbia’s personal income tax rates are as follows:

Income tax brackets

Ordinary income

Capital gain

Eligible dividend

Non-eligible dividends

$144,490 to $150,000

43.70%

21.85%

25.78%

36.66%

$150,001 to $205,842

45.80%

22.90%

28.68%

39.09%

Over $205,842

49.80%

24.90%

34.20%

43.73%

 

Several changes have been proposed for personal tax credits, including:

  • The new British Columbia caregiver credit will replace the infirm dependent tax credit and the caregiver tax credit, effective for 2018. The non-refundable British Columbia caregiver credit parallels the Canada caregiver credit announced in the 2017 Federal Budget. The British Columbia caregiver credit is available to British Columbians who care for an eligible adult relative who is dependent on the caregiver because of a mental or physical infirmity. The caregiver is not required to live with the dependent in order to the claim the credit. The maximum British Columbia caregiver credit is $4,556 per infirmed dependent for 2018, providing a benefit of up to $230.53, and is indexed to inflation for future years.
  • Effective for 2019, the British Columbia education tax credit will be eliminated. Amounts not used from previous years remain eligible and can be claimed in 2019 and subsequent tax years.
Sales tax updates
  • Retailers will not be obligated to charge provincial sales tax on cruise ships operating in B.C. waters; this measure will be applied retroactively to April 1, 2013.
  • All avalanche airbag backpacks are now exempt from provincial sales tax, as of April 1, 2018.
  • Tax payment agreements between the B.C. government and inter-jurisdictional railways will now be applied to services, pending Royal Assent. Previously, only goods and software were in included in such agreement.
  • The B.C. government plans to amend the Provincial Sales Tax Act to allow accommodation websites to collect and remit provincial, municipal and regional sales tax.
  • The luxury surcharge on both new and used passenger vehicles will be raised, as follows:
    • purchase price from $125,000 to $149,999: 15 per cent
    • purchase price of $150,000 or more: 20 per cent
    • private sale purchase price from $125,000 to $149,999: 15 per cent
    • private sales purchase price of $150,000 or more: 20 per cent
  • Effective on a date to be specified by regulation, tax revenue collected by municipalities, regional districts and eligible entities can now be used to fund affordable housing projects.
  • Effective retroactive to April 1, 2013, Provincial Sales Tax will now be charged on software provided under optional maintenance agreements; the Provincial Sales Tax Act will be amended to reflect this change.
Property tax updates
  • A speculation tax targeting foreign and domestic property owners not currently paying tax in British Columbia was introduced. As of this writing, the tax is still undergoing tweaks amid backlash from B.C. residents
  • Effective February 21, 2018, property transfer tax has increased on properties over $3 million by an additional 2 per cent and the tax on foreign entities and taxable trustees has also increased to 20 per cent
  • Effective February 21, 2018, property transfer tax will no longer be collected on transfers of a principal residence from a bankrupt spouse to his or her spouse or former spouse
  • For the 2018 taxation year, the home owner grant will increase to $1.65 million. For properties assessed above the threshold, the grant is reduced by $5 for every $1,000 of assessed value in excess of the threshold
  • The school tax will increase for high-value residential properties, as of the 2019 taxation year, as follows:
    • The residential portion that exceeds $3 million will be taxed at 0.2 per cent
    • Portion of the assessed value that exceeds $4 million will be taxed at 0.4 per cent
  • Effective for the 2019 tax year and subsequent tax years, municipal revitalization property tax exemptions for eligible new purpose-built rental housing will also apply to provincial property taxes. To be eligible for the new exemption, a municipality must issue a revitalization tax exemption certificate under a revitalization program that includes the creation of new rental housing as a goal. The provincial exemption only applies to the portion of the property that meets the provincial definition of new purpose-built rental housing. The provincial tax exemption only applies for revitalization tax exemption certificates issued on or after February 21, 2018.
Other tax measures
Medical service plans
  • Medical service plan premiums were reduced by 50 per cent for all British Columbians effective Jan. 1, 2018 and will be eliminated effective Jan. 1, 2020. Once eliminated, single individuals will see annual savings of up to $900 and families will see annual savings of up to $1,800.
Fuel and carbon
  • The refund rates for International Fuel Tax Agreement licensees are increased to reflect annual increases in the carbon tax each April 1st from 2018 through to 2021. This will ensure International Fuel Tax Agreement licenses only pay carbon tax on fuel they use in British Columbia.
  • Effective April 1, 2018, marine diesel fuel used in inter-jurisdictional cruise ships and ships prohibited from coasting trade under the Coasting Trade Act is exempt from motor fuel tax. This exemption parallels the existing exemption from carbon tax for these ships.
  • Effective April 1, 2018, clear gasoline and diesel fuel will be subject to higher motor fuel tax, from 3.5 cents per litre to 5.5 cents.
  • Security will no longer be charged on fuel for retail sale by refiner collectors; this applies retroactively to February 14, 2014.
Tobacco
  • Taxes on loose tobacco will increase to 37.5 cents per gram.
  • Cigarette tax will increase to 27.5 cents per cigarette, as of April 1, 2018.

