On April 20, 2021, BC’s Ministry of Finance released the 2021 Budget. A summary of the BC Budget highlights is provided below.

Personal Tax Measures

To align with the Federal change to the Canada Emergency Response Benefit (“CERB”), the Budget announced that self-employed individuals are not required to repay the BC Emergency Benefit for Workers if they would have qualified for the benefit or the CERB on their gross income.

Business Tax Measures

The mining flow-through share tax credit eligibility period during which an expenditure must be incurred by the issuer to be renounced in favor of flow-through shares is temporarily extended by 12 months.  This extension applies to flow-through share agreements entered into between March 1, 2018 and December 31, 2020 when using the general rule, and agreements entered into in 2019 or 2020 when using the look-back rule.

Housing Measures

Housing related measures announced in the Budget include the following:

• The property value threshold for the full home-owner grant is increased to $1.625 million in 2021 (from $1.525 million in 2020).
• Beginning in the 2021 tax year, corporations owned by agents of government can claim an exemption from the speculation and vacancy tax.
• A new exemption to the speculation and vacancy tax is provided for registered charities who hold property through a trust.
• The Speculation and Vacancy Tax Act is amended to clarify that a beneficial owner, whose interest in a residential property is registered in the name of a trustee of a trust and contingent on the death of another individual, is not considered a beneficial owner for the purpose of the speculation and vacancy tax.

Provincial Sales Tax Measures (“PST”)

PST related measures announced in the Budget include the following:

• Effective April 21, 2021, electric bicycles and tricycles are exempt from PST.
• Individuals who became a resident of BC on or after March 11, 2019 and who would otherwise qualify for the PST exemption in respect of personal effects brought into BC within one year of becoming a resident, will have until the earlier of January 1, 2023 or one year following the end of the most recent quarantine order made under the Quarantine Act (Canada), to bring their personal effects to BC without the application of PST.
• Effective on a date to be set by regulation, the PST refund for motor vehicles purchased in BC and sold within 7 days will be eliminated.
• Effective July 1, 2021, the tax rate on cigarettes and heated tobacco products will increase to 32.5 cents from 29.5 cents per cigarette or per heated tobacco product.

Other Tax Measures

• The book publishing tax credit is extended for five years to March 31, 2026.
• The climate action tax credit will increase to $193.50 per adult and $56.50 per child on July 1, 2022.
• Carbon tax rates will increase to $45 per tonne of CO2 on April 1, 2021 and to $50 per tonne of CO2 on April 1, 2022.
• Effective July 1, 2021, probate fees will not be charged on amount received by a person’s estate from the federal Memorial Grant Program for First Responders.
• Effective April 20, 2021, eligibility for the motor fuel tax refund for persons with disabilities is expanded to include recipients of disability assistance, or a disability supplement, from Indigenous Services Canada and anyone who is in receipt of 100% disability pension resulting from service as a member of Her Majesty’s forces.

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 Measures

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.

On February 19, 2019, the BC Ministry of Finance released the 2019 Provincial Budget. A summary of the provincial budget highlights is provided below.

Enhancements to the Small Business Venture Capital Tax Credit Program

Changes introduced by the Budget to enhance the small business venture capital tax credit program include the following:

• Effective for 2019 and subsequent tax years, for investments made after February 19, 2019, the maximum amount of annual tax credit that an individual can claim is increased to $120,000 from $60,000.
• Effective February 20, 2019, the maximum equity capital that eligible business corporations can raise under the program is increased to $10 million from $5 million.
• Effective February 20, 2019, share transfers to a Tax-Free Savings Account are permitted and equity purchases within a Tax-Free Savings Account may qualify for a tax credit.
• Effective February 20, 2019, certain advanced commercialization and scaling up activities are eligible for the tax credit program.
• Effective March 2, 2019, investments in convertible equity issued by an eligible business corporation may be eligible for tax credits.

BC Child Opportunity Benefit

Starting in October 2020, a new BC Child Opportunity Benefit will replace the early childhood tax benefit. BC families could receive annual benefits of up to $1,600 for the family’s first child, $1,000 for the second child, and $800 for each subsequent child under the age of 18. This new refundable tax credit will be reduced and phased out based on the income level and the number of children in a household. For example, a family with one child will have the benefit fully phased out at $97,500 of household income.

Other Tax Measures

Other tax measures announced in the Budget include the following:

• Effective January 1, 2020, MSP premiums will be fully eliminated.
• Effective January 1, 2019, the mining flow-through share tax credit is made permanent.
• Effective on royal assent, the mining exploration tax credit is made permanent.
• Effective on royal assent, PST collection, reporting and remittance responsibilities can be designated to a single party in an agency relationship.
• Effective for 2018 and subsequent years, the disability tax credit can be applied against tax on split income, and split income is included in the income threshold for calculating the medical expense tax credit.
• The training tax credits are extended for one year to the end of 2019.
• The farmer’s food donation tax credit is being extended for one year to the end of 2020.
• As of February 19, 2019, interest will no longer accrue on new and existing BC student loans.

