On February 18, 2020, the B.C. (British Columbia) government announced proposed changes to the provincial tax laws.
Effective January 1, 2020, a new top personal income tax bracket will be introduced effective for 2020 and subsequent tax years. Taxable income exceeding $220,000 will be subject to a provincial personal income tax rate of 20.5 per cent – this increases B.C.’s highest marginal rate of tax from 16.8 per cent to 20.5 per cent. This new bracket results in a combined federal and B.C. tax rate of 53.5 per cent for taxable income in excess of $220,000. A summary of the proposed changes as they relate to the combined top personal income tax bracket for B.C. are:
Personal (combined) federal and B.C. top marginal tax rates
|Pre-2020 B.C. budget
|Post-2020 B.C. budget
Consequential to the increase in the rate of tax, the charitable donation tax credit for individuals is increased to 20.5 per cent for charitable donations over $200 in respect of the individual’s income subject to the new 20.5 per cent tax rate.
No corporate income tax rate changes were announced in this year’s budget. The current corporate income tax rates for 2020 are outlined below:
|Small business corporations
Corporate tax credits
Training tax credit – The training tax credit is for employers and apprentices who take part in eligible apprenticeship programs administered through the Industry Training Authority.
The training tax credit is currently effective until the end of 2019. Budget 2020 proposes that the credit be extended until the end of 2022.
B.C. farmer’s food donation tax credit – The farmers’ food donation tax credit is a non-refundable income tax credit to encourage farmers and farming corporations to donate certain agricultural products that they produce in B.C. to registered charities, such as food banks or school meal programs.
The credit is 25 per cent of the eligible amount of a farming corporation’s qualifying gifts for the tax year. The credit is available to farming corporations who make a gift of agricultural product after February 16, 2016 and before January 1, 2021.
Budget 2020 proposes extending the farmers’ food donation tax credit by three years to include gifts of agricultural products made before January 1, 2024.
Production services tax credit – The production services tax credit is for accredited production corporations that produce accredited film or video productions in B.C. The credits are available to both domestic and foreign producers and there is no Canadian content requirement.
The production services tax credit program consists of four tax credits:
- Production services tax credit
- Regional production services tax credit
- Distant location production services tax credit
- Digital animation, visual effects and post-production (DAVE) services tax credit
You must claim the credit no later than 36 months after the end of your corporation’s tax year. However, Budget 2020 proposes changing the filing period from 36 months to 18 months for tax years beginning on or after February 19, 2020.
Budget 2020 proposed changes related to CreativeBC:
- Effective February 19, 2020, the application fee for an accreditation certificate increases to $10,000.
- In most circumstances, productions that first incur accredited B.C. labour expenditures on or after July 1, 2020, must notify CreativeBC within 60 days of incurring the expense.
Provincial sales tax
Carbonated beverages – Effective July 1, 2020, carbonated beverages that contain sugar, natural sweeteners or artificial sweeteners no longer qualify for the exemption for food products for human consumption. Effective July 1, 2020, PST also applies to all beverages that are dispensed through soda fountains, soda guns or similar equipment, along with all beverages dispensed through vending machines (except vending machines wholly dedicated to dispensing beverages other than sweetened carbonated beverages, e.g., coffee or water machines).
PST registration – Effective July 1, 2020, Canadian sellers of goods and Canadian and foreign sellers of software and telecommunication services are required to register to collect PST if specified B.C. revenues exceed $10,000. Streaming services including Netflix and DisneyPlus will now be subject to tax.
Also, effective July 1, 2020, all Canadian sellers of vapour products are required to register to collect PST if they cause vapour products to be delivered to B.C. purchasers.
Machinery and equipment – 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.
Electric aircraft – Effective February 19, 2020, electric aircraft are exempt from PST. Also, a refund is added for PST paid on or after February 19, 2020, in relation to non-electric aircraft obtained for the purpose of converting the aircraft to operate solely on electricity, as well as for PST paid on parts and related services obtained for this purpose. Legislative amendments for machinery and equipment are part of the Province’s CleanBC Strategy.
Real property contractors – Effective February 19, 2020, real property contractors who perform value-added work to goods and then install those goods into real property outside B.C. can apply for refunds of PST paid on those goods.
Motor vehicle dealers and manufacturers – Effective March 1, 2020, when a motor vehicle dealer or manufacturer changes the use of a vehicle in their sale or lease inventory, higher PST rates apply as follows:
- Average value of $125,000 to $149,999.99 – rate increased from 10% to 15%
- Average value of $150,000 and above – rate increased from 10% to 20%
Multi-jurisdictional vehicles – Effective on Royal Assent, the amendments to the Provincial Sales Tax Act clarify:
- Refunds for vehicles brought into B.C. to be immediately licensed as multi-jurisdictional vehicles; and
- Authority for the director to impose a penalty when PST collectors improperly provide an exemption for these vehicles.
Effective on a date to be specified by regulation, amendments to the Provincial Sales Tax Regulation clarify requirements for PST collectors to document exemptions and keep records of information related to these vehicles.
Bundled leases – Effective February 19, 2020, if a single price is charged for the lease of a taxable good along with an exempt good or real property, PST applies to the fair market value of the lease of the taxable good.
Leases – Effective February 19, 2020, the definition of “lease” has been changed to exclude a right to use coin-operated machines and garbage and similar bins.
Related services – Effective February 19, 2020, various exemptions for related services do not apply to a related service provided by a lessor, or provided by a third party through a contract with a lessor, during the lease of goods.
The B.C. carbon tax rates effective April 1, 2020, are aligned with the federal carbon pricing backstop methodology, where applicable. This means the carbon tax rates, effective April 1, 2020, and April 1, 2021, are revised from the rates that were previously set in 2017.
Also, effective April 1, 2020, the rates for shredded and whole tires are being replaced with a new category for combustible waste. Combustible waste includes tires in any form and asphalt shingles as a new taxable combustible.
For the revised carbon tax rates, see Carbon Tax Rates By Fuel Type – From July 1, 2012 (PDF).
Property and natural resource taxes
Rural property tax – Residential and non-residential rural area property tax rates for 2020 will be set in the spring consistent with long-standing rate-setting policy.
Homeowner grant – As announced on January 3, 2020, the threshold for the phase-out of the homeowner grant has decreased from $1,650,000 to $1,525,000 for the 2020 tax year.
Homeowner grant administrators will work with local governments on the centralization of the administration of the homeowner grant.
Property transfer tax – Effective on a date to be specified by regulation, a new exemption from additional property transfer tax will be introduced for qualifying Canadian-controlled limited partnerships.
Effective on Royal Assent, the Property Transfer Tax Act is amended to clarify the calculation of partial principal residence exemptions where the land is greater than 0.5 hectares or the property includes non-residential improvements. There is no change to the calculation as the clarification is consistent with administrative practice.
Property tax deferment – Effective May 1, 2020, the Land Tax Deferment Act is amended to centralize program administration within the Ministry of Finance. These changes will improve the filing and processing of property tax deferment applications. The eligibility requirements for property tax deferment remain the same.
School tax – Provincial residential and non-residential school property tax rates for 2020 will be set in the spring. Rates will be sent in a manner consistent with long-standing rate-setting policy.
Mineral tax – Effective on a date to be specified by regulation, the new mine allowance is extended for five years to the end of 2025.
Information is current to February 20, 2020. The information contained in this release is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation.