Corporate income tax
The budget did not announce any changes to the corporate income tax rate. As a result, the corporate income tax rates effective January 1, 2014 remain as follows:
The budget proposes to maintain Saskatchewan's current provincial income tax reduction for credit unions despite the 2013 federal budget announcement to phase-out the deduction over five years, beginning in 2013. As a result, credit unions will generally continue to pay the provincial 2% small business tax rate on all income (rather than on only the first $500,000 of income).
Oil and natural gas well levy
The budget proposes to replace many existing licensing fees for regulatory functions, including well licensing, facility licensing and geophysical permits, with a single levy. The province will also move to a cost recovery model in which industry will contribute 90% of total regulatory function costs. This measure is effective April 1, 2014.
Manufacturing Centre of Excellence
The budget provides $500,000 for start-up costs to establish a Manufacturing Centre of Excellence, which will focus on productivity improvement, innovation and workforce development for the provincial manufacturing sector.
In its 2013 budget, Saskatchewan announced that it was deferring plans to reduce the general corporate income tax rate to 10% (from 12%) by 2015. This planned rate reduction is not mentioned in the 2014 budget.
Dividend tax credit
As a result of the 2013 federal budget changes to the taxation of non-eligible dividends effective for 2014, Saskatchewan has increased its dividend tax credit to 3.40% (from 3.05%) so that the effective Saskatchewan tax rate on non-eligible dividends remains the same in 2014 as it was in 2013. As such, the combined federal-provincial top marginal tax rate on non-eligible dividends for 2014 will be 34.91% (up from 33.33%), with the 1.58% increase representing the federal tax rate change.
Saskatchewan's combined top marginal tax rates for 2013 and 2014 are as follows:
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We can help
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 19, 2014. 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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