February 20, 2020
On February 18, 2020, BC’s Ministry of Finance released the 2020 Budget. A summary of the Budget highlights is provided below.
Personal Income Tax Rates
Effective January 1, 2020, the Budget proposes to add a new top personal tax bracket. Taxable income above $220,000 will be subject to a BC personal income tax rate of 20.5%. This is an increase of 3.7% above BC’s 2019 top marginal rate of 16.8%, which was applicable to income over $153,900.
As a result of the increase to the top marginal personal tax rate, the top charitable donation tax credit rate (for annual donations in excess of $200) has also increased to 20.5% (from 16.8%), to the extent the individual has income subject to the top tax rate of 20.5%.
For updated combined Federal and BC Personal Tax Rates, click here.
Housing related measures announced in the Budget include the following:
- The property value threshold for the full home owner grant is decreased to $1.525 million in 2020 (from $1.65 million in 2019).
- A new exemption from additional property transfer tax will be introduced for qualifying Canadian-controlled limited partnerships, to be effective at a date to be specified by regulation. This change is intended to ensure new housing developments by Canadian-controlled limited partnerships are treated similar to those by Canadian-controlled private corporations.
Provincial Sales Tax (“PST”)
PST related measures announced in the Budget include the following:
- Effective July 1, 2020, Canadian sellers of goods, and Canadian and foreign sellers of software and telecommunication services, will be required to register and collect PST if specified BC revenues exceed $10,000. Further, all Canadian sellers who deliver vapour products to BC consumers will be required to register.
- Effective February 19, 2020, real property contractors can apply for refunds of PST paid on goods on which they have performed value-added work and subsequently installed into real property outside of BC.
- Effective February 19, 2020, exemptions for pollution control and waste management machinery and equipment are amended to remove the restrictions regarding the location where the machinery and equipment is used.
- Effective March 1, 2020, higher PST rates will apply when a motor vehicle dealer or manufacturer changes the use of a vehicle in their sale or lease inventory. The PST rate will increase from 10% to
- 15% for vehicles with an average value of $125,000 to $149,999.99; and
- 20% for vehicles with an average value of $150,000 or more.
- Effective July 1, 2020, carbonated beverages containing sugar, natural or artificial sweeteners will no longer qualify for the exemption for food products for human consumption. PST will apply to all beverages dispensed through soda fountains or similar equipment, along with all beverages dispensed through vending machines (except those wholly dedicated to dispensing other than sweetened carbonated beverages).
- Effective February 19, 2020, electric aircrafts are exempt from PST.
Other Tax Measures
Other tax measures announced in the budget include the following:
- The BC training tax credits are extended for three years to the end of 2022.
- Effective for tax years beginning after February 18, 2020, the deadline to claim the Film Incentive BC and the production services tax credit is reduced to 18 months (from 36 months).
- Effective April 1, 2020, a Tobacco Tax of $0.295 will apply per heated tobacco product unit.
- Effective on a date to be specified by regulation, the new mine allowance is extended for five years to the end of 2025.
- The farmer’s food donation tax credit is being extended for three years to the end of 2023.