Saskatchewan’s competitive corporate taxes help create successful businesses
A Toronto-based think tank found Saskatoon is one of the best cities in the country in which to run a successful business.
The C.D. Howe Institute ranks Saskatoon number two (slightly behind Calgary) when it comes to cities with the lowest or most competitive business tax burdens. A tax burden refers to how local and provincial taxes will affect a business’ net earnings or what its potential return on its investment will be.
The City of Saskatoon’s chief financial officer Kerry Tarasoff says the institute’s ranking reinforces the city’s strategic plan to make Saskatoon a business-friendly city by having a commercial tax policy that keeps the tax burden low.
“Because of that, you have a very business-friendly climate that attracts new businesses, is able to attract labour and provides a good economic spinoff…,” Tarasoff says.
Commercial properties in Saskatoon currently pay municipal property taxes at a rate of 1.75 times that of residential properties. The city is looking to make that even lower — possibly to 1.43 times, says Tarasoff. He says the low numbers are part of why Saskatoon is experiencing a high number of building permits — $1 billion in permits in the last three years.
“That’s just telling you the strength and the growth of the construction and the growth happening in our city is unprecedented,” Tarasoff says.
Provincially, The C.D. Howe findings are something that Chris Dekker, Associate Deputy Minister of the Economy with the Government of Saskatchewan, says lines up with other reports.
“For instance, the Canadian Federation of Independent Business has applauded Saskatchewan’s work on red tape reduction and ranked Saskatoon as Canada’s second most entrepreneur-friendly city in 2013,” he says.
Much of that has to do with Saskatchewan’s corporate income tax system and rates. Dekker says low business costs are attracting international interest in the prairie province. He points to independent studies that show operating costs in the province’s two largest cities — Saskatoon and Regina — are among the lowest for major centres in Western Canada and the United States Midwest.
“Saskatchewan’s general tax rate on corporate taxable income is very competitive: 12 per cent, and can be as low as 10 per cent for manufacturers and processors,” he explains.
Saskatchewan’s small businesses pay a reduced rate of 2 per cent on eligible business income.
There are a number of other tax incentives the province has to offer, which makes starting and operating a business less expensive in Saskatchewan. The Manufacturing and Processing Profits Tax Reduction reduces the corporate income tax rate to as low as 10 per cent for manufacturers and processors, depending on their allocation of income to Saskatchewan. Manufacturers are also eligible for a tax credit that refunds 5 per cent of the cost of investments in things like buildings, machinery and equipment. For research and development companies, there is a fully refundable 15 per cent credit on the first $3 million of research and development spending.
For a full list of business tax incentives and credits offered by the Government of Saskatchewan, please click here.
Angelina Irinici is an award-winning journalist from Saskatoon, Sask. She recently moved back to her home city and is working as a television reporter. She is a graduate of Ryerson University’s journalism school. You can find her on Twitter at @angelinairinici.