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Yukon

Yukon’s 2018-2019 budget was tabled by Finance Minister Sandy Silver. The budget does not contain any new taxes or increases.

Business tax measures

Corporate tax rates

Yukon’s 2018 and 2019 corporate tax rates are as follows:

 

2018

2019

 

YT

Federal and YT combined

YT

Federal and YT combined

Small business tax rate

2%

12%

2%

11%

General corporate tax rate

12%

27%

12%

27%

 

Personal tax measures

Yukon’s 2018 personal tax rates are as follows:

Income tax brackets

Yukon personal tax rates

$0 to $46,605

6.40%

$46,606 to $93,208

9%

$92,209 to $144,489

10.90%

$144,490 to $500,000

12.80%

Over $500,000

15%

 

For taxable income in excess of $144,489, the 2018 combined federal and Yukon personal income tax rates are as follow:

Income tax brackets

Ordinary income

Capital gain

Eligible dividend

Non-eligible dividends

$144,490 to $205,842

41.80%

20.90%

20.37%

34.22%

$205,843 to $500,000

45.80%

22.90%

25.89%

38.86%

Over $500,000

48%

24%

28.92%

41.42%

 

Harmonized sales tax

Mr. Silver confirmed that Yukon will not introduce a harmonized sale tax, which was raised for consideration by the independent Yukon Financial Advisory Panel in its November 15, 2017 report.

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Manitoba

Manitoba’s budget was tabled by Finance Minister Cameron Friesen.

Business tax measures

Corporate tax rates

Manitoba’s 2018-2019 budget announced no new changes to the corporate tax rates. Manitoba’s 2018 and 2019 corporate tax rates are as follows:

 

2018

2019

 

MB

Federal and MB combined

MB

Federal and MB combined

Small business tax rate

0%

10%

0%

9%

General corporate tax rate

12%

27%

12%

27%


Proposed business tax measures
  • Small business deduction
    • Small-business deduction limit eligible will rise from $450,000 to $500,000; this is as of Jan. 1, 2019. Canadian-controlled private corporations that qualify for the small business deduction pay a 0 per cent rate of Manitoba corporation income tax. The savings for a corporation as a result of this enhancement are up to $6,000 per year.
  • New child care centre development tax credit
    • A new refundable corporation income tax credit - Child care centre development tax credit is being introduced to stimulate the creation of licensed child care centres in workplaces. The tax credit will be available for private companies that create new child care centres for a total benefit of $10,000 per new infant or preschool space created, claimable over five years. The credit would be available for licensed spaces created by a taxable corporation that is not primarily engaged in child care services effective after Budget Date and before 2021.
  • Small business venture capital tax credit
    • Effective budget date, $15 million revenue cap on the size of an eligible corporation and the investment minimum is lowered from $20,000 to $10,000.  
Proposed eliminations
  • Rental housing construction tax credit
    • The rental housing construction tax credit will be eliminated as of Jan. 1, 2019. Projects that are currently under provincial review or approval are not impacted. No new project applications will be processed after 2018 and any future projects must be available for use before 2021.
  •  Labour sponsored fund tax credit
    • Labour sponsored fund tax credit will no longer apply for shares acquired after 2018.
Proposed extensions
  • Both the cultural industries printing tax credit and the Manitoba book publishing tax credit have been extended to December 31, 2019.

