British Columbia Budget Report 2019

British Columbia Budget Report 2019

On 19 February 2019, British Columbia Finance Minister Carole James tabled the province’s fiscal 2019–20 budget.

Although the budget does not include any new changes to the corporate or personal tax rates, it enhances the province’s Small Business Venture Capital Tax Credit program and introduces the new B.C. Child Opportunity Benefit to replace the current Early Childhood Tax Benefit starting in 2020.

Highlights

  • No changes to personal and corporate tax rates.
  • Budget anticipates surpluses of $274 million in 2019
  • Surplus of $287 million in 2020
  • Surplus of $585 million in 2021
  • Some tax credits are enhanced, others made permanent and others extented

Personal Tax Measures


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Personal Income Tax Rates

The budget does not include any changes to personal income tax for 2019. Note: There were no changes for 2018 as well.

As a result, B.C.’s personal income tax rates effective January 1, 2019 remain as follows:

Personal Combined Federal/Provincial Top Marginal Rates

 

2018

2019

Interest and regular income

49.80%

49.80%

Capital gains

24.90%

24.90%

Eligible dividends

34.20%

31.44%

Non-eligible dividends

43.73%

44.64%

 

The 2018/2019 British Columbia personal tax rates are summarized as follows: 

2017/2018 British Columbia Personal Tax Rates

2018 Bracket

Rate

2019 Bracket

Rate

$0 – 39,676

5.06%

$0 – 40,707

5.06%

39,677 to $79,107

7.70%

40,707 to $81,416

7.70%

79,354 to $91,107

10.50%

81,417 to $93,476

10.50%

$91,108 to $110,630

12.29%

$93,477 to $113,506

12.29%

$110,631 to $150,000

14.70%

$113,507 to $153,900

14.70%

Above $150,000

16.80%

Above $153,900

16.80%

 


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British Columbia Non-Refundable Tax Credits

The government confirmed today that personal tax credits for 2019 will be indexed by 1.026%.  The maximum tax credit amounts and actual BC tax credits for 2018 and 2019 are set out below.

British Columbia Non-Refundable Tax Credits

 

2018

2019

Maximum Amount

BC Tax Credit

Maximum Amount

BC Tax Credit

Basic Personal Amount

$10,412

527

$10,682

541

Spousal Amount

8,915

451

9,147

463

Eligible dependent amount

8,915

451

9,147

463

Age amount

4,669

236

4,791

242

CPP Contributions

2,594

131

2,749

139

EI Contributions

858

43

860

44

Pension income amount

1,000

51

1,000

51

Disability amount

7,809

395

8,012

405

Disability supplement

4,556

231

4,674

237

Tuition and education amounts

Variable

Variable

Variable

Variable

Adoption expenses

15,905

805

16,255

823

Medical expenses

Variable

Variable

Variable

Variable

Medical expenses (other dependents)

N/A

N/A

N/A

N/A

BC Caregiver amount

4,556

231

4,674

237

Interest on student loans

Variable

Variable

Variable

Variable

Donations & Gifts
-first $200
- over $200


200
75% of income


10
Variable


200
75% of income


10
Variable

In general, credits are multiplied by 5.06% to arrive at the deduction from BC Tax. In the case of donations and gifts over $200, the credit is 14.70%

PERSONAL TAX CREDITS

B.C. Child Opportunity Benefit

The budget introduces the new B.C. Child Opportunity Benefit to replace the current Early Childhood Tax Benefit.

Under the new program, which starts October 1, 2020, B.C. will provide support for children under the age of 18 (up from under the age of 6). The amount of the benefit will increase as follows:

  • For families with one child — Up to $1,600 per year
  • For families with two children — Up to $2,600 per year
  • For families with three children — Up to $3,400 per year

The new benefit is reduced by 4% of family net income over $25,000 until it is equivalent to a credit of $700 for the first child, $680 for the second child and $660 for each subsequent child under the age of 18.

The new benefit is phased out at a rate of 4% of family net income over $80,000. According to B.C., the $25,000 and $80,000 thresholds will be indexed to inflation in future years.

The income level at which the new benefit is fully phased out varies based on the number of children in a household (e.g., B.C. states that, for a family with one child, the benefit is fully phased out at $97,500 of family net income, and for a family with two children, the benefit is fully phased out at $114,500 of family net income).

The new benefit will be administered by the federal government under the Canada Child Benefit.


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Climate Action Tax Credit

The budget enhances B.C.’s Climate Action Tax Credit for qualifying adults and children.

As a result, adults will receive $154.50 per year (from $135), and children will receive $45.50 per year (from $40), effective July 1, 2019.

The credit is reduced in 2019 for family net income of more than $40,689 for married or single parents, and for family net income of more than $34,876 for single individuals.

