April 6, 2006
Saskatchewan’s Minister of Finance, Andrew Thomson, presented the 2006 provincial budget today at 2:30 p.m. Saskatchewan time. The following is a summary of the highlights contained in the budget.
Highlights for businesses
- A phased reduction in the general corporate income tax rate from 17% to 12%, to be completed July 1, 2008.
- A phased increase of the income threshold to which the 5% small business income tax rate applies, from the current $300,000 to $500,000, to be completed by July 1, 2008. There is no change to the current 5% rate.
- A phased elimination of the corporation capital tax (CCT) for all corporations, other than provincial Crown corporations and financial institutions, to be completed July 1, 2008. In addition, new capital investments made by corporations eligible for the phased elimination of the CCT will be exempt from the CCT during the transitional period (July 1, 2006 – June 30, 2008). This will likely be tied into Schedule 8 additions on corporate tax returns.
- A reduction in the CCT Resource Surcharge rates levied on Saskatchewan resource production. The general Surcharge rate will be reduced from 3.6% to 3.0% by July 1, 2008, and the special rate for fourth tier oil and gas production will be reduced from 2% of resource sales to 1.7% by July 1, 2008.
- Effective immediately, the existing investment tax credit (ITC) for capital acquisitions used in manufacturing and processing activities will be converted into a refundable tax credit. In addition, unclaimed ITC balances previously earned will have their carryforward period extended to ten years from the current seven years, allowing more time for corporations to utilize these balances.
- No change in the provincial PST rate. The Government indicated that before making any decision in favour of or against harmonizing the PST and GST, the various advantages and disadvantages need to be carefully weighed and Saskatchewan needs to ensure it has the fiscal resources to support such a change. The Government therefore announced it is deferring further consideration of sales tax harmonization or other PST reforms.
See PDF file below for Table of Business Tax Reform Implementation Plan.
Highlights for individuals
- The post-secondary graduate tax credit will increase to $850 in 2006 and $1,000 in 2007. Currently, the tax credit is $675.
- Introduction of a one-time trade entry income tax credit to recognize the high initial cost of tools that are required to be purchased by employees as a condition of employment. Four trade groups were identified with tax credits ranging from $148 to $1,375.
- Introduction of an annual tool maintenance tax credit to recognize the ongoing cost to a tradesperson of maintaining tools required as a condition of employment. The same four trade groups were identified with tax credits ranging from $33 to $275.
- Possible changes to the provincial taxation of dividend income will be considered once details of the federal changes are announced.
Other highlights
- The government has committed to an additional two-year freeze in university tuition.
- An 8% education property tax credit will continue in 2006 for residential, commercial and industrial property.
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Source: Deloitte & Touche LLP - Canada (English)