March 8, 2023
Canada: British Columbia issues budget 2023/24
On 28 February 2023, British Columbia Finance Minister Katrine Conroy tabled the province’s fiscal 2023/24 budget. The budget contains several tax measures affecting individuals and corporations.
The Minister anticipates a deficit of CA$4.2 billion[i] for 2023/24 and projects deficits for each of the next two years.
The following is a brief summary of the key tax measures.
Business tax measures
Corporate income tax rates
No changes are proposed to the corporate tax rates or the $500,000 small-business limit.
British Columbia’s 2023 corporate income tax rates are summarized in Table A.
Table A – 2023 British Columbia (BC) corporate income tax rates1
1 The rates represent calendar-year-end rates unless otherwise indicated.
2 The corporate income tax rates for manufacturers of qualifying zero-emission technology are reduced to 7.5% for eligible income otherwise subject to the 15% general corporate income tax rate or 4.5% for eligible income otherwise subject to the 9% small-business corporate income tax rate.
3 An additional tax applies to banks and life insurers at a rate of 1.5% on taxable income (subject to a $100 million exemption to be shared by group members), effective for taxation years ending after 7 April 2022 (prorated for taxation years straddling this effective date).
Other business tax measures
The Minister also proposed the following business tax measures:
Personal income tax rates
The budget does not include any changes to personal income tax rates.
The 2023 British Columbia personal income tax rates are summarized in Table B.
Table B – 2023 British Columbia personal income tax rates
For taxable income in excess of $172,602, the 2023 combined federal-British Columbia personal income tax rates are outlined in Table C.
Table C – Combined 2023 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 ($13,521 for 2023) and an additional amount ($1,479 for 2023). The additional amount is reduced for individuals with net income in excess of $165,430 and is fully eliminated for individuals with net income in excess of $235,675. Consequently, the additional amount is clawed back on net income in excess of $165,430 until the additional tax credit of $222 is eliminated; this results in additional federal income tax (e.g., 0.32% on ordinary income) on net income between $165,431 and $235,675.
Personal tax credits
This budget proposes changes to the following personal credits/amounts:
Provincial sales tax
Exemption for automated external defibrillators
Marketplace facilitator collection, remittance and reporting obligations
Other tax measures
Motor fuel tax
Effective 1 April 2023, the refund rates for International Fuel Tax Agreement licensees are increased to reflect scheduled increases in the carbon tax each 1 April from 2023 through to 2030 as discussed above.
Property transfer tax
Effective for transactions that occur on or after 1 January 2024, purchases of new purpose-built rental buildings will be exempt from the further 2% property transfer tax that is applied to the fair market value of the residential component of a taxable transaction that exceeds $3 million.
Purpose-built rental buildings are those that are non-stratified and held as rental, on a monthly basis or longer, for at least 10 years.
The residential portion of the building must be entirely for rental and have at least four apartments.
Other technical amendments
Technical amendments are proposed to various provincial statutes. 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.
For additional information with respect to this Alert, please contact the following:
Ernst & Young LLP (Canada), Vancouver