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March 8, 2021
2021-5273

Canada: Yukon issues budget 202122

On 4 March 2021, Yukon Finance Minister Sandy Silver tabled the territory’s fiscal 2021–22 budget. The budget contains no new taxes and no tax increases.

The Minister anticipates a deficit of CA$6.7 million1 for 2020–21 and projects a deficit of $12.7 million for 2021–22.

The following is a brief summary of the key tax measures.

Business tax measures

Corporate tax rates

No changes are proposed to the corporate tax rates or the $500,000 small-business limit.

Yukon’s 2021 corporate tax rates are summarized in Table A.

Table A – 2021 Yukon corporate tax rates

 

2021

Yukon

Federal and Yukon combined

Small-business tax rate* **

0.00%

9.00%

General manufacturing and processing (M&P) tax rate*

2.50%

17.50%

General corporate tax rate*

12.00%

27.00%

* The rates represent calendar year-end rates unless otherwise indicated.

** Yukon reduced its small-business rate to 0.00% effective 1 January 2021. For 2020, a rate of 1.50% applied to M&P income eligible for the small business deduction (SBD), while a rate of 2.00% applied to non-M&P income eligible for the SBD.

Personal tax

Personal income tax rates

The budget does not include any changes to personal income tax rates.

The 2021 Yukon personal tax rates are summarized in Table B.

Table B – 2021 Yukon personal tax rates

First bracket
rate

Second bracket rate

Third bracket rate

Fourth bracket rate

Fifth bracket
rate

$0 to $49,020

$49,021 to $98,040

$98,041 to $151,978

$151,979 to $500,000

Above $500,000

6.40%

9.00%

10.90%

12.80%

15.00%

For taxable income in excess of $151,978, the 2021 combined federal-Yukon personal income tax rates are outlined in Table C.

Table C – Combined 2021 federal and Yukon personal tax rates

Bracket

Ordinary income*

Eligible dividends

Non-eligible dividends

$151,979 to $216,511**

42.26%

21.00%

37.45%

$216,512 to $500,000

45.80%

25.89%

41.52%

Above $500,000

48.00%

28.92%

44.05%

* The rate on capital gains is one-half the ordinary income tax rate.

** The federal and territorial basic personal amounts comprise two basic elements: the existing personal amount ($12,421 for 2021) and an additional amount ($1,387 for 2021). The additional amount is gradually phased out for individuals with taxable income in excess of $151,978 and is fully eliminated for individuals with taxable income in excess of $216,511. Consequently, the additional amount is clawed back on taxable income in excess of $151,978 until the additional tax credit ($208 federally and $89 in Yukon) is eliminated; this results in additional federal and territorial income tax (e.g., 0.32% and 0.14%, respectively, on ordinary income) on taxable income between $151,979 and $216,511.

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For additional information with respect to this Alert, please contact the following:

Ernst & Young LLP (Canada), Toronto

Ernst & Young LLP (Canada), Quebec and Atlantic Canada

Ernst & Young LLP (Canada), Prairies

Ernst & Young LLP (Canada), Vancouver

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Endnotes

  1. Currency references in this Alert are to the CA$.
 
 

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