Canada | Saskatchewan Budget 2024-25 includes tax measures affecting corporations

On 20 March 2024, Saskatchewan Finance Minister Donna Harpauer tabled the province's fiscal 2024-25 budget. The budget contains tax measures affecting corporations and individuals.

The minister anticipates a deficit of CA$273.2m for 2024-25 and projects a surplus for the next year.

Following is a brief summary of the key tax measures.

Business tax measures

Corporate income tax rates

The budget confirms that the small-business rate will remain at 1.00% until 30 June 2025 and will increase to 2.00% on 1 July 2025. The small-business rate was previously set to increase to 2.00% on 1 July 2024.

No changes are proposed to the general corporate rate or to the CA$600,000 small-business limit.

Saskatchewan's current and proposed future corporate income tax rates are summarized in Table A.

Table A — 2024 and 2025 Saskatchewan corporate income tax rates1

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

2 Saskatchewan temporarily reduced its small-business rate from 2.00% to nil, effective for the period commencing 1 October 2020 and ending on 30 June 2023. The small-business rate increased to 1.00% effective 1 July 2023 and will return to a rate of 2.00% on 1 July 2025.

3 The federal corporate income tax rates for manufacturers of qualifying zero-emission technology are reduced to 7.5% for eligible income otherwise subject to the 15% federal general corporate income tax rate or 4.5% for eligible income otherwise subject to the 9% federal small-business corporate income tax rate. These reductions are not reflected in the combined federal and Saskatchewan rates above.

4 An additional federal tax applies to banks and life insurers at a rate of 1.5% on taxable income (subject to a CA$100m exemption to be shared by group members).

Other business tax measures

The budget announces that the application period for the existing Saskatchewan Commercial Innovation Incentive (SCII) is extended by one year to 30 June 2025. The SCII provides eligible corporations a reduction in the provincial general corporate rate to 6.00% for 10 consecutive years for eligible corporations that commercialize their qualifying intellectual property in Saskatchewan. The benefit period can be extended to 15 years if at least 50% of the related research and development was conducted in Saskatchewan.

Personal tax

Personal income tax rates

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

The 2024 Saskatchewan personal income tax rates are summarized in Table B.

Table B — 2024 Saskatchewan personal income tax rates

For taxable income exceeding CA$148,734, the 2024 combined federal-Saskatchewan personal income tax rates are outlined in Table C.

Table C — Combined 2024 federal and Saskatchewan personal income tax rates

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

2 The federal basic personal amount comprises two elements: the base amount (CA$14,156 for 2024) and an additional amount (CA$1,549 for 2024). The additional amount is reduced for individuals with net income exceeding CA$173,205 and is fully eliminated for individuals with net income exceeding CA$246,752. Consequently, the additional amount is clawed back on net income exceeding CA$173,205 until the additional tax credit of CA$232 is eliminated; this results in additional federal income tax (e.g., 0.32% on ordinary income) on net income between CA$173,206 and CA$246,752.

Other tax measures

Saskatchewan Technology Start-up Incentive

The budget announces the following enhancements to the existing Saskatchewan Technology Start-up Incentive (STSI): (1) extension of the program by one year to 31 March 2027; (2) increase in the annual program cap by CA$3.5m to CA$7m; and (3) expansion of the program to start-ups in the cleantech sector. The STSI provides a nonrefundable 45% income tax credit for individual or corporate investments in eligible start-up businesses.

Oil and gas taxation

The budget announces that the existing Saskatchewan Petroleum Innovation Incentive (SPII) is extended by five years to 31 March 2029. The budget also proposes to increase the program's total funding cap by CA$70m to CA$100m and remove helium and lithium as eligible commodities. The SPII provides transferable Crown royalty and freehold production tax credits at a rate of 25% of eligible costs for qualified innovation commercialization projects.

The budget announces that the existing Oil and Gas Processing Investment Incentive (OGPII) is extended by five years to 31 March 2029. The budget also proposes to increase the program's total funding cap by CA$130m to CA$500m and remove helium and lithium as eligible commodities. The OGPII provides transferable Crown royalty and freehold production tax credits at a rate of 15% of eligible costs for qualified greenfield or brownfield value-added projects.

The budget introduces the new Multi-lateral Well Program, which provides Crown royalty and freehold production tax volumetric drilling incentives based on the type of well drilled, with eligible multi-lateral wells receiving the largest volumetric incentive. The program will apply to eligible new wells drilled between 1 April 2024 and 31 March 2028.

Critical mineral taxation

The budget introduces the new Saskatchewan Critical Minerals Innovation Incentive (SCMII), which provides transferable Crown royalty and freehold production tax credits at a rate of 25% of eligible costs for pilot and commercial scaling projects that include new technologies that can improve resource recovery rates, manage environmental impacts, increase value-added processing or commercialize a by-product or waste product. This program will share the CA$100m funding cap with the SPII. Eligible minerals include aluminum, cobalt, copper, gallium, helium, lithium, magnesium, nickel, all rare earth minerals and zinc.

The budget introduces the new Critical Mineral Processing Investment Incentive (CMPII), which provides transferable Crown royalty and freehold production tax credits at a rate of 15% of eligible costs for new or expanded value-added processing projects, including by-product commercialization. This program will share the CA$500m funding cap with the OGPII. Eligible minerals include aluminum, cobalt, copper, gallium, helium, lithium, magnesium, nickel, all rare earth minerals and zinc.

Enforcement and collection

The budget proposes the following increases to penalties with respect to consumption tax, effective 1 October 2024:

• A new CA$50 penalty for failing to file a return by the due date
  
  
• Removal of the CA$500 maximum to the existing 10% penalty for failing to pay tax owing by the due date
  
  
• A new CA$500 penalty for failing to produce books, records or documents as required
  
  
• A new CA$100 penalty for failing to file any return or form in the manner required or failing to complete any information required on any return or form

This budget also announces the government's intention to amend The Revenue and Financial Services Act to:

• Enhance collection tools
  
  
• Prevent tax avoidance
  
  
• Clarify compliance obligations and increase associated monitoring

For up-to-date information on the federal, provincial and territorial budgets, visit ey.com/ca/Budget

Contact Information

For additional information concerning this Alert, please contact:

Ernst & Young LLP (Canada), Saskatoon

• Ryan Ball
  
  
• Craig Hermann
  
  
• Wes Unger
  
  
• Luke Hergott

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor

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