REGINA, Saskatchewan–While credit unions in the U.S. continue to operate under a federal tax exemption, that isn’t the case in other countries, where CUs are in a constant give-and-take over the taxes they pay. Case in point are credit unions in Saskatchewan, which are facing a phased-in provincial tax increase to begin in 2017.
"While we are disappointed with the removal of the small business tax deduction for credit unions, we understand the need for all sectors to do their part to balance the provincial budget," Keith Nixon, CEO of SaskCentral, was quoted by MarketWired.com as saying. "We will be encouraging the province to do more analysis on this issue to ensure Saskatchewan credit unions are not at a competitive disadvantage."
SaskCentral is the province’s corporate CU and trade group, representing 46 credit unions that serve more than 474,000 members.
According to MarketWired.com, Saskatchewan's small business tax deduction for credit unions was designed to accumulate capital in cooperative financial institutions. The province's small business tax deduction allowed Saskatchewan credit unions to retain approximately $11 million per year to build capital.
The tax hike on credit unions will have an impact on credit unions and the communities they serve throughout the province, MarketWired.com stated. "Credit unions may need to make adjustments in how they manage expenses," said Nixon. "These changes will be unique to the individual credit unions and the communities they serve."