Canada: Extension of temporary small business tax rate reduction; PST on entertainment charges (Saskatchewan)

The government of Saskatchewan announced that it is extending its temporary small business tax rate reduction by one year to 1 July 2024 (from 1 July 2023). In addition, a one-time $500* payment to eligible individuals is introduced under the Saskatchewan affordability tax credit, and certain upcoming provincial sales tax (PST) changes are revised so that PST does not apply to certain entertainment and recreational activities.

The reduced small business tax rate of 0% is retroactively extended so that it does not increase to its original rate of 2% until 1 July 2024. The province originally reduced its small business income tax rate to 0%, effective 1 October 2020 to 30 June 2022, and had scheduled an increase to 1% on 1 July 2022 and another increase to 2% on 1 July 2023.

A new tax credit is introduced to provide a $500 payment to certain Saskatchewan resident individuals. The Saskatchewan affordability tax credit provides the one-time payment to individuals who are 18 years of age or older as of 31 December 2022 and have filed a 2021 tax return as a resident of Saskatchewan by 31 October 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).

Changes are proposed to the upcoming PST rules related to admission and entertainment charges. Specifically, the province announced PST would 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 would not apply to recreational activities for residents under 18 years old, including:

• Golf
• Curling
• Hockey
• Tennis
• Basketball
• Similar formal sporting activities

However, these activities would still be subject to PST for individuals who are 18 years of age and older.

Saskatchewan governmental officials also note that PST would not apply to fitness classes, personal training and other fitness activities offered through municipal recreational facilities. Further, the province confirms PST would not apply to recreational activities such as arts, cultural and sports programming. However, the province clarifies that PST would still apply to:

• Ticket admissions to sporting events
• Concerts
• Trade shows
• Fairs
• Rodeos
• Movie theatres
• Professional water parks
• Entertainment admissions (i.e., escape rooms, batting cages and arcades)

Read an August 2022 report prepared by the KPMG member firm in Canada

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