Personal tax measures

The Budget does not propose any changes to the personal income tax rates. Manitoba’s 2018 personal tax rates are as follows:

Income tax brackets

Manitoba personal tax rates

$0 to $31,843

10.80

$31,844 to $68,821

12.75%

Over $68,821

17.40%

For taxable income in excess of $93,208, the 2018 combined federal and Manitoba personal income tax rates are as follows:

Income tax brackets

Ordinary income

Capital gain

Eligible dividend

Non-eligible dividends

$93,209 to $144,489

43.40%

21.70%

28.12%

37.80%

$144,390 to $205,842

46.40%

23.20%

32.26%

41.28%

Over $205,842

50.40%

25.20%

37.78%

45.92%

 

Personal tax credits
  • The basic personal amount will increase to $10,392 (from $9,382) for the 2019 taxation year and to $11,402 (from $10,392) for the 2020 taxation year.
  • The primary caregiver tax credit will see a reduction in paperwork, allowing eligible caregivers to fill out a registration form, remit a copy of the Department of Finance and then claim the credit on their return;
    • a flat $1,400 annual credit will be made available to all eligible caregivers with no change to the minimum 90-day requirement of care.
Other tax measures
  • The education property tax credit will eliminate the $250 deductible and the credit will be based on school taxes; this will commence for 2019.
  • The tobacco tax will be raised from 28.5 cents to 45 cents per gram, as of midnight, March 12, 2018.
  • The province’s carbon tax will levy a $25 tax per tonne of greenhouse gas emissions; these apply to gas, liquid and solid fuel products meant for combustion in Manitoba. The tax will take effect September 1, 2018.

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Nova Scotia

Nova Scotia’s 2018-2019 budget was tabled by Finance and Treasury Board Minister Karen Casey.

Business tax measures

Corporate tax rates

Nova Scotia’s 2018-2019 budget announced no new changes to the corporate tax rates. Nova Scotia’s 2018 and 2019 corporate tax rates are as follows:

 

2018

2019

 

NS

Federal and NS combined

NS

Federal and NS combined

Small business tax rate

3%

13%

3%

12%

General corporate tax rate

16%

31%

16%

31%

 

Personal tax measures

The Budget does not propose any changes to the personal income tax rates. Nova Scotia’s 2018 personal tax rates are as follows:

Income tax brackets

Nova Scotia Personal Tax Rates

$0 to $29,590

8.79%

$29,591 to $59,180

14.95%

$59,181 to $93,000

16.67%

$93,001 to $150,000

17.50%

Over $150,000

21%

 

For taxable income in excess of $144,489, the 2018 combined federal and Nova Scotia personal income tax rates are as follows:

Income tax brackets

Ordinary income

Capital gain

Eligible dividend

Non-eligible dividends

$144,490 to $150,000

46.50%

23.25%

31.23%

38.63%

$150,001 to $205,842

50%

25%

36.06%

42.69%

Over $205,842

54%

27%

41.58%

47.33%

 

Personal tax credits/amounts

The budget proposes changes to the following personal tax credits/amounts:

  • Effective Jan. 1, 2018, the basic personal amount has increased from $8,481 to $11,481 ($3,000 benefit), for individuals with taxable income of under $25,000. The $3,000 increased benefit decreases as individual’s income increases over $25,000 and ends when taxable income reaches $75,000.
  • Effective Jan. 1, 2018, the age amount has increased from $4,141 and to $5,606 ($1,465 benefit). The age amount is a non-refundable credit provided to individuals over the age of 65 in the taxation year. The increase is proportional to the increase in the basic personal amount. Similarly, the maximum benefit will be available for individuals with a taxable income of less than $25,000 and will be phased out between a taxable income of $25,000 and $75,000.
  • A new tax credit known as the innovation equity tax credit will tighten its focus. As of January 2019, this credit will phase out the existing equity tax credit.
  • Effective 2018 tax year, the medical expense tax credit is no longer subject to a $10,000 maximum amount for financially dependent relative. The medical expense tax credit is a non-refundable personal income tax credit for eligible medical expenses paid by an individual in respect of the individual, their spouse or common law partner, their child under the age of 18, or a financially dependent relative. A dependent relative is defined as a child who is 18 years of age or older, or a grandchild, parent, grandparent, brother, sister, aunt, uncle, niece, or nephew who is dependent on the taxpayer for support. An individual may claim eligible medical expenses that exceed the lesser of 3 per cent of their income of $1,637. However, there is a currently a $10,000 maximum for eligible medical expenses paid for a financially dependent relative. The removal of the cap on the dependent relative makes it consistent with the treatment of expenses that may be claimed for the individual, their children under 18 years of age, and their spouse or common law partner.
Other tax measures
Cannabis tax

In December 2017, the province agreed in principle to enter into a coordinated cannabis tax framework with the federal government for a two-year period following the legalization of recreational cannabis.

The federal government will collect an excise duty of $1 per gram of flowering substance in a cannabis product, of which the province retains 75 cents.

