Canada: Temporary reduction to 0% of small business rate (Saskatchewan)

Canada: Temporary reduction to of small business rate

Saskatchewan’s Bill 2 (first reading on 7 December 2020) would reduce the province’s small business income tax rate for the next three years.

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Specifically, under Bill 2, the schedule for the small business income tax rate would be as follows:

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


Non-eligible dividend tax credit

As a result of the small business rate changes, Bill 2 would also adjust the dividend tax credit for non-eligible dividends beginning in 2021, resulting in a top marginal tax rate for non-eligible dividends as follows:

Non-eligible dividends – Top marginal federal and Saskatchewan tax rate*

2020

2021

2022

2023

2024

40.37%

42.29%

41.82%

40.86%

40.37%

*Assumes no further changes to the federal or Saskatchewan tax rates.


Home renovation tax credit

Saskatchewan also introduced a new home renovation credit in Bill 1 (first reading on 3 December 2020). The measure would allow homeowners to claim a 10.5% non-refundable tax credit on up to $20,000** of certain eligible home renovation expenses on their primary residence.

Homeowners could claim a tax credit on eligible expenses between:

  • $1,000 and $12,000 ($11,000 total) incurred between 1 October 2020 and 31 December 2021 on their 2021 tax returns
  • $1,000 and $10,000 ($9,000 total) incurred between 1 January 2022 and 31 December 2022 on their 2022 tax returns

**$=Canadian dollar

There would be restrictions on the type of expenditures that could qualify, and spouses residing at the same address could share the credit.

Read a December 2020 report [PDF 347 KB] prepared by the KPMG member firm in Canada

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