Manitoba 2016 Budget Bill Receives First Reading | KPMG | CA

Manitoba 2016 Budget Bill Receives First Reading

Manitoba 2016 Budget Bill Receives First Reading

Manitoba Bill 11, which contains certain measures that were announced in Manitoba's 2016 budget, received first reading on June 15, 2016.

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Manitoba 2016 Budget Bill Receives First Reading

Since this bill has received first reading, the measures are considered to be substantively enacted for purposes of IFRS and Accounting Standards for Private Enterprise (ASPE) as of June 15, 2016 (as Manitoba has a majority government).

Bill 11 also adjusts the Manitoba dividend tax credit rate for non-eligible dividends. This is in response to the change to the federal gross-up rate for non-eligible dividends, which was included in Federal Bill C-15, effective January 1, 2016. As a result, the top marginal tax rate for non-eligible dividends for Manitoba will be 45.74%.

Corporate measures

Among other changes, Bill 11 contains the following corporate tax measures, as announced in Manitoba's 2016 budget:

  • Extension of the small business venture capital tax credit by three years, to the end of 2019
  • Modifications to the interactive digital media tax credit through the elimination of the 24-month and $500,000 per project labour expense limits from the existing 40% credit
  • Addition of a 35% interactive digital media tax credit for a corporation that pays less than 25% of its wages to Manitoba employees, provided the corporation pays wages of at least $1,000,000 each year to Manitoba employees working on eligible projects.

Dividend tax credit - non-eligible dividends

Bill 11 provides for a Manitoba dividend tax credit for non-eligible dividends of .7835% of the taxable dividend, based on the new 17% federal gross-up for non-eligible dividends, effective January 1, 2016. Federal Bill C-15 includes measures to adjust the gross-up and dividend tax credit for non-eligible dividends consequential to the 2016 federal budget holding the small business tax rate for the 2016 and subsequent taxation years at 10.5%.

For more information, contact your KPMG adviser.

Information is current to June 21, 2016. The information contained in this publication 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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