Saskatchewan has announced that it is extending its temporary small business tax rate reduction by one year to July 1, 2024 (from July 1, 2023). In addition, the province is introducing a one-time $500 payment to eligible individuals under the Saskatchewan Affordability Tax Credit and reversing some of its upcoming PST changes so that PST does not apply to certain entertainment and recreational activities.
The small business income tax rate changes will not be considered substantively enacted for purposes of IFRS and Accounting Standards for Private Enterprise (ASPE) until a bill that includes the changes receives first reading (as Saskatchewan has a majority government). The changes will not be considered enacted for purposes of U.S. GAAP until that bill receives Royal Assent.
Extension of temporary small business tax rate reduction
Saskatchewan is retroactively extending the reduced small business tax rate of 0% so that it does not increase to its original rate of 2% until July 1, 2024. The province originally reduced its small business income tax rate to 0%, effective October 1, 2020 to June 30, 2022, and had scheduled an increase to 1% on July 1, 2022 and another increase to 2% on July 1, 2023.
KPMG observation — The 0% reduced tax rate is expected to apply for an additional year to June 30, 2023 (from July 1, 2022) with an increase to 1% now starting on July 1, 2023 (instead of July 1, 2022). The rate will further increase to the original tax rate of 2%, as of July 1, 2024.
Saskatchewan Affordability Tax Credit
Saskatchewan is introducing a new tax credit that provides a $500 payment to certain Saskatchewan resident individuals. The Saskatchewan Affordability Tax Credit provides the one-time payment to individuals that are 18 years of age or older as of December 31, 2022 and have filed a 2021 tax return as a resident of Saskatchewan by October 31, 2022. The province advises that eligible residents (regardless of income level or social assistance) will be sent cheques this fall (provided that they have filed a 2021 income tax return).
PST on admission and entertainment charges
Saskatchewan has proposed changes to the upcoming PST rules related to admission and entertainment charges. Specifically, the province announced PST will not apply to certain recreational activities, as well as certain gym and fitness memberships, as previously introduced in the 2022 budget.
Saskatchewan now says that PST will not apply to recreational activities for residents under 18 years old, including golf, curling, hockey, tennis, basketball and similar formal sporting activities in certain circumstances. However, these activities will still be subject to PST for individuals that are 18 years of age and older.
In its news release, Saskatchewan also notes that PST will not apply to fitness classes, personal training and other fitness activities offered through municipal recreational facilities. Further, the province confirms PST will not apply to recreational activities such as arts, cultural and sports programming. However, the province clarifies that PST will still apply to ticket admissions to sporting events, concerts, trade shows, fairs, rodeos, movie theatres, professional water parks and entertainment admissions like escape rooms, batting cages and arcades.
For more information, contact your KPMG adviser.
Information is current to August 29, 2022. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500
