12 Sep Tax Highlights from the BC Budget
By Bilal Kathrada
The BC Minister of Finance, Carol James, delivered the NDP’s 2017 Budget update yesterday. Highlights of the Provincial tax measures announced are summarized below.
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Corporate Tax Changes
Corporate Income Tax Rates
The Government confirmed that the small business corporate income tax rate will be reduced from 2.5% to 2% effective April 1, 2017. This was previously announced by the former government. The combined federal and BC corporate tax rate for small business will be 12.5% (previously 13.0%), on the first $500,000 of active business income.
The Government announced a 1% increase in the general corporate tax rate effective January 1, 2018. The combined general federal and BC corporate tax rate for active business income will be 27.0% (previously 26.0%).
PST on Electricity Phased Out
The Government confirmed the previously announced phase out of the PST on electricity. The rate will be reduced to 3.5% effective October 1, 2017 and will fully exempt electricity effective April 1, 2019.
Personal Tax Changes
Personal Income Tax Rates
The Government created a new marginal tax bracket for taxable income greater than $150,000 effective January 1, 2018. The new bracket will be subject to a provincial marginal tax rate of 16.8%, which effectively raises the highest marginal rate by 2.1%.
The dividend tax credits for eligible dividends will be increased as a result of the increase in the general corporate tax rate.
Medical Service Plan Premiums
Medical Service Plan (MSP) Premiums will be reduced by 50% effective January 1, 2018. The previous government announced a similar reduction, but only for households with annual net incomes up to $120,000.
The Government will also establish a MSP Task Force to advise the Government on the best way to eliminate the MSP premiums and replace those revenues within the next four years.
Other Tax Changes
The Government announced an increase in the carbon tax by $5 per tonne of carbon dioxide emissions per year starting January 1, 2018 until the rates are equal to $50 per tonne in April 1, 2021. The Government also will repeal the requirement that any increase in carbon tax revenues be revenue neutral.