Canada: British Columbia 2017 Budget

On February 21st, 2017, British Columbia Finance Minister Michael de Jong announced the 2017 British Columbia Budget. Summarized below are highlights of some of the measures contained in the Budget.

Income Tax Measures

Small Business Corporate Income Tax Rate

The small business corporate income tax rate will decrease from 2.5% to 2% effective April 1, 2017 resulting in a combined federal and British Columbia small business corporate income tax rate of 12.5%. The general British Columbia corporate income tax rate remains at 11% resulting in a combined federal and British Columbia general corporate income tax rate of 26%.

In order to maintain tax integration, the British Columbia Dividend Tax Credit for Ineligible Dividends will decrease from 17% to 15% (i.e. 2.18% of the taxable amount of the dividends), effective for the 2017 and subsequent taxation years.

Tax Credit for Volunteer Firefighters and Search and Rescue Volunteers

A new non-refundable tax credit for volunteer firefighters and search and rescue volunteers is available for the 2017 and subsequent taxation years. British Columbians who provide at least 200 hours of volunteer service to either a volunteer fire department, an eligible search and rescue organization or a combination of both, may claim this $3,000 credit, which translates to tax savings of $151.80.

Back-to-School Tax Credit

The Back-to-School Tax Credit was announced on September 1, 2016 and is a new non-refundable tax credit available to individuals with school-aged children (5 to 17 years of age) of up to $250 per child or a maximum tax benefit of $12.65 per child. The credit is available for the 2016, 2017 and 2018 taxation years, after which the credit will be reviewed.

Education Tax Credit

The Education Tax Credit will be eliminated effective January 1, 2018. Any unused amounts carried forward from years prior to 2018 will remain available to be claimed in 2018 and in subsequent years.

Scientific Research and Experimental Development Tax Credit

The Scientific Research and Experimental Development Tax Credit is extended to August 31, 2022.

British Columbia Mining Flow-Through Share Tax Credit

The British Columbia Mining Flow-Through Share Tax Credit is extended to the end of 2017.

Training Tax Credits

The British Columbia Training Tax Credits are extended to the end of 2020.

Book Publishing Tax Credit

The Book Publishing Tax Credit is extended until March 31, 2019.

Interactive Digital Media Tax Credit

Effective February 22, 2017, this credit is available with respect to qualifying British Columbia labour employed in the development of augmented reality and virtual reality products. The credit is calculated as 17.5% of qualifying British Columbia labour expenses. Furthermore, corporations that have qualifying British Columbia labour expenses greater than $2 million will no longer need to meet the "principal business requirement" for taxation years ending on or after February 22, 2017.

Other Tax Measures

Provincial Sales Tax on Electricity

Provincial Sales Tax on taxable electricity will gradually be eliminated. Effective October 1, 2017, the tax rate on electricity is reduced to 3.5% from 7% of the purchase price, and effective April 1, 2019, electricity will be fully exempt from the tax.

First Time Home Buyers' Program Exemption

The fair market value threshold for eligible residential property under the First Time Home Buyers' Program is increased to $500,000 from $475,000. The partial exemption continues, applying to property valued between $500,000 and $525,000. These measures are effective for registrations on or after February 22, 2017.

Home Owner Grant Phase-Out

The threshold for the Home Owner Grant Phase-Out has been increased to $1.6 million from $1.2 million for the 2017 taxation year. The grant is reduced by $5 for every $1,000 of assessed value in excess of the threshold. This measure was announced on January 10, 2017.

Medical Services Plan

The 4% increase in Medical Services Plan ("MSP") premiums previously announced in the 2016 Budget was cancelled on September 15, 2016. The rate remains at $75 per month per adult and effective January 1, 2018, MSP premiums will be reduced by 50% for households with annual net incomes of up to $120,000. British Columbians will need to register for this 50% reduction and those currently receiving premium assistance will automatically be registered.

The following examples below may help to illustrate these savings:

" A single adult with income between $42,001 and $120,000 will save $450 per year ($37.50 per month).
" A couple with family net income between $45,001 and $120,000 will save $900 per year ($75 per month).

Furthermore, the income threshold at which households are fully exempt from MSP premiums is increased by $2,000.
For more information on the 2017 British Columbia Budget, please visit the government of British Columbia website at the following address:

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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