MANITOBA GOVERNMENT COMMITS TO INCREASE SMALL BUSINESS TAX-FREE INCOME THRESHOLD TO $500,000 IN 2017
Starting in 2017, small businesses in Manitoba will be able to earn even more income and still pay no provincial corporate income tax as the small business threshold will increase to $500,000, Finance Minister Greg Dewar announced today, marking the five-year anniversary of Manitoba becoming the first province to permanently eliminate the small business tax rate when the small business threshold increases to $450,000.
“We are proud that our government is still the only one in Canada that has eliminated the small business tax. Small businesses are the heart of our economy and we want to do what we can to help local entrepreneurs free up more money to create jobs and invest in our province,” said Minister Dewar. “When we entered office, Manitoba’s small businesses faced the highest taxes in the country. Now, they have the most competitive corporate income tax rate in Canada.”
The minister noted that $3.8 billion has been put back in the hands of Manitoba’s entrepreneurs since 1999 because of tax relief measures introduced by the provincial government.
“Eliminating corporate income taxes on Manitoba’s smallest businesses has made the system one of the most competitive in Canada for entrepreneurs,” said Elliot Sims, Manitoba director, provincial affairs, Canadian Federation of Independent Business. “Entrepreneurs are pleased to see the provincial government commit to increasing the small business threshold to $500,000, the Canadian provincial standard.”
In 2010, Manitoba became the first and only province to permanently eliminate the small business tax rate, which benefits about 85 per cent of taxable corporations in the province, the minister noted. Currently, 14,000 corporations pay no Manitoba corporate income tax as a result of the zero per cent rate. That number is expected to increase to 16,000 in 2016, Minister Dewar said.
“When small businesses like mine aren’t required to pay small business income tax, this gives us extra capital to hire new staff, invest in equipment or purchase more inventory,” said Constance Popp, owner, Chocolatier Constance Popp. “This commitment by the province to increase the threshold means that more small business owners will be able to choose how to reinvest that savings into growing their businesses. As well, this initiative helps make Manitoba a more marketable place to attract new and established business owners to the province.”
The minister noted that in addition to a competitive tax environment, Manitoba has numerous business advantages including:
one of Canada’s most stable provincial economies over the past decade;
a central location and excellent transportation links to the rest of North America and the world;
low industrial and commercial land costs;
among the world’s lowest electricity costs;
a skilled, well-educated workforce, with a high labour force participation rate and low unemployment; and
supportive research and development and innovation sectors.
The minister noted that at the current threshold, 14,000 small businesses pay no income tax, and when the small business threshold increases to $450,000 in 2016, the number of businesses paying no income tax is expected to increase to 16,000. Increasing the threshold to $500,000 will benefit another 3,600 small businesses, saving them each up to $6,000 off their income tax every year, he added.