British Columbia budget 2024-25 includes several measures affecting businesses

• The British Columbia budget for 2024/2025 has been tabled.
  
  
• The budget contains several tax measures affecting corporations and individuals.
  
  
• This Alert summarizes the key tax measures.

On 22 February 2024, British Columbia Finance Minister Katrine Conroy tabled the province's fiscal 2024-25 budget. The budget contains several tax measures affecting corporations and individuals, including the introduction of a new home-flipping tax.

The minister anticipates a deficit of CA$7.9 billion for 2024-25 and projects deficits for each of the next two years.

A brief summary of the key tax measures follows.

Business tax measures

Corporate income tax rates

No changes are proposed to the corporate income tax rates or the CA$500,000 small-business limit.

British Columbia's 2024 corporate income tax rates are summarized in Table A.

Table A — 2024 British Columbia (BC) corporate income tax rates1

1 - The rates represent calendar-year-end rates unless otherwise indicated.

2 - The federal corporate income tax rates for manufacturers of qualifying zero-emission technology are reduced to 7.5% for eligible income otherwise subject to the 15% federal general corporate income tax rate or 4.5% for eligible income otherwise subject to the 9% federal small-business corporate income tax rate. These reductions are not reflected in the combined federal and British Columbia rates above.

3 - An additional tax applies to banks and life insurers at a rate of 1.5% on taxable income (subject to a CA$100m exemption to be shared by group members).

Other business tax measures

The minister also proposed the following business tax measures:

• Animation productions will be excluded from the regional and distant location tax credits, effective 1 June 2024. The proposed measure will apply for animation productions under either the Film Incentive BC tax credit or the production services tax credit where principal photography begins on or after 1 June 2024.
  
  
• The training tax credit for employers is extended for three years to the end of 2027.
  
  
• The shipbuilding and ship repair industry tax credit is extended for two years to the end of 2026.
  
  
• Oil and gas exploration expenses will be excluded from the mining exploration tax credit effective 23 February 2024.

Personal tax

Personal income tax rates

The budget does not include any changes to personal income tax rates.

The 2024 British Columbia personal income tax rates are summarized in Table B.

Table B — 2024 British Columbia personal income tax rates

For taxable income exceeding CA$181,232, the 2024 combined federal-British Columbia personal income tax rates are outlined in Table C.

Table C — Combined 2024 federal and British Columbia personal income tax rates

1 - The rate on capital gains is one-half the ordinary income tax rate.

2 - The federal basic personal amount comprises two elements: the base amount (CA$14,156 for 2024) and an additional amount (CA$1,549 for 2024). The additional amount is reduced for individuals with net income exceeding CA$173,205 and is fully eliminated for individuals with net income exceeding CA$246,752. Consequently, the additional amount is clawed back on net income exceeding CA$173,205 until the additional tax credit of CA$232 is eliminated; this results in additional federal income tax (e.g., 0.32% on ordinary income) on net income between CA$173,206 and CA$246,752.

Personal tax credits and other amounts

This budget proposes changes to the following personal credits and other amounts:

• Effective 1 July 2024, the new temporary BC family benefit bonus is introduced for the 12-month benefit period and will be delivered alongside the BC family benefit. The proposed measure will result in a 25% increase to the annual benefit amounts and the income threshold used to assess eligibility for the BC family benefit. On average, eligible households will receive CA$445 over the 12-month period.
  
  
• Effective 1 July 2024, the maximum annual climate action tax credit payment is increased from CA$447 to CA$504 for an adult, from CA$223.50 to CA$252 for a spouse or common-law partner, and from CA$111.50 to CA$126 per child. This credit helps offset the effects of carbon taxes paid by low-to-moderate-income individuals and families. The income thresholds, at which point the tax credit begins to be phased out, will also be increased.
  
  
• The training tax credit for individuals is extended for one year to the end of 2025.

Other tax measures

BC home-flipping tax

Effective 1 January 2025, a new tax will be introduced on income from the sale of residential real estate in BC. For properties sold on or after 1 January 2025, the tax rate will be 20% for properties sold within 365 days of purchase, and the tax rate will decline to zero between 366 and 730 days. The tax will also apply to properties sold after the effective date where the property was purchased before 1 January 2025 and the property is sold within two years of its purchase. The tax will not apply to land or portions of land that are used for nonresidential purposes.

Exemptions will be available for:

• Certain life circumstances that may motivate the sale of a property within two years, such as separation or divorce, death, disability or illness, relocation for work, involuntary job loss, change in household membership, personal safety or insolvency
  
  
• Taxpayers that add to the housing supply or engage in construction and real estate development

In addition to the above exemptions, individuals selling their principal residence within two years of purchase will be able to exclude a maximum of CA$20,000 when calculating taxable income.

