2019 British Columbia budget: Tax highlights

February 20, 2019

Issue 2019-06

In brief

On February 19, 2019, British Columbia’s Minister of Finance, Carole James, presented the province’s budget. The budget:

  • enhances the small business venture capital tax credit
  • extends several business and personal tax credits, including the training tax credits
  • introduces the BC Child Opportunity Benefit for families with children under age 18
  • enhances the climate action tax credit

This Tax Insights discusses these and other tax initiatives outlined in the budget. 

In detail

Business tax measures

Corporate income tax rates

British Columbia’s corporate income tax rates will remain as shown in the table below. The table also shows combined federal/British Columbia corporate tax rates.

Federal and BC corporate rates

BC

Federal + BC

 

2018 - 2020

2018

2019 - 2020

General and M&P income

12%

27%

Canadian-controlled private corporations (CCPCs)

active business income to $500,000

2%

12%

11% (1)

investment income

12%

50.67%

1. The combined rate reflects the decline in the federal small business tax rate from 10% to 9% on January 1, 2019.

Small business venture capital tax credit

The small business venture capital tax credit program is enhanced as follows:

  • effective 2019 taxation years, the annual tax credit limit that an individual can claim for investments made after February 19, 2019, increases from $60,000 to $120,000
  • effective February 20, 2019:
    • the maximum amount that eligible business corporations (EBCs) can raise through the program increases from $5 million to $10 million
    • advanced commercialization will be an eligible business activity, but only for businesses outside the Metro Vancouver Regional District and Capital Regional District
    • eligible small businesses and EBCs can engage in activities related to scaling up their business after two years in the program
    • companies that exit the program after two years (instead of after three years) are eligible for a reduction in the amount that they must reimburse the government
    • share transfers are permitted to a Tax-Free Savings Account (TFSA) and equity purchases within a TFSA are eligible for tax credits
  • effective March 2, 2019, investments in convertible equity issued by an EBC can qualify for a tax credit
Business tax credits

The budget extends BC’s:

  • training tax credits, by one year to the end of 2019
  • farmers’ food donation tax credit, by one year to the end of 2020
  • shipbuilding and ship repair industry tax credit, by three years to the end of 2022

Personal tax measures

Personal income tax rates

The budget does not change BC personal income tax rates. Top combined federal/BC personal income tax rates are shown below. These rates apply to individuals with taxable incomes above $210,371 in 2019 ($205,842 in 2018)

Top combined federal/BC rates

2018

2019

Ordinary income & interest

49.80%

Capital gains

24.90%

Canadian dividends

eligible

34.20%

31.44%

non-eligible

43.73%

44.63% (1)

 

1. The combined non-eligible dividend tax rate reflects the decline in the federal non-eligible dividend tax credit rate (which results from a decrease to the federal small business tax rate, as noted above)

BC Child Opportunity Benefit

Effective October 1, 2020, a new BC Child Opportunity Benefit will be combined with the existing early childhood tax benefit into a single new benefit. This refundable tax credit will provide a benefit of up to:

  • $1,600 for a family’s first child
  • $1,000 for a second child, and
  • $800 for each subsequent child under the age of 18

The benefit will be reduced if family net income exceeds $25,000 and begin to be phased-out if family net income exceeds $80,000. The thresholds will be indexed for inflation. The Canada Revenue Agency will administer the benefit, alongside the federal Canada Child Benefit.

Climate action tax credit

The climate action tax credit is enhanced, effective July 1, 2019, as shown in the table below.

Maximum credit

2018

July 1, 2019

July 1, 2020

July 1, 2021

Per adult (1)

$135

$154.50

$174

$193.50

Per child

$40

$45.50

$51

$56.50

1. Single-parent families will continue to receive the adult amount for the first child in the family.

Personal income tax credits

The budget:

  • extends the training tax credits, by one year to the end of 2019
  • expands the pension tax credit, so that it applies to certain retirement income security benefits paid to veterans, effective 2015 taxation years
  • effective 2018 taxation years:
    • allows the disability tax credit to be applied in calculating the tax on split income
    • includes split income in the income threshold for calculating the medical expense tax credit
  • extends the farmers’ food donation tax credit, by one year to the end of 2020

Mining taxes

The budget extends the new mine allowance by one year to the end of 2020.

In addition, as previously announced, the following tax credits are made permanent:

  • the mining exploration tax credit, effective on royal assent
  • the mining flow-through share tax credit, effective January 1, 2019

Other taxes

Provincial sales tax (PST)

Effective on royal assent, a principal and agent will be able to jointly designate a single party to be responsible for tax collection, reporting and remittance obligations when a principal uses an agent to make a sale or lease, or when a billing agent is used to collect payments. Where sales are made by auction, an auctioneer acting as agent will be automatically designated as the party responsible for collecting, reporting and remitting the PST unless the parties jointly elect to assign the obligations to the principal.

Carbon tax

Effective on royal assent, persons who sell natural gas at the retail level in British Columbia, but are not registered as natural gas retail dealers, will be subject to a penalty.

Motor fuel tax

Effective July 1, 2019, the TransLink service region’s motor fuel tax rates on clear gasoline and clear diesel will be eligible to be increased from 17¢ per litre to a maximum of 18.5¢ per litre.

School (property) tax rates

In 2019, British Columbia will continue to apply its longstanding rate-setting policies for:

  • residential property taxes
  • non-residential property taxes
  • residential rural property taxes
  • non-residential rural property taxes

Technical amendments

To provide clarity and certainty, various amendments will be made to the:

  • Income Tax Act, Property Transfer Tax Act and Taxation (Rural Area) Act – effective on royal assent, to clarify provisions related to the sharing of information between these statutes
  • Income Tax Act – effective on royal assent:
    • to allow taxpayer information to be shared for administering or enforcing the Workers Compensation Act
    • to clarify the Information and Privacy Commissioner’s ability to access taxpayer information as part of an investigation, audit or inquiry
  • Provincial Sales Tax Act – to clarify, among other amendments, that the tax treatment of vehicles brought into British Columbia are immediately licensed as multi-jurisdictional vehicles, retroactive to April 1, 2013
  • Speculation and Vacancy Tax Act (SVT Act) – retroactive to November 27, 2018:
    • to ensure that the exemption that is available for property that is uninhabitable operates as intended if the property is rendered uninhabitable at the end of a calendar year
    • to clarify that the tax due date of additional tax resulting from an SVT Act assessment due to a consequential assessment under another act, is the later of 30 days after the SVT Act assessment or the annual tax due date
  • Motor Fuel Tax Act – to clarify, among other amendments, appeal rights, effective on royal assent

Contact us

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Tel: +1 604 806 7052

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Partner, PwC Canada

Tel: +1 604 806 7788

Sean Wilson

Partner, PwC Canada

Tel: +1 604 806 7187

Ken Ghag

Senior manager, PwC Canada

Tel: +1 604 806 7208

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