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Alberta

Alberta’s 2018-2019 budget was tabled by Finance Minister Joe Ceci. The budget does not contain any new taxes or increases.

Business tax measures

Corporate tax rates

Alberta’s 2018 and 2019 corporate tax rates are as follows:

 

2018

2019

 

AB

Federal and AB combined

AB

Federal and AB combined

Small business tax rate

2%

12%

2%

11%

General corporate tax rate

12%

27%

12%

27%

 

Other business tax measures
  • Interactive digital media tax credit – this refundable tax credit will provide eligible interactive digital media companies with a benefit worth 25 per cent of eligible labour costs incurred after April 1, 2018. A diversity and inclusion credit enhancement, worth up to an additional 5 per cent, will be available to companies that employ workers from under-represented groups. Further details on the enhancement will be provided when the regulations are brought forward.
  • Alberta investor tax credit (AITC) – This program provides a 30 per cent tax credit to individuals and corporate investors who make equity investments in Alberta businesses that undertake research, development or commercialization of new technology, products or processes. It is also available to businesses engaged in interactive digital media development, video post-production, digital animation or tourism. The credit was planned to operate for 3 years. The budget extended the credit until 2021-2022. In addition, investors will also be eligible to receive an additional 5 per cent credit if they invest in eligible business corporations that meet diversity and inclusion credit. The overall maximums for the AITC remain the same, with individual investors still limited to claiming a maximum of $60,000 in one year, up to $300,000 over five years.
  • The capital investment tax credit (CITC) – This program provides a 10 per cent non-refundable tax credit of up to $5 million for a corporation’s eligible capital expenditures on manufacturing, processing and tourism infrastructure. The CITC was planned to operate for two years. To continue to encourage companies to invest in Alberta, the credit will be extended until 2021-22.

Personal tax measures

Alberta’s 2018 personal tax rates are as follows:

Income tax brackets

Alberta personal tax rates

$0 to $128,145

10%

$128,146 to $153,773

12%

$153,774 to $205,031

13%

$205,032 to $307,547

14%

Over $307,547

15%

 

For taxable income in excess of $205,031, the 2018 combined federal and Alberta personal income tax rates are as follows:

Income tax brackets

Ordinary income

Capital gain

Eligible dividend

Non-eligible dividends

$205,032 to $205,842

43%

21.50%

24.81%

35.84%

$205,842 to $307,547

47%

23.50%

30.33%

40.84%

Over $307,547

48%

24%

31.71%

41.64%

 

Personal tax credits/amounts

For 2018, the non-refundable tax credits for basic personal and spousal amounts will increase to $18,915.

Other tax measures
  • Federal excise tax will apply to the sale of cannabis products in Alberta, specifically:
    • The greater amount of either $1 per gram or 10 per cent of the producer’s price, wherein the province retains 75 per cent of the taxes collected; and
    • 10 per cent of the estimated retail price, where Alberta receives the entire amount.

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Québec

Québec’s 2018-2019 budget was tabled by Finance Minister Carlos J. Leitão.

Business tax measures

  • Standardization of tax rates for all SMBs – The small-business deduction (SBD) rate will slowly rise until it reaches 4 per cent in 2021; thus, the tax rates for SMBs in all sectors will become standardized.  

The minimum tax rate applicable to income eligible for SBD is as follows:

 

Jan 1st - March 27, 2018

March 28th- Dec 31, 2018

2019

2020

As of Jan. 1, 2021

General rate

11.7%

11.7%

11.6%

11.5%

11.7%

Max. SBD rate*

-3.7%

-4.7%

-5.6%

-6.5%

-7.5%

SMB’s tax rate

8%

7%

6%

5%

4%

Additional max. deduction for primary and manufacturing sectors SMBs**

-4%

-3%

-2%

-1%

-

Total

4%

4%

4%

4%

4%

*This rate is reduced linearly, where the number of remunerated hours of the corporation’s employees is less than 5 500 hours but more than 5,000 hours, or where the proportion of the corporation’s primary and manufacturing sectors activities is between 25 per cent and 50 per cent.

**This rate is reduced linearly, where the proportion of the corporation’s primary and manufacturing sectors activities is between 25 per cent and 50 per cent.

