On February 16th, 2016, British Columbia Finance Minister Mike de Jong announced the 2016 British Columbia Budget. Summarized below are highlights of some of the measures contained in the Budget.
Housing in British Columbia
Property Transfer Tax
Effective February 17th, 2016 two changes with respect to Property Transfer Tax in British Columbia take effect:
- Newly-constructed homes that are priced up to $750,000 will be exempt from Property Transfer Tax when purchased by Canadian citizens or permanent residents and used as a principal residence for a full year. The exemption is not limited to first-time home buyers and partial exemptions are available for newly-constructed homes that are priced up to $800,000.
- The Property Transfer Tax rate is being increased to 3% from 2% on the portion of a property’s fair market value that exceeds $2 million. Unchanged are the rates of 1% on the first $200,000 of a property’s fair market value and 2% on the fair market value between $200,000 and $2 million.
Disclosure requirements for owners
Under proposed changes to the Property Transfer Tax Act, the government will be authorized to collect additional information from owners when a property is registered. This additional information will include the following:
- Individual purchasers must disclose if they are Canadian citizens or permanent residents of Canada. An individual purchaser who is not a Canadian citizen or permanent resident of Canada must disclose his/her citizenship.
- A corporate purchaser must disclose the citizenship of its director(s).
- Purchasers must also disclose if they hold property as bare trustees and if such an arrangement exists, the name(s), address(es) and citizenship information of the settlor and beneficiaries of the bare trust must be disclosed.
These proposed changes are expected to take effect during the Spring of 2016. Data that is collected will be shared with Canada Revenue Agency under existing exchange agreements between the British Columbia and federal governments.
Home Owner Grant
The Home Owner Grant provides for a reduction in the annual property tax paid by individuals for their principal residence. The grant is phased out when the value of a property exceeds a certain threshold, and this threshold is increased from $1,100,000 to $1,200,000 for the 2016 taxation year. This measure was previously announced on January 5th, 2016. Where a property is valued above the threshold, the grant is reduced by $5 for every $1,000 of assessed value that is in excess of the threshold.
Medical Services Plan
Effective January 1st, 2017, Medical Service Plan premiums will increase by approximately 4% with the maximum increase for adults being $3 per month. Furthermore, there will be two changes to the structuring of premium rates:
- The calculation of premiums will no longer include children and instead, will be based upon the number of adults residing in a household. This revision will be of significant benefit to single parent families.
- The premiums paid by couples will be increased to twice the rate paid by a single adult. This will help to ensure that adults pay the same maximum premium rate, regardless of family composition.
Also effective January 1st, 2017, premium assistance will be enhanced with the income threshold up to which a household can receive full assistance being increased by $2,000 and the income threshold up to which a household can receive partial assistance being increased by $12,000.
Income Tax Measures
The Budget did not announce any changes to British Columbia personal or corporate income tax rates. The temporary surtax of 2.1% on personal income in excess of $150,000 (for 2014, $151,050 for 2015) was not reinstated meaning that the highest British Columbia marginal rate for 2016 reverts to 14.7% for income in excess of $106,543. The combined federal and British Columbia personal tax brackets and rates can be found below:
Below is a summary of some of the income tax measures that were announced.
Taxation of Trusts and Estates
The recent federal changes relating to the taxation of trusts and estates are paralleled in British Columbia. Effective for taxation years ending after 2015, graduated personal income tax rates will only apply to trusts that are “Graduated Rate Estates” or “Qualified Disability Trusts.” The highest personal tax rate of 14.7% will apply to all other trusts and estates in British Columbia.
Farmers’ Food Donation Tax Credit
Effective February 17th, 2016, a new non-refundable tax credit is available to individuals and corporations that carry on the business of farming and donate a qualifying agricultural product to a registered charity that provides food to those in need or helps to operate a school meal program. The credit is calculated as 25% of the fair market value of the donated product and must be claimed in the same taxation year in which a charitable donation tax credit or deduction is claimed for the donated product. The credit is available for the 2016, 2017 and 2018 taxation years, after which it will be reviewed.
British Columbia Seniors’ Home Renovation Tax Credit
The British Columbia Seniors’ Home Renovation Tax Credit is a refundable tax credit worth up to $1,000 per year. The credit assists eligible individuals with the cost of home renovations to improve accessibility or help a senior be more functional or mobile at home. Effective for the 2016 taxation year, the credit is expanded to persons with disabilities who are eligible to claim the disability tax credit. The expanded credit is available for eligible expenditures incurred on or after February 17th, 2016.
British Columbia Mining Flow-Through Share Tax Credit and Mining Exploration Tax Credit
The British Columbia Mining Flow-Through Share Tax Credit is extended to the end of 2016. This was previously announced on January 25th, 2016.
Furthermore, the Mining Exploration Tax Credit is extended to the end of 2019. This was also previously announced on January 25th, 2016.
For more information on the 2016 British Columbia Budget, please visit the government of British Columbia website.