Legislation to introduce this measure is expected to be introduced in the spring.

Employer health tax

Effective 1 January 2024, the employer health tax exemption threshold is increased from CA$500,000 to CA$1m. The notch rate for remuneration above the new exemption threshold and below the full rate threshold (CA$1.5m) is increased from 2.925% to 5.850%.

Carbon tax

Effective 1 April 2024, the biomethane credit refund is amended so that it is based solely on the sum of the biomethane credits provided by the qualifying retail dealer in a reporting period. Unused biomethane may be carried forward two years from the end of the reporting period in which the biomethane is blended.

Property transfer tax

• Purchases of new qualifying purpose-built rental buildings will be exempt from the general property transfer tax, effective for transactions that occur between 1 January 2025 and 31 December 2030. Purpose-built rental buildings are generally properties that are non-stratified and held as rentals, on a monthly basis or longer, for at least 10 years. To qualify, the residential portion of the property must be entirely used for rental activities and have at least four apartments.
  
  
• Effective 1 April 2024, the first-time home buyers' exemption threshold is increased from a fair market value of CA$500,000 to CA$835,000, with the first CA$500,000 exempt from property transfer tax, resulting in savings of up to CA$8,000 for first-time home buyers.
  
  
• Effective 1 April 2024, the fair market value threshold for the newly built home exemption is increased from CA$750,000 to CA$1,100,000.

Speculation and vacancy tax

Effective 1 January 2024, a person who possesses a residential property under a lease registered at the Land Title and Survey Authority of BC will be considered the registered occupier of the property for the purpose of the speculation and vacancy tax and, as such, will be responsible for the tax.

Modern Treaty Nation Property taxation

Effective for 2025, the requirement for property taxation will not be imposed on Nisga'a Lands or the Treaty Lands of a Modern Treaty Nation. This change will allow Modern Treaty Nations to self-determine property taxation on their respective treaty lands. In addition, the Assessment Act will be amended to better align provincial assessment rules with the unique aspects of Nisga'a Lands and Treaty Lands as well as Modern Treaty Nation governance.

Insurance Premium Tax Act

Effective on Royal Assent, farmers will no longer be subject to insurance premium tax for provincial agricultural insurance programs offered by the Ministry of Agriculture and Food.

Other technical amendments

Technical amendments are proposed to various provincial statutes, including the Carbon Tax Act, Income Tax Act, Motor Fuel Tax Act, Property Transfer Tax Act, Provincial Sales Tax Act and the Speculation and Vacancy Tax Act. These amendments are generally intended to improve administrative effectiveness or enforcement, maintain the integrity of tax and revenue collection systems, or enhance legislative clarity or regulatory flexibility to preserve policy intent.

Of note, highlights of some of the technical amendments follow.

• The BC Income Tax Act is amended:
  • Effective 15 December 2022, to clarify that the general anti-avoidance rule will apply to abusive transactions that may result in future tax benefits, for transactions that occur on or after 7 April 2022; i.e., the tax benefit need not be realized at the time the general anti-avoidance rule is applied
    
    
  • Effective for payments made after 2023, to require payments to the Receiver General exceeding CA$10,000 to be made electronically
    
    
  • Effective on Royal Assent, to extend the clean building tax credit's certification deadline by six months to 30 September 2027
• The Provincial Sales Tax Act is amended:
  • Effective 1 July 2024, to specify that a refund of Provincial Sales Tax (PST) may be restricted where a person is acquiring goods for the purpose of export and resale, but the person presents himself as being the consumer of the goods
    
    
  • Effective 1 April 2013, to amend the definition of "software" retroactively for PST purposesi
    
    
  • Effective on Royal Assent, to enable a person who purchases goods from a seller that did not collect PST, where the purchaser has self-assessed PST but then later returns the goods for a refund, to claim a PST refund on the self-assessed PST
  • Effective 23 February 2024, to clarify that projects using sunlight, wind, tides, air or water to manufacture clean energy will qualify for the production machinery and equipment PST exemption
    
    
  • To clarify certain rules regarding when services are provided with taxable leased goods

For up-to-date information on the federal, provincial and territorial budgets, visit ey.com/ca/Budget.

Contact Information

For additional information concerning this Alert, please contact:

Ernst & Young LLP (Canada), Vancouver

• Gene Kim
  
  
• Jeanne Posey
  
  
• Lokesh Chaudhry
  
  
• Carla Marchant
  
  
• Penny Wong
  
  
• Michael Sabatino
  
  
• Rodger So
  
  
• Perry Yuen
  
  
• Guido Biemold

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor

For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.