Corporate tax rates

Quebec’s 2018 and 2019 corporate tax rates are as follows:

 

2018

2019

 

QC

Federal and QC combined

QC

Federal and QC combined

Small business tax rate (manufacturing, processing and primary sector)

4%

14%

4%

13%

General corporate tax rate

11.70%

26.70%

11.70%

26.70%

 

  • Harmonization with federal measures from the 2018 Federal Budget – The province will adopt (with necessary modifications) related to the taxation of income sprinkling proposed by the Department of Finance Canada in 2017. In addition, the provincial legislation will be amended to harmonize with other various tax measures regarding foreign affiliates; artificial losses using equity based financial arrangements and stop loss on share purchase transactions.
  • Health services fund - Small and medium sized business (SMB) will see a reduction in their contribution to the health services fund, over the next five years.
  • New refundable tax credit for training - Qualified SMBs will receive tax assistance of up to $5,460 a year, per eligible employee who participates in eligible training.
  • Enhanced capital cost allowance - The capital cost allowance will increase from 35 per cent to 60 per cent for new manufacturing, processing or general-purpose electronic data processing equipment acquired before April 1, 2020.
  • Broadening of tax holiday for large investment projects - The 2014 Budget introduced tax holiday for large investment projects. A corporation that carries out a large investment project in Québec may, under certain conditions, claim a tax holiday in respect of the income from its eligible activities relating to the project and a holiday from employer contributions to the heath services fund relating to the portions of wages paid to its employees that is attributable to the time they devote to such activities. This tax holiday lasts 15 years. Budget 2018 proposes to grant tax holiday status to large investment projects that develop an eligible digital platform. Eligible digital platform is computing environment allowing management or use of service occupying a function as an intermediary in accessing information, product or services edited or provided by the corporation or by a third party.
  • New refundable tax credit for digital transformation – This refundable tax credit of 35 per cent will provide assistance of up to $7 million annually in respect of expenditures related to the digital transformation of their print media activities. The credit will apply for eligible expenditures incurred before Jan. 1, 2023.

Personal tax measures

Changes to the rate of the dividend tax credit

To take into account that general tax reduction and the increase in the small business deduction (SBD) announced as part of this budget, and to ensure a better integration of the Québec corporate tax system with the personal tax system, the rates of the dividend tax credit for eligible dividends and the dividend tax credit for non-eligible dividends will be gradually reduced.

Consequently, the rate of the dividend tax credit for eligible dividends, which is currently 11.9 per cent of the dividend gross-up amount, will be reduced to 11.86 per cent of the gross-up amount of a dividend received or deemed received after the budget date but before Jan. 1, 2019. It will be reduced to 11.78 per cent of the gross-up amount of a dividend received or deemed received in 2019, and to 11.7 per cent of the gross-up amount of a dividend received or deemed received after December 31, 2019.

Similarly, the rate of the dividend tax credit for non-eligible dividends, which is currently 7.05 per cent of the dividend gross-up amount, will be reduced to 6.28 per cent of the gross-up amount of a dividend received or deemed received after the budget date but before Jan. 1, 2019. It will be reduced to 5.55 per cent of the gross-up amount of a dividend received or deemed received in 2019, to 4.77 per cent of the gross-up amount of a dividend received or deemed received in 2020, and to 4.01 per cent of the gross-up amount of a dividend received or deemed received after December 31, 2020.

For greater clarity, no change is made to the dividend gross-up rates.

As a result of the changes to the dividend tax credits for both eligible and non-eligible dividends, the combined federal and Québec top marginal rates for dividends are as follows:

 

Combined Federal and Québec Top Marginal Rates

Year

Eligible

Non-eligible

Before Mar 28, 2018

39.83%

43.94%

From Mar 28th to Dec 31, 2018

39.89%

44.83%

2019

40%

46.25%

2020

40.11%

47.14%

2021 and subsequent years

40.11%

48.02%

 

Quebec’s 2018 personal tax rates are as follows:

Income tax brackets

Quebec personal tax rates

$0 to $43,055

15%

$43,056 to $86,105

20%

$86,106 to $104,765

24%

Over $104,766

25.75%

 

The top marginal combined federal and Quebec personal income tax rates for 2018 are as follows:

Amounts received before March 28, 2018:

Ordinary income

Capital gain

Eligible dividend

Non-eligible dividends

53.31%

26.65%

39.83%

43.94%

 

Amounts received after March 27, 2018:

Ordinary income

Capital gain

Eligible dividend

Non-eligible dividends

53.31%

26.65%

39.89%

44.83%

 

