2017 BC Budget Essentials

By Bilal Kathrada

The Minister of Finance, Michael de Jong delivered the Province’s 2017 budget yesterday. Here are the highlights of the tax measures announced in the budget:


Corporate Income Tax Rates

The small business corporate income tax rate will be reduced from 2.5% to 2% effective April 1, 2017. The combined federal and BC corporate tax rate for active business income on the first $500,000 will therefore be 12.5% (income over $500,000 will remain taxable at 26%).

PST on Electricity Phased Out

The Province will phase out the PST on taxable electricity. The rate will be reduced to 3.5% effective October 1, 2017 and will fully exempt electricity effective April 1, 2019.


Personal Tax Rates

The only change to personal tax rates is a slight increase to the non-eligible dividend tax rate to 40.95% (from 40.61%) as a result of a reduction in the dividend tax credit on ineligible dividends to 15% (from 17%) for 2017 and subsequent tax years. The BC personal income tax rates effective January 1, 2017 are as follows:

Income Type

Top Marginal Rate

Interest and regular income: 47.70%

Capital gains: 23.85%

Non-eligible dividends: 40.95%

Eligible dividends: 31.30%

Medical Service Plan Premiums

Medical Service Plan (MSP) Premiums will be reduced by 50% for households with annual net incomes up to $120,000 effective January 1, 2018.

The calculation of MSP premiums will no longer include children. The MSP premium rate paid by couples will be set at twice the premium paid by single adults.

Property Transfer Tax – First Time Home Buyers’ Exemption

The fair market value threshold for eligible residential property under the First Time Home Buyers’ Program is increased from $475,000 to $500,000. A partial exemption now applies to home valued between $500,000 and $525,000.

Home Owner’s Grant

As previously announced, the budget increases the threshold for the phase-out of the home owner grant to $1.6 million (from $1.2 million) for the 2017 tax year. For properties above the threshold, the grant is reduced by $5 for every $1,000 of assessed value in excess of the threshold.

BC Student Loan

The interest rate on BC Student Loans will be reduced to the prime rate (currently 2.7%) from the prime rate plus 2.5% (5.2%).

For more information about these tax measures, please contact us at we_are@clearlinecpa.ca or 604.639.0909.