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Sheryne Mecklai

Sheryne Mecklai

Tax Partner at Manning Elliott Vancouver
by Sheryne Mecklai
March 3, 2020

BC Budget 2020

British Columbia’s Ministry of Finance released the BC Budget 2020 on February 18, 2020. There were some interesting items including:

  • Increases to the top BC personal tax rate 

  • Some changes to BC Provincial Sales Tax 

  • No impact on the BC Corporate tax rate

Here are some highlights of the changes outlined in the BC Budget 2020.

Top Personal Income Tax Rate Increase

A new top personal tax bracket was added effective January 1, 2020.  The BC personal tax rate on taxable income above $220,000 will now be 20.5%, an increase of approximately 4% over the 2019 top personal income tax rate of 16.8%.  

For comparison purposes, in the chart below we have provided the 2019 and 2020 top personal tax rates for individuals resident in BC (i.e. on income over $220,000): 


Year

Other Income (Salary, interest, business income etc.)

Capital Gains

 

Eligible Canadian Dividends

Non-Eligible Canadian Dividends

2019

49.80%

24.90%

31.44%

44.64%

2020

53.50%

26.75%

36.54%

48.89%


Note that according to the BC Budget 2020, the charitable donation tax credit for taxpayers in the top tax bracket has also increased in 2020 to 20.5% for annual donations over $200.

Changes to the Provincial Sales Tax (“PST”)

PST Refunds or Exemptions – Effective February 19, 2020

  • Real property contractors can apply for PST refunds for PST paid on goods on which they have performed value-added work and subsequently installed into real property outside of BC.

  • PST exemptions for Pollution control and waste management machinery and equipment are amended to remove the restrictions regarding the location where the machinery and equipment are used.

  • Electric aircraft are exempt from provincial sales tax. 

  • A PST refund is available for the PST paid on non-electric aircraft and parts/services obtained for the purpose of converting the aircraft to operate solely on electricity.

PST on Beverages – Effective July 1, 2020

  • PST will not only apply to carbonated beverages sweetened with sugar and natural or artificial sweeteners but also to soda fountain beverages and beverages distributed through vending machines or other similar equipment (unless ALL the beverages in the vending machine are not carbonated beverages that contain sugar, natural sweeteners, or artificial sweeteners).

PST Registration Requirements – Effective July 1, 2020

  • Canadians that sell goods, as well as both foreign and Canadian sellers of telecommunication services and software, will be required to register as tax collectors if their specified revenues in British Columbia exceed $10,000. 

  • PST registration is also mandatory for Canadians that sell vapour products if their products are delivered to consumers in British Columbia. 

BC Luxury Car Surtax – Effective March 1, 2020

The BC Budget 2020 also states that if a manufacturer or dealer of motor vehicles alters the use of a vehicle in their sale or lease inventory, the luxury surtax rates will apply to the dealer use formula. 

The PST rate on vehicles will increase from 10% to 15% for vehicles with an average value of $125,000 to $149,999.99 and from 10% to 20% for vehicles with an average value of $150,000 or more.

Other BC Tax Measures for 2020

  • As previously announced, the threshold for the phase-out of the homeowner grant is decreased to $1,525,000 from $1,650,000 for the 2020 tax year. The grant continues to be reduced by $5 for every $1,000 of assessed value in excess of the threshold. 

  • Effective April 1, 2020, British Columbia will introduce a default tax of 29.5 cents per heated tobacco product. The rate on each product can be altered by regulation. 

  • For taxation years beginning after February 18, 2020, the deadline to claim the Film Incentive B.C. and the production services tax credit is reduced to 18 months. This deadline was previously 36 months. 

  • The new mine allowance is extended for five years to the end of 2025, effective on a date to be specified by regulation.

  • The BC training tax credits have been extended for 3 years until December 31st, 2022.

  • The farmer’s food donation tax credit has been extended for 3 years until December 31st, 2023.


For more information about the BC Budget 2020, please contact the Manning Elliott Tax Team by submitting a contact form inquiry.

The above content is believed to be accurate as of the date of posting. Canadian tax laws are complex and are subject to frequent changes. Professional tax advice should be sought before implementing any tax planning. Manning Elliott LLP cannot accept any liability for the tax consequences that may result from acting based on the information contained herein.