Snow, mosquitoes, and taxes

In Manitoba, nothing is certain but snow, mosquitoes, and yes, taxes. Yesterday was my one year Pegiversary, and I’ve been reflecting on some of the tax-related incentives and disincentives of moving to Manitoba.

There were so many things to consider when I was thinking about moving to a new province, but I have to be honest – tax rates never once crossed my mind. In fact, I went about my new Manitoba life blissfully unaware of what awaited me at tax time.  It turns out that the provincial tax rates in Manitoba are significantly higher than they are in BC. In this fair province, the 2008 rate for the first 30K (ish) you make was 10.9%, contrasted with 5.06% on the first 35K in BC, and they go up according to bracket from there. (2009 rates were not much different.) Since you pay provincial taxes for the province you lived in on December 31, I’d underpaid my taxes by 50% for half the year and had quite a sizeable amount owing. A bit of a rude awakening!

People might be quick to say that Manitoba’s higher tax rate is a bad thing. To be sure, Manitoba definitely has one of the higher provincial rates in Canada. But in my mind, it all balances out in the end. For one thing, you don’t have to pay health care premiums here, and you can’t say the same of Alberta and BC (when I lived in Vancouver, I was paid the mandatory $54 a month for basic provincial health care, and I remember I had to pay in Alberta, too).  I’m not upset that Manitoba has a higher tax rate–that doesn’t bother me at all. I’m just peeved that I didn’t catch my oversight earlier and pay a little extra tax throughout the rest of the year to make up for it.

I now know that in a perfect world, you should move in the wintertime. If you’re moving to a province with a higher tax rate, you should wait to move after December 31. And if you’re moving to a province with a lower tax rate, you should plan your arrival for just before December 31! If this isn’t possible and you wind up moving mid-year like I did, try to plan to set aside money to pay that big tax bill – or on the flip side, start thinking about how you’d like to use your refund

Now, unfortunately, the middle of the year really is the ideal time to move to Manitoba. Arriving in late June or early July puts you smack dab in the middle of Manitoba’s most glorious season: summer. Any earlier, and it could still be winter, and same goes for any later. As Laurel can attest, February is not a great time to voluntarily move to Winnipeg. So, decide what matters most to you and make your move based on that. Or, just follow your heart and move whenever it makes sense for you!

On another more positive tax-related note, something else to consider when contemplating a move to this province is the fabulous Manitoba Tuition Fee Income Tax Rebate. This program was designed to encourage college and university grads to bring their skills to/keep their skills in Manitoba. In a nutshell, if you graduated from an accredited Canadian post-secondary institution on or after January 1, 2007 and start paying taxes in Manitoba, you can get a 60% income tax rebate on your eligible tuition fees paid after December 31, 2003. Pretty sweet deal! (More deets on the program are available at the Government of Manitoba website.)

Incidentally, I graduated way before 2007, so this was of no use to me. But I still think it’s an amazing incentive for recent grads to come and work here or forego a move to another province, as it can seriously reduce the amount of income tax you pay.

Those are just a couple things to keep in mind when planning a move to (I hope!) or from (I hope not!) Manitoba.

What do you think of our provincial taxes? Do you know of any other great tax credits or rebates?