05 March 2018 Canada: Yukon issues budget 2018–19 On 1 March 2018, Yukon Premier and Finance Minister Sandy Silver tabled the territory's fiscal 2018–19 budget. The budget contains no new taxes and no tax increases. The Minister anticipates a surplus of CA$16.3m for 2017–18, but projects deficits of $4.5m for 2018–19 and $6.9m for 2019–20. Return to a surplus is expected for 2020–21. Following is a brief summary of the key tax measures. No changes are proposed to the corporate tax rates or the $500,000 small-business limit. Yukon's 2018 and 2019 corporate tax rates are summarized in Table A. Table A – Corporate tax rates | | 2018 | 2019 | | | Yukon | Federal and Yukon combined | Yukon | Federal and Yukon combined | Small business manufacturing and process tax rate*, ** | 1.50% | 11.50% | 1.50% | 10.50% | Small-business tax rate*, ** | 2.00% | 12.00% | 2.00% | 11.00% | General manufacturing and processing tax rate | 2.50% | 17.50% | 2.50% | 17.50% | General corporate tax rate | 12.00% | 27.00% | 12.00% | 27.00% | *The small-business rate is prorated based on a 31 December year-end. **On 24 October 2017, the Federal Government tabled a notice of ways and means motion to implement reductions in the small-business corporate income tax rate, which were announced on 16 October 2017. The federal small-business rate is reduced from 10.5% to 10.0% effective 1 January 2018 and will be further reduced to 9.0% effective 1 January 2019. Personal income tax rates The budget does not include any changes to personal income tax rates. The 2018 Yukon personal tax rates are summarized in Table B. Table B – 2018 Yukon personal tax rates First bracket rate | Second bracket rate | Third bracket rate | Fourth bracket rate | Fifth bracket rate | $0 to $46,605 | $46,606 to $93,208 | $93,209 to $144,489 | $144,490 to $500,000 | Above $500,000 | 6.40% | 9.00% | 10.90% | 12.80% | 15.00% | For taxable income in excess of $144,489, the 2018 combined federal – Yukon personal income tax rates are outlined in Table C. Table C – Combined 2018 federal and Yukon personal tax rates Bracket | Ordinary income* | Eligible dividends | Non-eligible dividends | $144,490 to $205,842 | 41.80% | 20.37% | 34.22% | $205,843 to $500,000 | 45.80% | 25.89% | 38.86% | Above $500,000 | 48.00% | 28.92% | 41.42% | *The rate on capital gains is one-half the ordinary income tax rate. The Minister confirmed the Government's decision not to introduce a harmonized sales tax, which was one of the options raised for consideration by the independent Yukon Financial Advisory Panel in its 15 November 2017 Final Report. While the Government is considering other options raised by the panel, the Minister announced that it will begin with three non-tax-related actions (e.g., conducting a comprehensive review of Health and Social Services, as also suggested by the panel). 1 Currency references in this Alert are to CA$. For additional information with respect to this Alert, please contact the following: Ernst & Young LLP (Canada), Toronto - Linda Tang
linda.y.tang@ca.ey.com - Mark Kaplan
mark.kaplan@ca.ey.com - Phil Halvorson
phil.d.halvorson@ca.ey.com - Trevor O'Brien
trevor.obrien@ca.ey.com
Ernst & Young LLP (Canada), Montreal - Albert Anelli
albert.anelli@ca.ey.com - Angelo Nikolakakis
angelo.nikolakakis@ca.ey.com - Nicolas Legault
nicolas.legault@ca.ey.com - Nik Diksic
nik.diksic@ca.ey.com
Ernst & Young LLP (Canada), Calgary - Karen Nixon
karen.r.nixon@ca.ey.com - Mark Coleman
mark.coleman@ca.ey.com
Ernst & Young LLP (Canada), Vancouver - Eric Bretsen
eric.r.bretsen@ca.ey.com
Ernst & Young LLP, Canadian Tax Desk, New York - Terry McDowell
terry.mcdowell@ey.com - Andrea Lepitzki
andrea.lepitzki@ey.com
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ATTACHMENT PDF version of this Tax Alert Document ID: 2018-5370 | 
