Canada: Yukon issues budget 2021–22

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EY Global

8 Mar 2021
Subject Tax Alert
Categories Corporate Tax
Jurisdictions Canada

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
  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
Second bracket rate Third bracket rate Fourth bracket rate Fifth bracket
$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%
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.

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

Ernst & Young LLP (Canada), Toronto

  • Linda Tang 
  • Mark Kaplan 
  • Phil Halvorson 
  • Terry McDowell 
  • Trevor O’Brien 

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

  • Albert Anelli 
  • Angelo Nikolakakis 
  • Brian Mustard 
  • Denis Vaillancourt 
  • Nicolas Legault 
  • Nik Diksic 
  • Philippe-Antoine Morin

Ernst & Young LLP (Canada), Prairies

  • Mark Coleman 
  • Liza Mathew 

Ernst & Young LLP (Canada), Vancouver

  • Eric Bretsen 

For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.