Manitoba Income Tax Guide for New Residents

Last updated on August 16th, 2024 at 03:32 pm

Welcome to Manitoba, home to a thriving economy and unique tax advantages. Whether you relocated from elsewhere in Canada or are a recent immigrant, this Remitly guide will help you become familiar with the Manitoba and Canadian tax systems, tax rates, and available credits and deductions so that you can manage your taxes in your new home.

Introduction to Manitoba’s Tax System

Those who recently moved to Manitoba are subject to two main types of taxes. Let’s take a look at each one.

Income tax in Manitoba

The Canadian Revenue Agency (CRA) requires Canadian residents to pay Canadian Income Taxes on their world income. Residence for Canadian income tax purposes does not equal immigration status, but generally speaking, if you are a resident who primarily lives in Canada or maintains a home or family in Canada, you are considered a resident for Canadian income tax purposes.

 The CRA is in charge of collecting and handling all tax filings, including federal individual income tax and Manitoba individual income tax. Tax filings are required to be completed once per calendar year.

Income Taxes are mostly calculated on the following, which will be discussed further in later sections:

• Employment and self-employment income, including commissions and foreign employment income
• Investment income, like interest, dividends, and capital gains
• Pension and savings plan income, including pensions from other countries
• Benefit income, such as income from Employment Insurance, workers’ compensation benefits, social assistance payments, etc. 
• Any other types of income

Each individual can also claim deductions, credits, and expenses on their income tax return to help reduce the amount of tax owed. 

Sales tax in Manitoba

Sales taxes are imposed on certain goods and services you purchase in Manitoba. 

As an individual, you don’t pay sales tax directly to the government. Instead, the seller collects sales tax at the time of the sale and then remits payment to government agencies. It is the seller’s responsibility to file their Sales Tax returns.  

For a newcomer to Manitoba, the important thing is to know that the prices labeled by sellers or merchants in stores are usually pre-tax, and sales taxes are added at the time of payment. The payment price will be the total of the labeled prices plus the calculated sales tax on some or all of your purchased items. 

In Manitoba, sales taxes include:

• GST: The Goods and Services Tax, or GST, is a 5% federal sales tax.
• PST: The Provincial Sales Tax, or PST, is a sales tax imposed by Manitoba. As of March 2024, Manitoba’s PST rate was 7%.

Not all goods and services are subject to both types of sales taxes. Depending on the type of goods or service, the seller knows whether GST and/or PST should be charged. For example, some supplies are considered zero-rated supplies, such as:

• Basic groceries
• Agricultural products
• Most fishery products
• Most farm livestock
• Feminine hygiene products
• Prescription drugs and drug-dispensing services
• International transportation services 
• Some medical devices

Other types of supplies/services might be tax-exempt, such as the following listed on the CRA website:

• a sale of housing that was last used by an individual as a place of residence
• long-term rentals of residential accommodation (of one month or more) and residential condominium fees
• most health, medical, and dental services performed by licensed physicians or dentists for medical reasons
• child care services, where the primary purpose is to provide care and supervision to children 14 years of age or under for periods of less than 24 hours per day
• most domestic ferry services
• legal aid services
• many educational services, such as:
  • courses supplied by a vocational school leading to a certificate or a diploma that certifies the ability of individuals to practice or perform a trade or a vocation
  • tutoring services made to an individual in a course that follows a curriculum designated by a school authority
• music lessons
• most services provided by financial institutions, such as lending money or operating deposit accounts
• the issuance of insurance policies by an insurer and the arranging for the issuance of insurance policies by insurance agents
• most property and services provided by charities and public institutions
• certain property and services provided by governments, non-profit organizations, municipalities, and other public service bodies, including municipal transit services and standard residential services such as water distribution

Key tax considerations when moving to Manitoba

For tax purposes, Canada considers your province to be where you lived on December 31st of the tax year. If you lived in Manitoba on December 31, 2023, you’d file a Manitoba provincial tax return in 2024, regardless of when you moved there.

In some cases, those who recently moved to Canada may owe taxes abroad as well as in Canada. A tax professional can help you determine whether you need to file a return or pay taxes in your home country.

Understanding income tax rates in Manitoba

How much you owe for federal and Manitoba provincial income taxes depends on your income, the applicable tax rate, and the credits and deductions you’re eligible to claim. In this section, we’ll explore each factor.

Calculating income for federal and Manitoba individual income taxes

For federal and provincial tax purposes, income can come from a variety of sources, including all the following. 

Employment income

The money that you receive for working is employment income. Examples of employment income include:

• Wages
• Research grants
• Commissions
• Clergy housing allowance
• Foreign employment income
• Self-employment income
• Royalties

Investment income

Investment income is money that you receive from investments, such as interest paid on a savings account, dividends from shares in a company, or capital gains from the sale of properties.

