Tax highlights from the 2016 Saskatchewan budget

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Tax highlights from the 2016 Saskatchewan budget

Published
June 2016

Tax highlights from the 2016 Saskatchewan budget

Finance Minister Kevin Doherty tabled the 2016 Saskatchewan provincial budget on June 1, 2016. The budget forecasts total revenue of $14.02 billion and a total expense of $14.46 billion for a projected deficit of $434 million for 2016-17. The budget states that the deficit is largely due to a drop of nearly a billion dollars in non-renewable resource revenue. The government expects Saskatchewan’s economy to rebound in 2017, with GDP growth predicted to be 2.5%, following an expected 0.6% decline in 2016. The government is planning a return to balanced budgets by 2017-18.

On the tax side, there were no new taxes and no changes to personal or corporate tax rates. The budget does contain tax credit changes including a change to the province’s dividend tax credit, the introduction of a new Graduate Retention Program First Home Plan and the elimination of the Active Families Benefit, a credit originally introduced to assist families with the cost of cultural, recreational and sports activities.

Budget 2016 confirms the government’s intention to engage in an exercise of “transformational change” to ensure the delivery of high quality public services in the most effective, efficient way. As a part of this process, effective 2016, the government will take a close look at everything that it does with the goal of finding administrative efficiencies and savings.

The following pages are a summary of the changes announced in the budget. Please note that these changes are still proposals until passed into law by the provincial government.

Personal Tax Matters

Personal income tax rates

There are no changes to Saskatchewan’s personal income tax rates for 2016, which are shown in the table below, although the tax brackets have been indexed by 1.3% to reflect the effect of inflation.

 Taxable income range

2016 tax rates

$15,844 - $44,601

11%

$44,602 - $127,430

13%

$127,431 and over

15%

 The new federal marginal tax rate of 33% for taxable income in excess of $200,000 became effective January 1, 2016. The table below shows the 2016 combined federal and provincial highest marginal tax rates for various types of income.

Type of income

2016 tax rates

Regular income

48.00%

Capital gains

24.00%

Eligible dividends

30.33%

Non-eligible dividends

40.06%

Dividend tax credit

Budget 2016 includes a change to the province’s dividend tax credit to counteract a recent federal change. Without a corresponding provincial change, the federal change would have increased provincial tax on dividend income for residents of Saskatchewan. With a provincial change, Saskatchewan’s tax on dividend income will remain unchanged from previous years. No additional details were provided in the budget.

Active families benefit

The Active Families Benefit is a refundable personal income tax credit designed to assist families with the cost of registering children in cultural, recreational and sports activities. The credit provides an annual benefit of up to $150 per child under the age of 18 in respect of eligible registration fees, subject to family income.

Budget 2016 proposes to eliminate this credit. An effective date was not specified in the budget.

Graduate retention program first home plan

Saskatchewan has a Graduate Retention Program (GRP) that allows post-secondary graduates tax credits of up to $20,000 to rebate tuition fees if they become and remain residents of Saskatchewan.

Budget 2016 introduces a new program, the Graduate Retention Program First Home Plan, to allow eligible post-secondary graduates to use up to $10,000 of their future GRP tax credits as an interest-free loan to use toward the down payment on their first home in Saskatchewan.

Corporate Tax Matters

Corporate income tax rates

There were no changes proposed to any corporate tax rates. The table below shows Saskatchewan tax rates and the small business limit for 2016.

Category

2016 tax rates

General rate

12%

Manufacturing & processing rate

10%

Small business rate

2%

Small business limit

$500,000

Other Proposals

Saskatchewan employment supplement

The Saskatchewan Employment Supplement (SES) provides assistance to families with lower-incomes who have children. It is a monthly payment that supplements income from a job, farming, self-employment, or from child or spousal support.

In 2015-16, the program changed to target the supplement to applicants with children 12 years old and under. However there was a grandfathering provision, leaving families who were already in the program eligible to receive support for children 13 years old and over. Budget 2016 proposes the elimination of the grandfathering provision.

Children’s and seniors’ drug plans

The Children’s and Seniors’ Drug Plan is rising by $5 per prescription effective June 1, 2016, resulting in a $25 per prescription maximum.

Publish date: 
June, 2016