On 5 March 2020, Yukon Premier and Finance Minister Sandy Silver tabled Yukon’s fiscal 2020–21 budget. The budget contains no new taxes but contains an increase in the existing insurance premium tax rate as well as a reduction in the small-business corporate income tax rates.
The Minister projects a surplus of CA$4.1m1 for 2020–21.
The following is a brief summary of the key tax measures.
Business tax measures
Corporate tax rates
Effective 1 January 2021, the Yukon small-business corporate income tax rates will be lowered from 2% (or 1.5% on manufacturing and processing profits) to 0%. No changes are proposed to the $500,000 small-business limit.
Yukon’s current and proposed future corporate tax rates are summarized in Table A.
Table A – Corporate tax rates
Federal and Yukon combined
Federal and Yukon combined
Small business manufacturing and processing tax rate*
Small-business tax rate*
General manufacturing and processing tax rate
General corporate tax rate
* The small-business rate is based on a 31 December year-end.
Other business tax measures
The Minister also proposed the following business tax measure:
Personal income tax rates
The budget does not include any changes to personal income tax rates. However, Yukon will be increasing over four years the basic personal amount to mirror the changes announced at the federal level on 9 December 2019.
The 2020 Yukon personal tax rates are summarized in Table B.
Table B – 2020 Yukon personal tax rates
First bracket rate
Second bracket rate
Third bracket rate
Fourth bracket rate
Fifth bracket rate
$0 to $48,535
$48,536 to $97,069
$97,070 to $150,473
$150,474 to $500,000
For taxable income in excess of $150,473, the 2020 combined federal-Yukon personal income tax rates are outlined in Table C.
Table C – Combined 2020 federal and Yukon personal tax rates*
$150,474 to $214,368***
$214,369 to $500,000
* The rates exclude the impact, if any, of the proposed increase to the Yukon’s basic personal amount.
** The rate on capital gains is one-half the ordinary income tax rate.
*** An additional federal basic personal amount may be available for individuals with taxable income below $214,368. The additional tax credit is $140 for individuals with taxable income below $150,474; this additional amount is gradually phased out for individuals with taxable income between $150,474 and $214,368, resulting in an additional 0.22% to 0.30% of federal income tax on taxable income in this bracket.
Other tax measures
Insurance premium tax
Effective 1 January 2021, the insurance premium tax rate will increase to 4%.
1. Currency references in this Alert are to CA$.
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