Help & Contact: 1 866 953 4769
Last updated: March 08 2016
High Earners Could Pay More in Manitoba
Ready for a fourth tax bracket? That’s just one piece of news in the Manitoba Economic and Fiscal Outlook delivered March 8, in advance of provincial election in which the current government will face significant challenges; now even more so with the announcement of a $770 million deficit.
If the proposed tax changes come to fruition, high income earners will pay more, some middle income earners will receive slightly more in tax credits, some small businesses could pay less, and seniors will get a break on their school taxes. Tax planning is in order, in other words. Here are the details.
1. New high income tax bracket – a fourth bracket to begin at taxable income levels of $170,000 is introduced at a rate of 20.9%. Combined with the federal tax rate of 33% on incomes over $200,000, high earners in Manitoba will now pay 53.9% on income over $200,000.
Here’s what the marginal tax rates look like on ordinary at the various brackets in Manitoba, should this come to pass:
| Taxable Income | MTR |
| $11,474 to $31,000 | 25.80% |
| $31,001 to $45,282 | 27.75% |
| $45,283 to $67,000 | 33.25% |
| $67,001 to $90,563 | 37.90% |
| $90,564 to $140,388 | 43.40% |
| $140,389 to $170,000 | 46.40% |
| $170,001 to $200,000 | 49.90% |
| over $200,000 | 53.90% |
This measure will generate an increase in revenue of $52.5 million (about 1.5% of personal income tax revenue) on a full-year basis from approximately 13,200 taxpayers who represent 1.9% of all taxpayers.
However, it will affect many more estates of single and widowed taxpayers who have not averaged in their taxable company or private pension sources soon enough. Those who die with $331,700 in their RRIFs for example, will pay $5660 more in the absence of a spousal rollover. Those with $500,000 will pay $11,550 more and if you leave $1000,000 in your RRSP to be taxed on your final return, you will pay $29,050 more.
| Impact of New Rate and Bracket on High Incomes (from Department of Finance, Manitoba) | ||||
| Taxable Income | 2016 Tax | 2017 Tax | Change in Tax |
Change in Tax as |
| (Dollars) | (Per Cent) | |||
| 170,000 | 24,874 | 24,874 | -. | 0.0 |
| 200,000 | 30,094 | 31,144 | 1,050 | 0.5 |
| 250,000 | 38,794 | 41,594 | 2,800 | 1.1 |
| 331,700 | 53,009 | 58,669 | 5,660 | 1.7 |
| 500,000 | 82,294 | 93,844 | 11,550 | 2.3 |
| 1,000,000 | 169,294 | 198,344 | 29,050 | 2.9 |
This compares as follows to other provincial high income tax brackets:
| Top Marginal Rate Rank* | |
| % | Taxable Income |
| BC 14.70 | 106,544 |
| AB 15.00 | 300,000 |
| SK 15.00 | 127,430 |
| NL 15.30 | 175,700 |
| PE 18.37 | 98,145 |
| NB 20.30 | 150,000 |
| ON 20.53 | 220,000 |
| MB 20.90 | 170,000 |
| NS 21.00 | 150,000 |
| QC 25.75 | 103,150 |
(*Based on known brackets and rates as of March 8, 2016. From the Manitoba release)
Other changes proposed to begin in 2017:
1. The Family Tax Benefit, which reduces Manitoba Taxes Payable on Line 428 will increase by $413 from $2065 to $2478 for individuals, their spouses, eligible individuals (equivalent to spouse) and for those who qualify for the age amount.
a. It will rise by $550 to $3302 from $2752 for those in the family who are disabled or for dependants under the age of 19.
2. The Personal Tax Credit of $190 will be renamed the Affordability Tax Credit and rise to $234 for individuals, spouses or eligible individuals, from $113 to $136 for those age 65 and older and their spouse, or the disabled and from $62 to $74 for each dependant over 18; and from $26 to $31 for those under 18.
 |
3. The Charitable Donations Tax Credit will be adjusted to account for additional benefits due to changes in federal and provincial high income tax brackets, as follows: For amounts donated up to $200, the 10,8% provincial rate will apply; on amounts over $170,000 the 17.4% rate will apply and in between the new 20.9% provincial rate will apply.
4. Small Business Income Limit increases to $500,000 on July 1, 2017.
5. The 45% Small Business Venture Tax Credit is extend to December 31st, 2019.
Effective in 2016:
6. Fertility Tax Credit. This refundable tax credit which can be shared between spouses has been increased to 50% of expenses up to $30,000 (previously 40% on $20,000); this increases to 75% if the patient is also undergoing other medical treatments that affect fertility (ie. Cancer). Further, 100% of preservation costs for up to 5 years to a maximum of $1500 in a lifetime is available. These provisions effective July 1, 2016.
7. Seniors School Tax Rebate increases. It is estimated that 98% of seniors will no longer pay school taxes when this rebate increases from $470 to $2300 in 2016.
Knowledge Bureau will continue to discuss federal and provincial tax changes and prepare comprehensive planning tutorials as it updates its tax, retirement and wealth management courses for the changes. Readers are also invited to register now for the comprehensive Distinguished Advisor Workshops May 24 to 31 in Winnipeg, Calgary, Vancouver and Toronto respectively, for a peer-to-peer advanced planning opportunity.
Evelyn Jacks is a best-selling Canadian author of 52 books including her latest, Family Tax Essentials. Evelyn is the Founder and President of Knowledge Bureau, a national educational institute. To learn more about professional tax preparation and tax-efficient wealth management, see www.knowledgebureau.com.
 |
 |
 |
 |
| Refer a Friend | Research | Calculators | Course Trials |
 |
|
|
|