You’ll typically include 100% of your interest income on both your federal and Manitoba income tax calculations unless the interest is earned on a Tax-Free Savings Account (TSFA)

For dividends, tax slips like T3, T4PS, T5, and T5013 are usually issued so you can report dividend income on your tax return. If no tax slips are issued, depending on whether the dividends are eligible or non-eligible, there are different rules for the calculation:

• Eligible dividends: Dividends taxed at a higher rate at the corporate level are eligible dividends. When adding them to your income, you will usually multiply the amount by 138%.
• Non-eligible dividends: Dividends taxed at a lower rate at the corporate level are non-eligible dividends. You will usually multiply the amount by 115% when adding them to your income.

If you sell an investment, property, or other asset for more than you initially paid or invested, you are required to pay tax on the capital gain. For federal and Manitoba provincial tax purposes, you’ll most likely add 50% of capital gains to your income.

One exception is gains made from the sale of your principal residence. Generally, these are exempt from income calculations.

Other income

Some people receive other types of income that must be added to their income for tax purposes. Examples include:

• Rental income
• EI benefit income
• Social assistance payments
• Savings plan income
• Pension plan income
• Worker’s compensation

Federal and provincial tax rates

Both Canada and Manitoba use a graduated tax system, one where tax rates increase as income increases. Refer to the table below for federal and provincial tax rates for the 2023 tax year.

When determining your tax obligations, you progress through each level of the tax rates until you arrive at the one that corresponds with your annual income. Here’s a look at how this works with an example that assumes an individual’s taxable income was $100,000 during the 2023 tax year.

For federal individual income tax, the calculation would be:

55,867 x 15% = $8,380.05

• (100,000 – 55,867) x 20.50% = $9,047.27= $17,427.32

For Manitoba individual income tax, the calculation would be:

47,000 x 10.8% = $5,076

• (100,000 – 47,000) x 12.75% = $6,757.50= $11,833.50

So in total, for $100,000 taxable income earned in Manitoba, this individual would be paying about $29,260 in income tax. It is worth noting that taxable income does not equal the total income. Taxable income is calculated as the total of all types of income minus all the tax deductions to which this individual is entitled. So, in our example above, the calculation is performed on a taxable income of $100,000, which is all income combined less the entitled deductions. 

Furthermore, even though the $29,260 is the calculated income tax, it might not be the amount the individual owes because there are also tax credits that individuals are entitled to, reducing their income tax owed. 

We will explain more about tax credits and deductions next. 

Tax credits and deductions for Manitoba

Both the federal government and Manitoba offer tax credits and deductions that reduce your tax obligations but in different ways. Let’s define each:

• Tax deductions: A tax deduction is an amount that you subtract from your total income to arrive at your taxable income before tax rates are applied.
• Tax credit: A tax credit is an amount you subtract from your calculated taxes owed to reduce the tax you have to pay. There are two types:
  • Refundable tax credits: If a refundable tax credit takes your tax obligation into the negative, you’ll qualify for a tax refund
  • Nonrefundable tax credits: A nonrefundable tax credit does not qualify you for a refund. If the tax credit exceeds your tax obligation, zero taxes will be due.

Depending on your situation, you may qualify for an array of federal and provincial tax deductions and credits. 

We’ve created a list and table of some of the most common federal and Manitoba deductions and credits. Consult a tax professional to determine if you’re eligible for them and to find out if you can take advantage of any additional credits and deductions.

Basic personal amount

The basic personal amount is a non-refundable tax credit based on income that most taxpayers qualify for at the federal level.

Spousal amount

The spousal credit is a federal non-refundable tax credit available to some taxpayers who are married or have common-law partners. To qualify, your spouse or partner typically must be financially dependent on you, and their net income must be less than your basic personal amount.

Canada child benefit

A federal program, the Canada Child Benefit, is for eligible families with children under the age of 18. If you qualify, you can receive monthly tax-free payments from the CRA. You can apply for the program on the CRA website.

Disability tax credit

Individuals with eligible disabilities may qualify for disability tax credits at the federal level.

Dividend tax credit

The dividend tax credit is a federal non-refundable tax credit that reduces the amount of taxes owed on dividends from Canadian investments. Usually, you will need to have owned an investment for a set number of days to claim the credit.

For the 2023 tax year, the dividend tax credit was 15.0198% for eligible dividends and 9.0301% for non-eligible dividends.

Canada Workers Benefit

A federal refundable tax credit, the Canada Workers Benefit, is for low- and moderate-income taxpayers who are currently working and meet eligibility requirements, such as:

• Living in Canada for the full tax year
• Having an obligation to pay income taxes in Canada
• Meeting income requirements
• Not being a full-time student
• Not being currently incarcerated

RRSP tax deduction

The RRSP tax deduction is for eligible taxpayers who contributed to a registered retirement savings plan (RRSP) during the tax year.

Manitoba Family credit

Unlike many other provinces, Manitoba combines the personal basic amount, the spousal credit, the disability credit, and other tax credits into a single tax credit for families with children called the Manitoba Family Credit.

Personal tax credit

For couples and single individuals without children, the personal basic amount, spousal credit, disability credit, and other tax credits fall under the Manitoba personal tax credit umbrella.

