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February 26, 2024 Canada | British Columbia budget 2024-25 includes several measures affecting businesses
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:
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:
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:
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
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.
For up-to-date information on the federal, provincial and territorial budgets, visit ey.com/ca/Budget.
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