2020 BC Budget Commentary
Finance Minister Carole James tabled the 2020 British Columbia provincial budget on February 18, 2020.
The budget projects surpluses of $227 million for the 2020-2021 fiscal year, $179 million for the 2021-2022 fiscal year and $374 million for the 2022-2023 fiscal year.
The following pages are a summary of the changes announced in the budget. Please note that these changes are still proposals until passed into law by the provincial government.
Personal Tax Matters
New personal income tax bracket
A top new personal income tax bracket is introduced effective for 2020 and subsequent tax years. Taxable income exceeding $220,000 will be subject to a personal income tax rate of 20.5%.
Consequential to the introduction of the new top personal income tax rate, the charitable donation tax credit for individuals is increased to 20.5% for charitable donations over $200 in respect of individual’s income subject to the new 20.5% tax rate.
Personal income tax rates and tax brackets
Tax brackets and personal credit amounts have been indexed by 2.5% for 2020. The table below shows British Columbia tax rates and brackets for 2020.
Taxable income range
2020 tax rates
first $41,725
5.06%
$41,726 – $83,451
7.70%
$83,452 – $95,812
10.50%
$95,813 – $116,344
12.29%
$116,345 – $157,748
14.70%
$157,749 – $220,000
16.80%
$220,001 and over
20.50%
The table below shows the 2020 combined federal and provincial highest marginal tax rates for various types of income.
Type of income
2020 combined tax rates
Regular income
53.50%
Capital gains
26.75%
Eligible dividends
36.54%
Non-eligible dividends
48.89%
British Columbia Child Opportunity Benefit
Effective October 2020, the budget proposes to replace the British Columbia Early Childhood Tax Benefit with the new British Columbia Child Opportunity Benefit, a refundable tax credit applicable to families with children under the age of 18. The maximum annual benefit is $1,600 for families with one child, $2,600 for families with two children and $3,400 for families with three children under the age of 18.
British Columbia Access Grant
Budget 2020 creates a new, needs-based British Columbia Access Grant for students to help with the cost of programs that lead to a degree, diploma or certificate. This grant will provide up to $4,000 to help with the upfront costs of tuition for low and middle-income students.
Elimination of Medical Services Plan (MSP) premiums
Effective January 1, 2020, MSP premiums will be eliminated, resulting in a savings of $900 a year for individuals and up to $1,800 a year for families.
Farmers’ Food Donation Personal Tax Credit
The Farmers’ Food Donation Personal Tax Credit is extended for three years, to the end of 2023.
Corporate Tax Matters
Corporate income tax rates
The table below shows British Columbia tax rates and the small business limit for 2020.
Category
2020 tax rates
General rate
12%
Manufacturing and processing rate
12%
Investment income rate
12%
Small business rate
2%
Small business limit
$500,000
The table below shows the 2020 combined federal and provincial corporate income tax rates for various types of income earned by a Canadian Controlled Private Corporation (CCPC).
Type of Income
2020 combined tax rates
Small business income
11%
Active income over $500,000
27%
Manufacturing and processing income
27%
Investment Income
50.7%
Training Tax Credits
The training tax credits are extended for three years, to the end of 2022.
Farmers’ Food Donation Corporate Tax Credit
The Farmers’ Food Donation Corporate Tax Credit is extended for three years, to the end of 2023.
Film Incentive BC and production services tax credit certification
Effective February 19, 2020, the accreditation certificate fee for the production services tax credit is increased to $10,000. Other amounts for the Film Incentive BC and production services tax credit remain unchanged.
Other Proposals
Provincial Sales Tax Act
Effective July 1, 2020, carbonated beverages that contain sugar, natural sweeteners or artificial sweeteners will be subject to provincial sales tax.
Effective July 1, 2020, “foreign sellers of software and telecommunication services” and Canadian sellers of vaping products to be delivered to British Columbia consumers will be required to register as a tax collector if specified British Columbia revenues exceed $10,000.
Mineral Tax Act
The new mine allowance is extended for five years to the end of 2025.
Tobacco Tax Act
Effective April 1, 2020, a default tax rate of 29.5 cents per heated tobacco product is introduced. A heated tobacco product is a product that contains tobacco and is designated to be heated, but not combusted, in a tobacco heating unit to produce a vapour for inhalation.
Various technical measures
The budget introduces a number of technical amendments to various tax acts including the Income Tax Act, Land Tax Deferment Act, Provincial Sales Tax Act and Property Transfer Tax Act for clarity and certainty.
We can help
Your Assante advisor can help you assess the impact of these proposals on your personal finances or business affairs and show you ways to take advantage of their benefits or ease their impact. The resources available to you and your advisor include Assante Private Client’s Wealth Planning Group, a multi-disciplinary team of accountants, lawyers and financial planners.
Download Full PDF Article Here
This communication is published by Assante Wealth Management (Canada) Ltd. (“AWM”) as a general source of information only. It should not be construed as providing specific tax, accounting, legal or investment advice, and should not be relied upon as such. Professional advisors should be consulted prior to acting on the basis of any information provided herein. AWM and its affiliates will not be responsible in any manner for direct, indirect, special or consequential damages, howsoever caused, arising out of the use of this communication. Facts and data provided herein are believed to be reliable as at the date of publication, however AWM cannot guarantee that they are accurate or complete or that they will remain current at all times. Published February 19, 2020.
Finance Minister Carole James tabled the 2020 British Columbia provincial budget on February 18, 2020.
