March 20, 2013
Today Saskatchewan’s Finance Minister Ken Krawetz delivered the province’s 2013 budget. The budget, which does not include any corporate or personal income tax rate changes, anticipates a surplus of $149.8 million for 2013-14 with modest overall spending increases of 3.1%. In the budget, Saskatchewan announces that it will defer a planned decrease to the general corporate tax rate and introduce Pooled Registered Pension Plans legislation, among other changes.
Highlights of tax measures announced in today’s budget are summarized below.
Corporate income tax rates
The budget did not announce any changes to the corporate tax rate, and noted that Saskatchewan is deferring plans to reduce the general corporate income tax rate to 10% (from 12%) by 2015. As a result, the corporate income tax rates effective January 1, 2013 remain as follows:
|Corporate Income Tax Rates - As of January 1, 2013|
*on first $500,000 of active business income
Saskatchewan Resource Credit
The budget reduces the Saskatchewan Resource Credit (SRC), a credit against Crown royalties and production taxes on the production of oil, natural gas, potash, uranium and coal in Saskatchewan by 0.25%, effective April 1, 2013.
The budget reduces the SRC for potash, uranium and coal production to 0.75% (from 1%) of the value of sales and, for oil and natural gas production from wells drilled before October 2002, to either 0.75% (from 1%) or 2.25% (from 2.5%) of the value of production, depending on the type of well and when it was drilled.
Personal income tax rates
No changes to Saskatchewan’s income tax rate were announced in the budget. As a result, Saskatchewan’s combined federal and provincial top marginal tax rates remain as follows:
|Combined Top Marginal Tax Rates for 2013|
|Interest and regular Income
Pooled Registered Pension Plans
Saskatchewan announced it will introduce The Pooled Registered Pension Plans Act in 2013 to allow Saskatchewan employees and the self-employed to participate in Pooled Registered Pension Plans (PRPPs). The government notes that the design of Saskatchewan’s PRPP legislation will closely mirror the federal PRPP legislation, with modifications as necessary to align with existing provincial pension rules.
As under federal legislation, administrators of PRPPs in Saskatchewan can be any eligible Canadian corporation that meets the licensing requirements. Although financial institutions and life insurance companies are the most likely potential administrators, other corporate entities may also qualify.
Labour Sponsored Venture Capital Corporations tax credit
As part of Saskatchewan’s recent review of the Labour Sponsored Venture Capital Corporations tax credit (LSVCC), the budget proposes that LSVCCs must target a minimum proportion of their aggregate net capitalization in innovation-related investments, starting at:
- 15% in 2013
- 20% 2014 and
- 25% 2015 and thereafter.
Saskatchewan says that it will consult with innovation stakeholders to define eligible innovation-related investments.
The budget also proposes to reduce the aggregate amount of capital that the LSVCCs can raise in a year through the Invest in Saskatchewan Program to $80 million (from $110 million). In addition, no one LSVCC will be able to raise more than 50% of that total each year. This change will apply for 2013 and will limit the cost of the program’s tax credit to no more than $16 million per year.
Education Property Tax
The mill rates for the Education Property Tax will be reduced to:
- Agricultural land — 2.67 (from 3.91)
- Residential property — 5.03 (from 9.51)
- Commercial/industrial mill rate — 8.28 (from 12.25-18.55)
- Resource (new separate class) — 11.04 (from 12.25-18.55).
These reduced mill rates are intended to offset the increase in property taxes that will happen with increase in property values from the reassessments in 2013. Overall the taxes generated should remain neutral but may mean increases and decrease for specific taxpayers.
The budget increases the tax rate on tobacco products to 25 cents per cigarette or gram of cut/loose tobacco (from 21 cents), effective March 20, 2013.
The budget adjusts the mark-up rates for all beverage categories by approximately 3%, effective April 1, 2013.
Your KPMG adviser can help you assess the effect of the tax changes in this year’s Saskatchewan budget on your personal finances or business affairs, and point out ways to take advantage of their benefits or ease their impact. We can also keep you abreast of the progress of these proposals as they make their way into law and help you bring any concerns you may have to the attention of the Saskatchewan Ministry of Finance.
Information is current to March 20, 2013. The information contained in this TaxNewsFlash-Canada is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG’s National Tax Centre at 416.777.8500.
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