March 21, 2012
Highlights of the 2012 Saskatchewan Budget
Today Saskatchewan Finance Minister Ken Krawetz delivered the province’s 2012 budget. The budget anticipates a surplus of $14.8 million for 2012-13. The budget introduces a 10% reduction in the general corporation income tax rate on income earned from the rental of certain new housing and restricts the refundability of the Research and Development (R&D) Tax Credit to Canadian-controlled private corporations, among other changes. The budget does not include any corporate or personal income tax rate changes.
Highlights of tax measures announced in today’s budget are summarized below.
tax rebate on new rental housing
All private and public Canadian-resident corporations qualify for the rebate as long as they have a permanent establishment in Saskatchewan and are solely engaged in the construction and rental of eligible new rental housing in Saskatchewan.
For the purposes of determining the tax rebate, the eligible rental income will pertain specifically to the rental of eligible rental housing and will be based on terms and conditions outlined in the federal Income Tax Act. However, the rules specifically exclude income from the disposition of eligible new rental housing, including recapture of depreciation and capital gains.
Small business corporations will be able to apply for the rebate on eligible income that does not benefit from the 2% small business income tax rate that applies on the first $500,000 of active business income of Canadian-controlled private corporations.
An eligible corporation can contract with another party for the construction of the eligible new rental housing or the business of renting the eligible new rental housing. However, the corporation must retain ownership of the housing and must be able to clearly identify income earned from the owning and renting of that housing in order to access the tax rebate. The budget mentions that it will carefully scrutinize non-arm’s length transactions to ensure that the eligible corporation or its owners do not artificially benefit from this tax rebate.
Rental housing that is registered under a building permit dated on or after March 21, 2012 and before January 1, 2014 will be eligible for the tax rebate, up to a maximum of 10,000 rental units. Eligible units must be constructed and available for rent before the end of 2016.
R&D Tax Credit
Film Employment Tax
Homebuyers Tax Credit
Active Families Tax
Other Tax Changes
The budget also:
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 21, 2012. 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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