If you have any questions or would like further information relating to the 2019 Provincial Budget and its impact on you, please contact us.

On February 20, 2018, the BC Ministry of Finance released the 2018 Provincial Budget. A summary of the provincial budget highlights is provided.

Property Transfer Tax (“PTT”)

Effective February 21, 2018, the PTT applicable to residential property will increase from 3% (applicable on the fair market value above $2 million) to 5% on the component of the fair market value above $3 million.

Further, the additional PTT applicable to foreign buyers of residential properties will increase from 15% to 20%. This tax is expanded from Metro Vancouver to include the Capital Regional District, the Regional District of Central Okanagan, the Fraser Valley Regional District and the Regional District of Nanaimo. Transitional rules (not yet defined) may exempt eligible property transactions entered into before February 21, 2018; however, there are no transitional rules for transactions in Metro Vancouver.

Effective for transactions occurring on or after February 21, 2018, transfers of a bankrupt’s principal residence from a bankruptcy trustee to the bankrupt or the bankrupt’s spouse or former spouse are exempt from PTT.

Currently, the PTT Act includes a general anti-avoidance rule (“GAAR”) that applies only to the foreign buyers tax.  Effective on royal assent, the GAAR would be extended to the entire PTT Act.  That is, an avoidance transaction without a bona fide purpose other than to obtain a tax benefit (i.e., avoidance of PTT) may result in a denial of the tax benefit and allow the administrator to determine “reasonable” tax consequences to the transferee or transferor.  This change may impact the use of bare trusts in the future.

Speculation Tax

Legislation will be introduced in 2018 to impose a speculation tax on residential property in BC, specifically in Metro Vancouver, the Fraser Valley, Capital and Nanaimo Regional Districts and in the municipalities of Kelowna and West Kelowna.

This tax will target foreign and domestic home owners who do not pay income tax in BC, including satellite families with high worldwide household income that pay little income tax in BC. Up-front exemptions will be available for most principal residences, qualifying long-term rental properties and certain special cases.

The tax rate in 2018 will be $5 per $1,000 of assessed value and will increase to $20 per $1,000 of assessed value in 2019. A non-refundable income tax credit will be introduced to provide relief to those who do not qualify for an up-front exemption but who pay income taxes in BC.

Details on how to apply for the exemptions and the income tax credit will be provided prior to the introduction of the tax.

Other Housing Measures

Other housing related measures announced in the budget include the following:

• The property value threshold for the full home owner grant is increased to $1.65 million in 2018 (from $1.6 million in 2017). The grant is reduced by $5 for every $1,000 of assessed value in excess of the threshold.
• Effective for 2019 and subsequent tax years, the school tax is being increased and will be applied at a tax rate of 0.2% on the portion of a residential property’s taxable assessed value that exceeds $3 million but does not exceed $4 million. A tax rate of 0.4% will apply on the portion of the taxable assessed value that exceeds $4 million.

Employer Health Tax (“EHT”) and Medical Services Plan (“MSP”)

Effective January 1, 2018, MSP premiums were reduced by 50%, as announced in the Budget 2017 Update. The BC government has announced that MSP premiums will be eliminated effective January 1, 2020.

The lost MSP revenue will be replaced by an EHT starting in the 2019 calendar year. Details on the frequency of instalment payments and aggregation of payroll among associated businesses is yet to be released. Subject to legislative approval, the following EHT rates will apply effective January 1, 2019:

Other Tax Measures

Other tax measures announced in the budget include the following:

• The interactive digital media tax credit is extended for five years to August 31, 2023.
• The mining flow-through share tax credit is being extended for one year to the end of 2018.
• The Film Incentive BC tax credit is expanded to include scriptwriting expenditures on BC labour incurred by a corporation prior to the completion of the final script stage of the production, effective for expenditures incurred on or after February 21, 2018.
• The book publishing tax credit is extended for three years to March 31, 2021.
• The farmer’s food donation tax credit is being extended for one year to the end of 2019.
• The infirm dependent tax credit and caregiver tax credit are replaced with a new non-refundable BC caregiver tax credit effective for 2018 and subsequent years. The maximum BC caregiver credit amount is $4,556 per infirm dependent for 2018, providing a benefit of up to $230.53.
• The BC education tax credit is eliminated effective for 2019 and subsequent years. Unused BC education amounts carried forward from years prior to 2019 will remain available to be claimed in 2019 and subsequent tax years.

For more information about the 2018 Provincial Budget Highlights we encourage you to contact us.