  • First-time home buyers’ tax credit - As of the 2018 taxation year, a $5,000 first-home buyers’ credit will be made available. This credit combined with the existing federal tax credit could provide eligible Québec home buyers with up to $1,376 ($750 through the Québec tax credit) in tax relief.
  • Extension for the RénoVert tax credit - The RénoVert tax credit has been extended to March 31, 2019. Capped at $10,000 per eligible dwelling, this program provides financial assistance to carry out recognized eco-friendly renovation work on the individual’s principal place of residence or on a cottage suitable for year-round occupancy that is normally occupied by the individual.
  • Greater access to the tax shield - Eligible work income has increased from $3,000 to $4,000 as of the 2018 taxation year.
  • Enhancement of the tax credit for experienced workers - To encourage experienced workers to remain in or re-enter the labour market, the tax system grants older workers a tax credit that can eliminate the income tax payable on part of their eligible work income that exceeds the first $5,000. To further encourage experienced workers to remain in the labour market, the age of eligibility for the tax credit will be lowered, as of the 2018 taxation year, to 61 years of age. For the new category of workers 61 years of age, the maximum amount of eligible work income on which the tax credit would be calculated is $3,000. Moreover, the tax legislation will be amended to provide that the maximum amount of eligible work income on which the tax credit will be calculated for experienced workers aged 62 and over will be increased by $1,000 as of the 2018 taxation year.
  • Enhancement of the refundable tax credit for the acquisition or rental of property intended to help seniors live independently longer - An individual over 70 years of age is eligible for a refundable tax credit for the year equal to 20 per cent of the qualified property. To enable more seniors to obtain the property necessary to maximize their independence and ensure their safety, the refundable tax credit for the acquisition or rental of property intended to help seniors live independently longer will be enhanced, as of the 2018 taxation year, through the reduction, to $250 (previously $500), of the threshold at which the tax credit may be claimed in respect of expenses paid for qualified property, and through the broadening of the existing list of qualified property.
  • Broadening of the tax credit for persons living alone – For a taxation year after 2017,  an individual who ordinarily lives, throughout the year in a self-contained domestic establishment maintained by the individual and in which no person, other than the individual, a person under 18 years of age or an eligible student of whom the individual is either the father, mother, grandfather or grandmother, or the great-grandfather or great-grandmother, lived during the year may claim, for that year, the amount for persons living alone in the calculation of the tax credit for a person living alone.
  • Enhancement of the refundable tax credit for childcare expenses:
    • Annual limits for child care expenses have been increased to $13,000 for children under 7 with physical or mental impairment and $9,500 for children under 7 without physical or mental impairment;
    • Annual limits will be automatically indexed as of the 2019 tax year.
  • Extension of the tax credit for a first major cultural gift – This tax credit of up to $6,250 is granted to individuals, on certain conditions, in respect of a first major cultural gift made after July 3, 2013, but before January, 1, 2018. A major cultural gift of an individual for a taxation year means the eligible amount of a gift of money, up to $25,000, made by the individual in the year or in any of the four preceding taxation years to an eligible cultural donee, if the eligible amount of the gift is at least $5,000. Given the increase in the number of major cultural gifts since the introduction of this measure, it will be extended five years.

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Newfoundland and Labrador

Newfoundland and Labrador’s 2018-2019 budget was tabled by Finance Minister Tom Osborne.

Business tax measures

Corporate tax rates

Newfoundland and Labrador’s 2018-2019 budget announced no new changes to the corporate tax rates. Newfoundland and Labrador’s 2018 and 2019 corporate tax rates are as follows:

 

2018

2019

 

NFLD

Federal and NFLD combined

NFLD

Federal and NFLD combined

Small business tax rate

3%

13%

3%

12%

General corporate tax rate

15%

30%

15%

30%

 

Other business tax measures

The budget proposes to increase the threshold of the provincial payroll tax. As of January 2019, this will be raised from its current level of $100,000 to $1.3 million.

Personal tax measures

The Budget does not propose any changes to the personal income tax rates. Newfoundland and Labrador’s 2018 personal tax rates are as follows:

Income tax brackets

NFLD personal tax rates

$0 to $36,926

8.70%

$36,927 to $73,852

14.50%

$73,853 to $131,850

15.80%

$131,851 to $184,590

17.30%

Over $184,590

18.30%

 

For taxable income in excess of $144,489, the 2018 combined federal and Newfoundland and Labrador’s personal income tax rates are as follows:

Income tax brackets

Ordinary income

Capital gain

Eligible dividend

Non-eligible dividends

$144,890 to $184,590

46.30%

23.15%

35.71%

38.01%

$184,591 to $205,842

47.30%

23.65%

37.09%

39.17%

Over $205,842

51.30%

25.65%

42.61%

43.81%

 

Personal tax credits/amounts

Starting Jan. 1, 2019, a new non-refundable tax credit of $3,000 will be available to search and rescue volunteers.

