From tax rates to incentive programs, we review the 2020-21 Estimates and any implications for personal and corporate finances.
On March 18, 2020, Finance Minister Donna Harpauer tabled the 2020-21 Estimates, unveiling spending plans for the coming year. Revenue forecasts were not provided due to the COVID-19 pandemic impacting world markets. A full budget with revenue forecasts is expected later this year.
The Estimates reveal $14.15 billion of government expenditure, representing an increase of 3.1% from 2019-20, and covers investments and spending on health care, education, social services and infrastructure. Spending includes a record-investment of $5.77 billion in health care, representing a 3.8% increase over the year prior.
On the income tax side, there were no increases or decreases to personal or corporate income tax rates for 2020 presented in the Estimates.
The following pages are a summary of changes announced. Please note that these changes are still proposals until passed into law by the provincial government.
PERSONAL TAX MATTERS
Personal income tax rates and tax brackets
The Estimates leaves personal income tax rates unchanged from 2019. The table below shows Saskatchewan tax rates and brackets for 2020.
|Taxable income range||2020 tax rates|
|$45,226 – $129,214||12.5%|
The table below shows the 2020 combined federal and provincial highest marginal tax rates for various types of income.
|Type of income||2020 combined tax rates|
Re-indexation of personal tax system
The province intends to introduce the re-indexation of Saskatchewan’s Personal Income Tax system to the national rate of inflation, beginning with the 2021 taxation year.
Saskatchewan Housing Benefit
$3.4 million is allocated to launch the new Saskatchewan Housing Benefit. The benefit is intended to help make housing more affordable for individuals or families who require rental support.
CORPORATE TAX MATTERS
Corporate income tax rates
The Estimates reveal no changes proposed to corporate income tax rates. The table below shows Saskatchewan tax rates and the small business limit for 2020.
|Category||2020 tax rates|
|Manufacturing and processing rate||10%|
|Investment income rate||12%|
|Small business rate||2%|
|Small business limit||$600,000|
The table below shows the 2020 combined federal and provincial corporate income tax rates for various types of income earned
by a Canadian-controlled private corporation (CCPC).
|Type of income||2020 combined tax rates|
|Small business income||11.0%|
|Active income over $500,000 / $600,000||17.0% / 27.0%|
|Manufacturing and processing income||25.0%|
Provincial sales tax rebates
The Estimates propose a Provincial Sales Tax (PST) rebate of up to 42% of PST paid (up to $350,000, excluding the land) on a new
home construction. This is intended to help both the construction industry and families looking to purchase a new home.
Oil Infrastructure Investment Program
This newly introduced program is a growth tax incentive, administered by the Ministry of Energy and Resources, to support new and expanded pipelines, as well as new pipeline terminals, to flow oil to markets.
Manufacturing and Processing Exporter Tax Incentive
The manufacturing and processing (M&P) exporter tax incentive will be extended for an additional three years. This incentive provides non-refundable tax credits to eligible corporations that expand the number of M&P-related full-time employees above the number that were employed in 2014.
Two new growth tax incentives will also be introduced. An agricultural technology incentive will support the application of emerging digital technologies and will help attract agricultural technology companies to Saskatchewan. A new chemical fertilizer incentive will encourage investment in Saskatchewan’s chemical fertilizer sector.
WE CAN HELP
Your Assante advisor can help you assess the impact of these proposals on your personal finances or business affairs and show you ways to take advantage of their benefits or ease their impact. The resources available to you and your advisor include Assante Private Client’s Wealth Planning Group, a multi-disciplinary team of accountants, lawyers and financial planners.
This communication is published by Assante Wealth Management (Canada) Ltd. (“AWM”) as a general source of information only. It should not be construed as providing specific tax, accounting, legal or investment advice, and should not be relied upon as such. Professional advisors should be consulted prior to acting on the basis of any information provided herein. AWM and its affiliates will not be responsible in any manner for direct, indirect, special or consequential damages, howsoever caused, arising out of the use of this communication.
Facts and data provided herein are believed to be reliable as at the date of publication, however AWM cannot guarantee that they are accurate or complete or that they will remain current at all times.
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Published March 19, 2020.