Fitness tax credit

The Manitoba Fitness tax credit encourages children under the age of 16 and young adults aged 16 to 24 to stay active. It is a non-refundable tax credit that eligible families or young adults can claim to help cover the cost of qualified fitness activities.

Children’s Art and Cultural Activities tax credit

Designed to encourage participation in arts and cultural activities, the Manitoba Children’s Art and Cultural Activities tax credit is a non-refundable tax credit available to offset the cost of qualified artistic and cultural activities for eligible children under the age of 16 and disabled people aged 16 to 18.

Fertility treatment tax credit

A Manitoba tax credit, the Fertility Treatment tax credit, is a refundable credit that can equal up to 40% of qualified fertility treatments received by eligible taxpayers in Manitoba.

Renters tax credit

Manitoba residents who pay rent on their primary residence may qualify for the refundable Renter’s tax credit, designed to make rent more affordable.

Special considerations for tax filers in Manitoba

Self-employed people and recent immigrants living in Manitoba have unique tax considerations.

Self-employment

Self-employed people must complete additional forms when reporting income and filing federal and Manitoba income tax returns. They may also be eligible for business expense deductions. The CRA guide breaks down rules, requirements, and benefits for self-employed persons.

Immigrants

If you’re an immigrant preparing to file your taxes in Canada for the first time, read the CRA’s tax guide for newcomers. It explains what you’ll need to do to file your taxes and covers important information, such as how to claim tax benefits on your first tax return.

How to file your Manitoba taxes

For the 2023 tax year, the filing deadline for both federal and Manitoba income tax returns is April 30, 2024. 

If you, your partner, or your common-law spouse are self-employed, you’ll likely qualify for an extended deadline of June 15, 2024, but any taxes that you owe will remain due on the 30th.

To complete and submit your returns, follow these steps.

Gather required documents

You’ll need to gather documents and receipts to complete your federal and provincial tax returns. Depending on your tax situation, you may need:

• Social Security number
• T4 Statement of Remuneration Paid
• T5 Statement of Investment Income
• T3 Statement of Trust Income Allocations and Designations
• T5008 Statement of Securities Transactions
• T4A Statement of Pension, Retirement, Annuity, and Other Income
• T4A(P) Statement of Canada Pension Plan Benefits
• T4RSP Statement of RRSP Income
• T4RIF Statement of Income from a Registered Retirement Income Fund
• T4E Statement of Employment Insurance and Other Benefits
• T5007 Statement of Benefits–Workers Compensation or Social Assistance benefits
• T2200 Employment expenses
• Last year’s notice of assessment from the CRA, if applicable
• RRSP deduction limit and unused amounts
• Any other income slips or income documentation received
• Receipts for childcare expenses
• Receipts for adoption expenses
• Receipts for support payments made
• Receipts for moving expenses
• Receipts for tuition
• Receipts for student loan interest paid
• Receipts for charitable donations
• Receipts for medical expenses
• Payment information for taxes owed
• Bank account information for direct deposit of refunds

Complete your tax return online or on paper

After you gather documents and receipts, you can start working on your federal and Manitoba provincial tax returns. Complete Form T1 for your federal return, and then work on Form MB428 for your Manitoba return.

You can fill out your forms in one of four ways:

• Certified tax software: Tax software can simplify tax filing by asking you questions to fill in your tax returns and performing calculations automatically. You can choose from free and fee-based programs.
• Authorized representative: You can name a family member, friend, or tax professional to serve as your authorized representative and fill out your returns on your behalf.
• Tax clinics: Low- and moderate-income taxpayers can take advantage of free tax clinics, where experts can assist them with completing their tax returns step by step.
• Paper return: You can download and print out the necessary tax forms and perform the calculations yourself.

Submit your return

Once you’ve completed them, submit your federal and Manitoba tax returns together:

• Electronically: Tax preparation software and some tax professionals will file your tax returns online for added convenience. 
• By mail: You can send completed paper tax returns to the CRA address for Manitoba residents.

Options for paying taxes or getting a refund in Manitoba

Any taxes owed get paid to the CRA, regardless of whether they’re federal or provincial. The CRA accepts the following payment methods:

• Direct debit from a Canadian bank account
• Credit or debit card
• Wire transfer
• Cash or cheque
• Money transfer platforms, such as PayPal or Interac

Learn how to pay your taxes using different methods by checking out the CRA website.

If you’re due a federal or Manitoba income tax refund, the CRA will mail you a check unless you opt for direct deposit into a Canadian bank account. To sign up for direct deposit, visit the CRA website.

Taxes in Manitoba vs. other provinces

As a resident of Manitoba, you benefit from some distinct tax advantages, such as:

• Fewer tax brackets: Manitoba has only three tax brackets, simplifying provincial income tax calculations.

• Lower than average sales tax: Combined GST and PST rates are lower than those of many other provinces and territories.
• Unique tax credits for families: Manitoba offers a range of tax credits and deductions for families, such as the Family Tax Credit and tax credits for physical, art, and cultural programs for children.

The table below illustrates how Manitoba’s tax system compares to other provinces and territories.