Other tax measures

The retail sales tax on automobile insurance will be reduced by 5 per cent over the next four years, as follows:

  • 2019: 2 per cent
  • 2020: 1 per cent
  • 2021: 1 per cent
  • 2022: 1 per cent

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Ontario

Ontario’s 2018-2019 budget was tabled by Minister of Finance Charles Sousa. For a comprehensive analysis of Ontario’s budget, click here.

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Prince Edward Island

Prince Edward Island’s 2018-2019 budget was tabled by Finance Minister Heath MacDonald.

Business tax measures

Corporate tax rates

Prince Edward Island’s 2018-2019 budget proposes to reduce the small business corporate rate from 4.50 per cent to 4 per cent. Prince Edward Island’s 2018 and 2019 corporate tax rates are as follows:

 

2018

2019

 

PEI

Federal and PEI combined

PEI

Federal and PEI combined

Small business tax rate

4%

14%

4%

13%

General corporate tax rate

16%

31%

16%

31%

 

Other business tax measures
Small business investment grant

The budget proposes to introduce a small business investment grant that will provide companies with a 15 per cent rebate on qualifying business investments of up to $25,000.

Personal tax measures

The budget does not propose any changes to the personal income tax rates. Prince Edward Island’s 2018 personal tax rates are as follows:

Income tax brackets

PEI personal tax rates

$0 to $31,984

9.80%

$31,985 to $63,969

13.80%

Over $63,969

16.70%

 

For taxable income over $98,408, the 2018 combined federal and Prince Edward Island’s personal income tax rates are as follows:

Income tax brackets

Ordinary income

Capital gain

Eligible dividend*

Non-eligible dividends*

$98,409 to $144,489

44.37%

22.19%

24.56%

36.14%

$144,490 to $205,842

47.37%

23.69%

28.70%

39.62%

Over $205,842

51.37%

25.69%

34.22%

44.26%

*the budget announced that the dividend tax credit will be adjusted to preserve integration; however these changes have not been announced. The table above does not reflect this proposal.

Personal tax credits/amounts

The budget proposes to increase the province’s basic personal amount from $8,160 to $8,660 for 2018 and increase to $9,160 for 2019.

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Saskatchewan

Saskatchewan’s 2018-2019 budget was tabled by Finance Minister Donna Harpauer.

Business tax measures

Corporate tax rates

Saskatchewan’s 2018-2019 budget does not propose to change the corporate tax rate or its $600,000 small business limit. Saskatchewan’s 2018 and 2019 corporate tax rates are as follows:

 

2018

2019

 

SK

Federal and SK combined

SK

Federal and SK combined

Small business tax rate

2%

12% (up to $500,000)

17% (500,000 to $600,000)

2%

11% (up to $500,000)

16% (500,000 to $600,000)

General corporate tax rate

12%

27%

12%

27%

 

Other business tax measures
Saskatchewan technology start-up incentive

To encourage business investment in early stage technology start-ups, Saskatchewan is introducing an incentive to increase the availability of patient and risk tolerant seed capital. The Saskatchewan technology start-up incentive (STSI) builds on the best practices in other Western Canadian jurisdictions to address the capitalization challenges faced by Saskatchewan technology start-ups. The STSI will provide a non-refundable tax credit equal to 45 per cent of qualifying new investments made in eligible small businesses.

Eligible small businesses (ESBs) are early stage technology start-ups that:

  • are developing new technologies or applying existing technologies in a new way, to create proprietary new products, services, or processes that are repeatable and scalable
  • have less than 50 employees
  • are incorporated and headquartered in Saskatchewan, and
  • have the majority of staff and operations located in Saskatchewan.

Investors can be either accredited or non-accredited. Accredited investors include local investment fund managers and financial institutions. Non-accredited investors will be permitted to invest within the confines of Saskatchewan securities legislation. Venture capital corporations may also raise capital and make investments under the terms of the STSI program.

