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On February 18, 2020, BC’s Ministry of Finance released the 2020 Budget. A summary of the Budget highlights is provided below.
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:
PST related measures announced in the Budget include the following:
Other tax measures announced in the budget include the following:
On February 19, 2019, the BC Ministry of Finance released the 2019 Provincial Budget. A summary of the provincial budget highlights is provided below.
Changes introduced by the Budget to enhance the small business venture capital tax credit program include the following:
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 announced in the Budget include the following:
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.
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.
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 related measures announced in the budget include the following:
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:
Annual BC Payroll | Annual EHT | Tax as % of Payroll |
$500,000 or less | $0 | 0.00% |
$750,000 | $7,313 | 0.98% |
$1 million | $14,625 | 1.46% |
$1.25 million | $21,938 | 1.76% |
$1.5 million | $29,250 | 1.95% |
Over $1.5 million | $29,250 plus 1.95% of payroll over $1.5 million | 1.95% |
Other tax measures announced in the budget include the following:
For more information about the 2018 Provincial Budget Highlights we encourage you to contact us.