Tax Insights: 2024 British Columbia budget – Tax highlights

Issue 2024-05

In brief

On February 22, 2024, British Columbia’s Minister of Finance, Katrine Conroy, presented the province’s budget. The budget does not change personal or corporate income tax rates, but does:

• introduce a tax of up to 20% on income from the sale of residential property that was held for less than two years, effective January 1, 2025
• increase the employer health tax exemption threshold to $1 million, effective January 1, 2024
• provide a general property transfer tax exemption for new qualifying purpose-built rental buildings purchased from 2025 to 2030, and increase the property transfer tax exemption thresholds for first-time home buyers and newly built homes, effective April 1, 2024
• state that British Columbia will no longer impose a requirement for property taxation to apply on Nisga’a Lands or the Treaty Lands of a Modern Treaty Nation, starting 2025

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

In detail

Personal tax measures

Personal income tax rates

The budget does not change British Columbia personal income tax rates. The top two combined federal/British Columbia personal income tax rates are shown below.  

Tax targeting home flipping activity

The budget introduces a tax on proceeds from the sale of residential real estate in British Columbia. Effective for properties sold after December 31, 2024, the tax targeting home flipping activity will apply to income from the sale of property (and the assignment of contracts to purchase property):

• with a housing unit
• zoned for residential use, and
• held for less than two years

The tax rate will be 20% for property sold within 365 days of purchase, and will gradually decrease to zero for property held between 366 and 730 days. The tax is in addition to any federal or provincial tax incurred from the sale of property. Exemptions will be available for:

• certain life events, including death, disability or illness, separation or divorce, personal safety, work relocation or involuntary job loss, insolvency, etc.
• property owners who add to the housing supply through construction and real estate development

Individuals who sell their primary residence within two years of purchase can exclude up to $20,000 when calculating their taxable income for purposes of this tax.

BC Family Benefit Bonus

The budget introduces the BC Family Benefit Bonus, a temporary bonus for the 2024/25 benefit year, which will result in a 25% increase to both the annual BC Family Benefit amounts and the income thresholds used to determine eligibility for the BC Family Benefit. The bonus will be paid with the BC Family Benefit starting in July 2024.

Training tax credit

The budget extends the training tax credit for individuals by one year to December 31, 2025.

Clean buildings tax credit

Effective on royal assent of the enacting legislation, the clean building tax credit deadlines will be extended by six months to September 30, 2027, by which a certificate can be given by a qualified person and an application for certification by the Minister of Finance can be filed.

Mining exploration tax credit

Effective February 23, 2024, oil and gas exploration expenditures will no longer qualify for the mining exploration tax credit.

Business tax measures

Corporate income tax rates

British Columbia’s corporate income tax rates have not changed and will remain as shown in the table below. The table also shows combined federal/British Columbia corporate tax rates.

Employer health tax (EHT)

The budget proposes, effective January 1, 2024, to increase the EHT exemption threshold from $500,000 to $1 million. As a result, the notch rate for remuneration above the new $1 million exemption threshold and below the full rate $1.5 million threshold will increase from 2.925% to 5.85%. The EHT is imposed on wages paid by employers with a permanent establishment in the province. Associated employers with annual payroll of less than $1.5 million would save up to $9,750 in payroll tax annually.

Film, digital media and animation incentives

Film incentive BC tax credit (FIBCTC) and British Columbia production services tax credit (BCPSTC)

Effective for productions beginning principal photography after May 31, 2024, animation productions will no longer be eligible for both the regional and distant location tax credits under the FIBCTC and BCPSTC. Animation productions will remain eligible for the basic tax credits under the FIBCTC and BCPSTC, as well as the British Columbia digital animation, visual effects and post-production services tax credit.

British Columbia interactive digital media tax credit (BCIDMTC)

Effective September 1, 2024, products that involve gambling with currency will no longer be eligible for the BCIDMTC.

Clean buildings tax credit

Effective on royal assent of the enacting legislation, the clean building tax credit deadlines will be extended by six months to September 30, 2027, by which a certificate can be given by a qualified person and an application for certification by the Minister of Finance can be filed.

Mining exploration tax credit

Effective February 23, 2024, oil and gas exploration expenditures will no longer qualify for the mining exploration tax credit.

Other business tax credits

The budget extends British Columbia’s:

• training tax credit for employers by three years to December 31, 2027
• shipbuilding and ship repair industry tax credit by two years to December 31, 2026

Property transfer tax measures

First-time home buyers and newly built homes

Effective April 1, 2024, the budget increases the property transfer tax exemption thresholds for:

• first-time home buyers, from $500,000 to $835,000 (the exemption is phased-out for properties with a fair market value above $835,000 and is eliminated at $860,000)
• newly built homes, from $750,000 to $1,100,000 (the exemption is phased-out for properties with a fair market value above $1,100,000 and is eliminated at $1,150,000)

New purpose-built rental buildings

The budget provides a general property transfer tax exemption for purchases of new qualifying purpose-built rental buildings that occur after December 31, 2024 and before January 1, 2031. Purpose-built rental buildings must:

• be non-stratified and held as rentals, on a monthly basis, for at least 10 years, and
• have the residential portion of the building used entirely for rental purposes and be comprised of at least four apartments

Sales tax measures

Provincial sales tax (PST)

The budget makes technical amendments to:

• the Provincial Sales Tax Act
  • effective April 1, 2013, to broaden the definition of software for the purposes of the PST (which overturns a recent court decision)
  • effective on royal assent of the enacting legislation, to provide discretionary authority for the director to require online only filings and submission of information or documents
• the Provincial Sales Tax Exemption and Refund Regulation:
  • effective February 23, 2024, to clarify that projects that use sunlight, wind, tides, air, or water to manufacture clean energy qualify for the production machinery and equipment exemption
  • to clarify the rules for when services are provided with taxable leased goods

Other tax measures

Speculation and vacancy tax (SVT)

The budget amends the definition of a registered occupier for purposes of the SVT. Effective January 1, 2024, a person who possesses a residential property under a lease registered in the Land Title and Survey Authority of British Columbia will be treated as the registered occupier of the property for SVT purposes and be responsible for any SVT filings and tax for the leasehold property. Registered leaseholders who are not already required to declare in 2024 will declare for the first time in 2025, based on the use of the property in 2024.

Insurance premium tax

The budget exempts farmers from insurance premium tax for premiums paid on provincial agricultural insurance programs offered by the Ministry of Agriculture and Food, effective on royal assent of the enacting legislation.

Property taxation on Nisga’a Lands and Treaty Lands

Starting in the 2025 taxation year, British Columbia will no longer impose a requirement for property taxation to apply on Nisga’a Lands or the Treaty Lands of a Modern Treaty Nation. Modern Treaty Nations will be able to self‑determine property taxation on their respective treaty lands, including whether and how to exercise their own assessment and property taxation laws and policies. Modern Treaty Nations will continue to contribute to applicable provincial services, such as regional hospital districts. Provincial assessment rules will also be better aligned with the unique aspects of Nisga’a Lands and Treaty Lands, as well as Modern Treaty Nation governance.

General anti-avoidance rule (GAAR)

The budget states that the Income Tax Act was amended, effective December 15, 2022, to ensure that the GAAR applies to abusive transactions that may result in future tax benefits, for transactions that occur after April 6, 2022.