On February 19, 2019, BC Finance Minster Carole James tabled the 2019 Provincial Budget. The Budget forecasts slim surpluses of $274 million for 2019, $287 million for 2020 and $585 million for 2021. The total provincial debt is also expected to rise from a current forecast of $67.9 billion to $82.3 billion by 2022, close to a 22% increase.
For the second year in a row, there are no changes to the individual or corporate tax rates. Although it is interesting to note that the biggest anticipated increase in revenue to the government is the employer’s health tax. According to the Budget documents, this new tax that is effective for the 2019 year is expected to grow from $464 million in the 2018 year to over $2 billion by 2021.
Full details of the Budget can be found by clicking here. A summary of the main measures are outlined below.
Business Tax Measures
Corporate income tax rates
The Budget did not announce any changes to BC’s corporate income tax rates. As a result, BC’s corporate income tax rates will remain as follows:
|BC||Combined (Federal and BC)|
|Small business 1||2%||12%|
1 For first $500,000 of taxable active business income
Small business venture capital tax credit
The Budget did bring in some changes to the Small Business Venture Capital Tax Credit. Starting in 2019, individual can now claim investments of up to $120,000 per year (an increase from $60,000) and the maximum amount that corporations can raise through the program has increased to $10 million (from $5 million).
There are also a few tweaks to the program:
- Effective February 20, 2019, advanced commercialization is added as an eligible business activity (only if outside the Metro Vancouver Regional District and Capital Regional District). There is no definition in the Budget as to what is advanced commercialization.
- Effective February 20, 2019, eligible small businesses and eligible business corporations can engage in activities related to scaling up their business after two years in the tax credit program.
- Effective February 20, 2019, companies are eligible for a reduction in the amount they are required to reimburse the government if they exit the tax credit program.
- Effective February 20, 2019, share transfers are permitted to a Tax-Free Savings Account and equity purchases within a Tax-Free savings Account are eligible for tax credits.
- Effective March 2, 2019, investments in convertible equity issued by an eligible business corporation can qualify for a tax credit.
Corporate Tax Credits
The Budget also extended or made permanent several corporate tax credits (some of which had already been announced):
- Training Tax Credit – extended until the end of 2019
- Mining Exploration Tax Credit – made permanent
- Shipbuilding and Ship Repair Industry Tax Credit – extended until the end of 2022
Personal Tax Measures
Personal income tax rates
The budget did not announce any changes to BC’s personal income tax rates. As a result, BC’s top personal income tax rate will remain as follows for the 2019 year:
|Personal Top Marginal Rates (Income > $210,371)|
|Interest and regular income||49.80%|
Note: The tables shown above represent the combined Federal/BC Provincial personal tax rates.
BC Child Opportunity Benefit
The Budget outlined a new BC Child Opportunity Benefit for Children will be combined with the early childhood tax benefit. Effective October 1, 2020, this new program is to provide a refundable tax credit to families with children under the age of 18 (the current program only applies to children under the age 6). The maximum benefit that can be received is as follows:
- $1,600 for the first child
- $1,000 for the second child
- $800 for each subsequent child
The benefit is to be reduced by 4% of the family net income over $25,000 until it is equivalent to $700 for the first child, $680 for the second child and $660 for each subsequent child. Once the family net income reaches $80,000, the benefit will start to be phased out at a rate of 4% per year. The thresholds of $25,000 and $80,000 are to be indexed to inflation.
The Budget outlines examples that this new benefit will be fully phased out for a family with one child that has $97,500 of family net income and a family with two children will have the new benefit phased out with $114,500 of family net income.
Personal Tax Credits
The budget also enhanced, extended or adjusted several personal tax credits:
- Climate Action Tax Credit – enhanced starting July 1, 2019
- Farmer’s Food Donation Tax Credit – extended until the end of 2020
- Mining flow-through Share Tax Credit – made permanent
- Pension Tax Credit – expanded to include certain types of retirement benefits paid to veterans
- Calculation of Tax on Split income – adjusted to ensure the disability tax credit can be applied
- Calculation of Medical Expenses Tax Credit – adjusted to ensure that split income is included in determining the relevant threshold
For more information on how any of the proposed changes might impact your business or you, contact your Rise Advisor.