The Climate Action Tax Credit, which is scheduled to increase in 2020 and 2021, is combined with the federal GST/HST credit.

Mining Flow-Through Share Tax Credit made permanent

As previously announced on 28 January 2019, the mining flow-through share tax credit is made permanent, effective 1 January 2019.

The Farmer’s Food Donation Tax Credit is extended

The farmer’s food donation tax credit is extended for 1 year to the end of 2020.

The Pension Tax Credit is expanded

The Pension Tax Credit is expanded to apply in respect of certain retirement income security benefits paid to veterans, effective for 2015 and subsequent tax years.

The Disability Tax Credit

The Disability Tax Credit will be allowed to apply in calculating the tax on split income, effective for 2018 and subsequent tax years

The Medical Expense Tax Credit

The budget introduces changes to personal tax credits to include split income in the income threshold for calculating the medical expense tax credit, effective for 2018 and subsequent tax years

Corporate Tax Measures

Corporate Income Tax Rates

No changes are proposed to the corporate tax rates or the $500,000 small-business limit.

British Columbia’s 2019 corporate tax rates are summarized as follows:

Corporate Income Tax Rates — As of January 1, 2019

 

British Columbia

Combined Federal
and British Columbia

General

12%

27%

M&P

12%

27%

Small business*, **

2.0%

11%

* on first $500,000 of active business income
** The federal small business rate was reduced from 10.00% to 9.00% effective 1 January 2019.

Small Business Venture Capital Tax Credit - Enhancements

The budget introduces new enhancements to the Small Business Venture Capital Tax Credit.

The budget increases the maximum amount that eligible business corporations can raise through the tax credit program to $10 million (from $5 million), effective February 20, 2019.

Further, the budget increases the annual tax credit limit that an individual can claim for investments made after February 19, 2019 to $120,000 (from $60,000), effective for 2019 and subsequent tax years.

The budget also expanded the Small Business Venture Capital Tax Credit so that:

“Advanced commercialization” is added as an eligible business activity, effective February 20, 2019.

The activity is limited to businesses outside the Metro Vancouver Regional District and Capital Regional District. “Advanced commercialization” is not defined in the budget.

Investments in convertible equity issued by an eligible business corporation will qualify for tax credits effective March 2, 2019

Share transfers are permitted to a tax-free savings account (TFSA) and equity purchases within a TFSA are eligible for tax credits, effective February 20, 2019

Eligible small businesses and eligible business corporations can engage in activities related to scaling up their business after 2 years in the tax credit program, effective February 20, 2019.

Companies that exit the tax credit program after 2 years (instead of after 3 years) are eligible for a reduction in the amount they are required to reimburse British Columbia, effective February 20, 2019.

The budget also includes technical amendments to clarify requirements to file a certificate with a tax credit return.

Other Tax Credits

BC Mining Exploration Tax Credit

Mining Flow-Through Share Tax Credit made permanent

As previously announced on 28 January 2019, the B.C. mining exploration tax credit for individuals and corporations made permanent, effective 1 January 2019.

New Mine Allowance is extended

The new mine allowance is extended for one year to the end of 2020.

Training Tax Credit is extended

Training tax credits are extended for one year to the end of 2019.

The Farmer’s Food Donation Tax Credit is extended

The farmer’s food donation tax credit is extended for 1 year to the end of 2020.

The Ship Building and Repair Industry Tax Credit is extended

The Shipbuilding and Ship Repair Industry Tax Credit is extended to the end of 2022.

Provincial Sales Tax

Streamline Tax Collection

Effective on Royal Assent, the Provincial Sales Tax Act is amended to authorize a designation to streamline tax collection, reporting and remittance requirements for sales or leases involving agency.

When a principal uses an agent to make a sale or lease, or when a billing agent is used to collect payments, the principal and agent can jointly designate a single party to be responsible for tax collection, reporting and remittance obligations.

For sales made by auction, an auctioneer acting as agent is automatically designated as the party responsible for collecting, reporting and remitting tax unless the parties jointly elect to assign the obligations to the principal.

PST – Technical Amendments

The budget also makes technical amendments to the Provincial Sales Tax Act to clarify:

The tax treatment of vehicles brought into B.C. to be immediately licensed as multi-jurisdictional vehicles, effective retroactive to April 1, 2013.

Refunds for motor vehicles returned to manufacturers, effective on a date to be specified by regulation

Suspensions and cancellations of collector registrations, effective on Royal Assent.

Conditions for small seller eligibility, effective on Royal Assent.

The obligation to pay tax when an exemption is not documented, effective retroactive to April 1, 2013.

The timing of tax payments by promotional distributors, effective on Royal Assent.

Procedures regarding unspent municipal and regional district tax revenues held by dissolving societies, effective on Royal Assent.

Other Measures (Not Related to Tax)

Motor Fuel Tax

The budget allows TransLink to increase its motor fuel tax rates on clear gasoline and clear diesel to a maximum of 18.5 cents per litre (from 17 cents per litre), effective July 1, 2019.

The budget also makes technical amendments to the Motor Fuel Tax Act to clarify:

Refunds of motor fuel tax security related to sales of relabeled fuel, effective retroactive to January 1, 2018

Allowance for motor fuel tax collectors, effective retroactive to February 20, 2015.

Eliminating Interest on BC student loans

Effective 19 February 2019, interest will no longer accrue on new and existing student loans provided through the British Columbia Student Loan Program.

Clean Energy Rebates

The budget papers refer to rebates for clean energy retrofits for peoples’ homes:

  • $2,000 to replace a fossil fuel (i.e., oil, propane or natural gas) heating system with an electric air-source heat pump
  • up to $1,000 to upgrade windows and doors to be better insulated
  • up to $700 toward a higher-efficiency natural gas furnace

Provincial Rural Area Property Tax Rates Set

A single rural area residential property tax rate applies provincewide.

The longstanding rate-setting policy that average residential rural property taxes increase by the previous year’s provincial inflation rate will continue for 2019.

Consistent with longstanding policy, non-residential rural area property tax rates will be set so that total non-residential rural tax revenue will increase by inflation plus new construction.

The rates will be set in the spring.

School Act

The longstanding rate-setting policy is that average residential class property taxes, before the application of the home owner grant, increase by the previous year’s provincial inflation rate.

This rate-setting policy has been in place since 2003 and will continue in 2019.

The rates will be set in the spring.

Provincial Non-Residential Class School Tax Rates Set

A single province-wide school tax rate is set for each of the non-residential property classes.

Consistent with longstanding policy, the rate for 2019, except for the rate for the industrial property classes, will be set so that non-residential tax revenue increases by inflation plus new construction.

This rate-setting policy has been in place since 2005 and the rates will be set in the spring.

The major industry class tax rate and the light industry class tax rate will be set at the same rate as the business class tax rate, consistent with the policy announced in the British Columbia 2008 budget.

Administration, Enforcement & Revenue Sharing

Budget 2019 introduces several changes to enhance tax administration and information sharing:

Effective on Royal Assent, amendments to the Income Tax Act, Property Tax Act and Taxation (Rural Area) Act clarify provisions related to the sharing of information between these statutes.

Effective on Royal Assent, amendments to the Income Tax Act also:

Allow taxpayer information to be shared to an official for the purposes of administering or enforcing the Workers Compensation Act

Clarify the Information and Privacy Commissioner’s ability to access taxpayer information as part of an investigation, audit or inquiry.

Carbon Tax Act

Effective on Royal Assent, the Carbon Tax Act is amended to introduce a penalty for persons who sell natural gas at the retail level in British Columbia but are not registered as natural gas retail dealers.

Motor Fuel Tax Act

The amendments to the Motor Fuel Tax Act clarify:

Effective retroactive to 1 January 2018, refunds of motor fuel tax security related to sales of relabeled fuel

Effective retroactive to 20 February 2015, allowance for motor fuel tax collectors

The amendments to the Provincial Sales Tax Act clarify:

Effective retroactive to 1 April 2013, the tax treatment of vehicles brought into British Columbia to be immediately licensed as multi-jurisdictional vehicles

Effective on a date to be specified by regulation, refunds for motor vehicles returned to manufacturers

Effective on Royal Assent, suspensions and cancellation of collector registrations

Effective on Royal Assent, conditions for small seller eligibility

Effective retroactive to 1 April 2013, the obligation to pay tax when an exemption is not documented

Effective on Royal Assent, the timing of tax payments by promotional distributors

Effective on Royal Assent, procedures regarding unspent municipal and regional district tax revenues held by dissolving societies

Speculation and Vacancy Tax Act

Effective retroactive to 27 November 2018, the amendments to the Speculation and Vacancy Tax Act include correcting typographical errors and:

The Speculation and Vacancy Tax Act provides an exemption for property that is uninhabitable due to a natural disaster or a hazardous condition.

The exemption applies when the property is unavailable for at least 60 days in a calendar year.

This act is amended to clarify the application of the exemption of property that is rendered uninhabitable at the end of a calendar year.

This amendment will ensure the exemption operates as intended.

Clarify that the tax due date of additional tax as a result of a Speculation and Vacancy Tax Act assessment due to a consequential assessment under another act is the later of 30 days after the Speculation and Vacancy Tax Act assessment and the annual tax due date.

(Source: BC Government)

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