The budget projects surpluses of $227 million for the 2020-2021 fiscal year, $179 million for the 2021-2022 fiscal year and $374 million for the 2022-2023 fiscal year.
The following pages are a summary of the changes announced in the budget. Please note that these changes are still proposals until passed into law by the provincial government.
Personal Tax Matters
New personal income tax bracket
A top new personal income tax bracket is introduced effective for 2020 and subsequent tax years. Taxable income exceeding $220,000 will be subject to a personal income tax rate of 20.5%.
Consequential to the introduction of the new top personal income tax rate, the charitable donation tax credit for individuals is increased to 20.5% for charitable donations over $200 in respect of individual’s income subject to the new 20.5% tax rate.
Personal income tax rates and tax brackets
Tax brackets and personal credit amounts have been indexed by 2.5% for 2020. The table below shows British Columbia tax rates and brackets for 2020.
|
Taxable income range |
2020 tax rates |
|
first $41,725 |
5.06% |
|
$41,726 – $83,451 |
7.70% |
|
$83,452 – $95,812 |
10.50% |
|
$95,813 – $116,344 |
12.29% |
|
$116,345 – $157,748 |
14.70% |
|
$157,749 – $220,000 |
16.80% |
|
$220,001 and over |
20.50% |
The table below shows the 2020 combined federal and provincial highest marginal tax rates for various types of income.
|
Type of income |
2020 combined tax rates |
|
Regular income |
53.50% |
|
Capital gains |
26.75% |
|
Eligible dividends |
36.54% |
|
Non-eligible dividends |
48.89% |
British Columbia Child Opportunity Benefit
Effective October 2020, the budget proposes to replace the British Columbia Early Childhood Tax Benefit with the new British Columbia Child Opportunity Benefit, a refundable tax credit applicable to families with children under the age of 18. The maximum annual benefit is $1,600 for families with one child, $2,600 for families with two children and $3,400 for families with three children under the age of 18.
British Columbia Access Grant
Budget 2020 creates a new, needs-based British Columbia Access Grant for students to help with the cost of programs that lead to a degree, diploma or certificate. This grant will provide up to $4,000 to help with the upfront costs of tuition for low and middle-income students.
Elimination of Medical Services Plan (MSP) premiums
Effective January 1, 2020, MSP premiums will be eliminated, resulting in a savings of $900 a year for individuals and up to $1,800 a year for families.
Farmers’ Food Donation Personal Tax Credit
The Farmers’ Food Donation Personal Tax Credit is extended for three years, to the end of 2023.
Corporate Tax Matters
Corporate income tax rates
The table below shows British Columbia tax rates and the small business limit for 2020.
|
Category |
2020 tax rates |
|
General rate |
12% |
|
Manufacturing and processing rate |
12% |
|
Investment income rate |
12% |
|
Small business rate |
2% |
|
Small business limit |
$500,000 |
The table below shows the 2020 combined federal and provincial corporate income tax rates for various types of income earned by a Canadian Controlled Private Corporation (CCPC).
|
Type of Income |
2020 combined tax rates |
|
Small business income |
11% |
|
Active income over $500,000 |
27% |
|
Manufacturing and processing income |
27% |
|
Investment Income |
50.7% |
Training Tax Credits
The training tax credits are extended for three years, to the end of 2022.
Farmers’ Food Donation Corporate Tax Credit
The Farmers’ Food Donation Corporate Tax Credit is extended for three years, to the end of 2023.
Film Incentive BC and production services tax credit certification
Effective February 19, 2020, the accreditation certificate fee for the production services tax credit is increased to $10,000. Other amounts for the Film Incentive BC and production services tax credit remain unchanged.
Other Proposals
Provincial Sales Tax Act
Effective July 1, 2020, carbonated beverages that contain sugar, natural sweeteners or artificial sweeteners will be subject to provincial sales tax.
Effective July 1, 2020, “foreign sellers of software and telecommunication services” and Canadian sellers of vaping products to be delivered to British Columbia consumers will be required to register as a tax collector if specified British Columbia revenues exceed $10,000.
Mineral Tax Act
The new mine allowance is extended for five years to the end of 2025.
Tobacco Tax Act
Effective April 1, 2020, a default tax rate of 29.5 cents per heated tobacco product is introduced. A heated tobacco product is a product that contains tobacco and is designated to be heated, but not combusted, in a tobacco heating unit to produce a vapour for inhalation.
Various technical measures
The budget introduces a number of technical amendments to various tax acts including the Income Tax Act, Land Tax Deferment Act, Provincial Sales Tax Act and Property Transfer Tax Act for clarity and certainty.
We can help
Your Assante advisor can help you assess the impact of these proposals on your personal finances or business affairs and show you ways to take advantage of their benefits or ease their impact. The resources available to you and your advisor include Assante Private Client’s Wealth Planning Group, a multi-disciplinary team of accountants, lawyers and financial planners.
Download Full PDF Article Here
This communication is published by Assante Wealth Management (Canada) Ltd. (“AWM”) as a general source of information only. It should not be construed as providing specific tax, accounting, legal or investment advice, and should not be relied upon as such. Professional advisors should be consulted prior to acting on the basis of any information provided herein. AWM and its affiliates will not be responsible in any manner for direct, indirect, special or consequential damages, howsoever caused, arising out of the use of this communication. Facts and data provided herein are believed to be reliable as at the date of publication, however AWM cannot guarantee that they are accurate or complete or that they will remain current at all times. Published February 19, 2020.