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Saskatchewan — Small business tax rate set to temporarily drop?

Saskatchewan — Small business tax rate set to drop?

Saskatchewan’s newly elected majority government promised to temporarily reduce the small business rate

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Now that Saskatchewan has a newly elected majority government, reviewing the government's election platform may provide some insight on what tax changes may be coming in the near future. During the election, the governing party promised to temporarily reduce the province's small business income tax rate, introduce a new home renovation tax credit and restart the Active Families Benefit. Although the government has not yet introduced any of these promised measures into legislation, we will provide an update if legislative changes are put forward.

The small business income tax rate changes will not be considered substantively enacted for the purposes of IFRS and Accounting Standards for Private Enterprise (ASPE) until a bill including the changes receives first reading (as Saskatchewan has a majority government). The changes will not be considered enacted for purposes of U.S. GAAP until that bill receives Royal Assent.

Small business income tax rate reduction

The government promised to temporarily reduce the province's small business income tax rate for the next three years. Specifically, the government promised to:

  • Reduce the small business income tax rate to 0% (from 2%) beginning October 1, 2020
  • Increase the small business income tax rate to 1% (from 0%) beginning July 1, 2022
  • Increase the small business income tax rate back to its current rate of 2% (from 1%) beginning July 1, 2023.

New home renovation tax credit

Saskatchewan's government also promised to introduce a new home renovation tax credit to allow homeowners to claim a 10.5% non-refundable tax credit on up to $20,000 of eligible home renovation expenses on their primary residence incurred between October 1, 2020 and December 31, 2022.

As part of its election platform, the government stated that homeowners will be able to claim a tax credit on eligible expenses between $1,000 and $12,000 ($11,000 total) incurred between October 1, 2020 and December 31, 2021 on their 2021 tax return. Homeowners will be able to claim a tax credit on eligible expenses between $1,000 and $10,000 ($9,000 total) incurred between January 1, 2022 and December 31, 2022 on their 2022 tax return. The promised change would include a number of restrictions on the type of expenditures that will qualify for the credit, and allow spouses residing at the same address to share the credit.

Active Families Benefit

Saskatchewan's government also promised to restart the Active Families Benefit. This income-tested refundable tax credit provides up to $150 annually per minor child to eligible families who pay fees to register children and youth in eligible sports, recreational and cultural activities. Families with children with disabilities will receive an extra $50 annually. The government noted that it intended to restart this benefit following the 2021-22 provincial budget.

For more information, contact your KPMG advisor.

Information is current to November 3, 2020. 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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