Upon making an approved ESB investment, eligible investors will receive an eligibility certificate from Innovation Saskatchewan which may then be used to claim the 45 per cent STSI tax credit from the Saskatchewan Ministry of Finance. For example, a $500,000 investment can earn a maximum tax credit of $225,000 per investment in an ESB. An investor may claim up to $140,000 in tax benefits per year. Unused tax credit amounts may be carried forward for up to four years after the ESB investment is made. The minimum hold period for ESB investments is two years and the ESB may not be acquired, go public or leave Saskatchewan within that two-year period.

Saskatchewan value-added agriculture incentive

To encourage business investments that will support the continued diversification of the provincial economy, this Budget introduces a new growth incentive designed to improve investment in Saskatchewan’s value-added agriculture sector. The Saskatchewan value-added agriculture incentive (SVAI) will provide a non-refundable corporation income tax credit equal to 15 per cent of qualifying new capital expenditures.

Eligible value-added agriculture activities are defined as the physical transformation or upgrading of any raw/primary agricultural product or any agricultural by-product or waste into a new or upgraded product. Potential examples include pea protein processing, canola seed crushing, oat milling, malt production and cannabis oil processing. Qualifying projects include new or existing value-added agriculture facilities making capital expenditures of at least $10 million related to new or expanded productive capacity.

Eligible companies can claim the 15 per cent SVAI tax credit by submitting the certificate of SVAI eligibility to the Saskatchewan Ministry of Finance, along with the company’s Notice of Assessment from the Canada Revenue Agency. The Ministry will redeem the tax credit as a rebate up to the amount of Saskatchewan corporation income tax paid by the company. Redemption of the tax credit will be limited to 20 per cent in year one after the facility begins operations, 30 per cent in year two, and 50 per cent in year three. Unused tax credit amounts can be carried forward to subsequent taxation years, up to the tenth year after the facility begins operations. The SVAI program will sunset after December 31, 2022.

Personal tax measures

The 2017 Budget had proposed to reduce Saskatchewan’s personal income tax rates by 0.50 per cent from July 1, 2019. The budget announces a temporary freeze to the tax reduction plan. In addition, the budget proposes to adjust its effective dividend tax rate on non-eligible dividends. For the 2018 taxation year, the effective Saskatchewan dividend tax credit rate will be 3.333 per cent of taxable non-eligible dividend income. For the 2019 and subsequent taxation years, this rate will be 3.362 per cent.

Saskatchewan’s 2018 personal tax rates are as follows:

Income tax brackets

Saskatchewan personal tax rates

$0 to $45,225

10.50%

$45,226 to $129,214

12.50%

Over $129,214

14.50%

 

For taxable income over $129,214, the 2018 combined federal and Saskatchewan personal income tax rates are as follows:

Income tax brackets

Ordinary income

Capital gain

Eligible dividend

Non-eligible dividends

$129,215 to $144,489

40.50%

20.25%

19.98%

31.47%

$144,490 to $205,842

43.50%

21.75%

24.12%

34.95%

Over $205,842

47.50%

23.75%

29.64%

39.59%

 

Personal tax credits/amounts

The budget proposes to increase the province’s basic personal amount from $8,160 to $8,660 for 2018 and increase to $9,160 for 2019.

Caregiver tax credits

In its 2017-18 Budget, the federal government announced the consolidation of federal caregiver related income tax credits into a single Canada caregiver credit. Saskatchewan will not mirror the federal change and will instead maintain the existing provincial Infirm dependant tax credit and caregiver tax credit, in order to ensure that dependants who are currently eligible to be claimed under these tax credits remain eligible. Saskatchewan’s $9,464 tax credit amounts also remain significantly higher than the $6,883 federal amount.

Other tax measures
Tax on cannabis

Saskatchewan will follow a taxation approach agreed to by Canadian Finance Ministers in late 2017. Saskatchewan intends to formalize its participation by entering into a two-year agreement, where the province will receive 75 per cent of the federal cannabis excise duty revenue. Budget 2018-19 PST will also apply to all retail sales of cannabis products in Saskatchewan and the federal excise duty rate will be increased to account for interprovincial sales tax rate differentials. Saskatchewan will receive this revenue from the federal government.

Vehicles

Effective April 11, 2018, PST will not be applied to the private sale of used vehicles with a purchase price of up to $5,000. Private sales of used vehicles registered for commercial use, as well as dealer sales of used vehicles, are not eligible for the $5,000 exemption. PST will not be charged for used vehicles gifted between qualifying family members – spouses, parents or legal guardians, children, grandparents, grandchildren or siblings.

ENERGY STAR appliances

Effective April 11, 2018, the PST exemption on ENERGY STAR appliances is removed.

 

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