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April 8, 2021
Canada: Saskatchewan issues budget 2021–22
On 6 April 2021, Saskatchewan Finance Minister Donna Harpauer tabled the province’s fiscal 2021–22 budget. The budget contains several tax measures affecting individuals and corporations.
The Minister anticipates a deficit of CA$2.6 billion1 for 2021–22 and projects deficits for each of the next three years.
The following is a brief summary of the key tax measures.
Business tax measures
Corporate tax rates
The budget confirms the temporary reduction of the small-business rate from 2% to nil, which commenced on 1 October 2020 and ends on 30 June 2022. No changes are proposed to the $600,000 small-business limit.
Saskatchewan’s 2021 and 2022 corporate tax rates are summarized in Table A.
Table A – 2021 and 2022 corporate tax rates
* Rates represent calendar-year rates unless otherwise indicated.
** Saskatchewan is temporarily reducing its small-business rate from 2% to nil, effective for the period commencing 1 October 2020 and ending on 30 June 2022. The small-business rate will increase to 1% effective 1 July 2022 and return to a rate of 2% on 1 July 2023.
Personal income tax rates
The budget does not include any changes to personal income tax rates.
The 2021 Saskatchewan personal tax rates are summarized in Table B.
Table B – 2021 Saskatchewan personal tax rates
For taxable income in excess of $130,506, the 2021 combined federal-Saskatchewan personal income tax rates are outlined in Table C.
Table C – Combined 2021 federal and Saskatchewan personal tax rates
* The rate on capital gains is one-half the ordinary income tax rate.
Personal tax credits
This budget proposes changes to the following personal credits/amounts:
Other tax measures
Saskatchewan Technology Start-up Incentive
The budget extends the Saskatchewan Technology Start-up Incentive for five years through to 2025–26. This incentive provides a non-refundable 45% income tax credit for individual, corporate or venture capital corporation investments in eligible start-up businesses. The budget also extends the carry-forward period to claim unused tax credits from four years to seven years.
Natural gas taxation
The budget introduces a moratorium on royalties on natural gas associated with oil production by implementing a royalty rate of 0% for a period of five years commencing on 1 April 2021 and ending on 31 March 2026.
The budget expands the High Water-Cut Program (HWCP) for a period of five years commencing on 1 April 2021 and ending on 31 March 2026. The HWCP reduces the royalty rate for eligible oil wells up to 2%.
Sodium sulphate taxation
The budget introduces a simplified system for sodium sulphate royalties by replacing the scaled production-based royalty with a 3% flat royalty rate, effective retroactively on 6 April 2020.
The budget introduces a credit for 10% of qualifying capital expenditures eligible for use against sodium sulphate royalties otherwise payable, effective retroactively on 6 April 2020.
Vapor product taxation
The budget introduces a Vapor Products Tax of 20% on the retail price of all vapor liquids, products and devices, effective on 1 September 2021.
Heat-non-burn tobacco product taxation
The budget introduces a tax rate on heat-non-burn tobacco sticks of 20.5¢ per stick, effective on 1 June 2021.
Electric vehicle taxation
The budget introduces an annual tax of $150 per passenger electric vehicle registered in Saskatchewan, effective for registrations beginning on 1 October 2021. This tax will be collected by Saskatchewan Government Insurance.
The budget introduces increases to the Education Property Tax mill rates in line with year-over-year inflation.
For additional information with respect to this Alert, please contact the following:
Ernst & Young LLP (Canada), Saskatoon