B.C. Provincial Budget Tax Updates 2024
The B.C. government has announced changes to provincial tax laws in its Budget 2024 Taking Action For You, released on February 23, 2024. This summary highlights key changes shaping the provincial tax landscape for the foreseeable future.
Corporate and personal tax rates remain unchanged for 2024.
Tax targeting home flipping activity:
The budget provides details on a new tax applicable on the proceed of residential properties sold in BC on or after January 1, 2025.
The new tax will apply on the sale of properties with a housing unit, properties zoned for residential use as well as the assignment of contracts to purchase such properties if owned for less than two years, including for properties purchased before January 1, 2025.
The tax rate will be set at 20 percent for properties sold within 365 days of purchase and decrease to zero between 366 and 730 days.
In addition, individuals will be able to exclude up to $20,000 when calculating their taxable income for the purposes of this tax.
Exemptions will be available for specific life events, including death, disability, illness, separation, divorce, personal safety concerns, work relocation, involuntary job loss, insolvency, etc. Property owners who contribute to the housing supply through construction and real estate development will also be eligible for exemption.
Property transfer tax
Increased Threshold for First-Time Home Buyers’ Exemption:
This exemption reduces or eliminates the property transfer tax on a principal residence for eligible first-time home buyers. Starting April 1, 2024, the threshold for the first-time home buyers’ exemption rises to a fair market value (FMV) of $835,000 with the initial $500,000 exempt from property transfer tax and the exemption gradually phasing out and ending entirely at $860,000. Previously, the exemption was solely applicable to homes valued at $500,000 or below.
Increased Threshold for Newly Built Home Exemption:
The newly built home exemption reduces or eliminates property transfer tax for qualifying purchasers of a principal residence. Effective April 1, 2024, fair market value (FMV) threshold for the newly built home exemption rises to $1,100,000 from $750,000. The exemption gradually phases out with eligibility ending entirely at $1,150,000.
Enhanced Exemption for New Purpose-Built Rental Buildings:
From January 1, 2025, until December 31, 2030, purchases of new qualifying purpose-built rental buildings will be exempt from the general property transfer tax, the purpose being to encourage the construction of new purpose-built rental buildings to address housing affordability.
Purpose-built rental buildings are those that are non-stratified and are rented out on a monthly basis or for longer periods, for at least 10 years. The residential section of the building must be exclusively dedicated to rental purposes and must comprise at least 4 apartments.
Employer Health Tax:
Employer Health Tax Exemption Threshold Increase: Effective January 1, 2024, the employer health tax exemption threshold is raised from $500,000 to $1 million. Additionally, the tax rate will increase for certain employers based on their B.C. remuneration.
More Details
The employer health tax is imposed annually on an employer’s B.C. remuneration to employees and former employees within a calendar year commencing on January 1, 2019. It is deductible from business income for income tax purposes.
Any employers with B.C. remuneration exceeding the exemption threshold in a calendar year is required to register for the employer health tax.
Under Budget 2024, the following proposals have been set forth for employers:
- Raise the exemption threshold for B.C. remuneration, granting exemption to employers with B.C. remuneration below $1,000,000.
- Increase the tax rate for B.C. remuneration ranging between $1,000,000 and $1,500,000 from 2.925 % to 5.85%.
These proposed adjustments are applicable to remuneration dispensed on or after January 1, 2024. For employers with B.C. remuneration surpassing $1,500,000, the tax rate remains fixed at 1.95%.Haut du formulaire
Personal Income Tax Measures:
B.C. Family Benefit Bonus: From July 1, 2024, eligible families will receive a B.C. Family Benefit Bonus alongside their monthly BC Family Benefit payment. This measure will result in a temporary increase of 25 per cent of the annual benefit amount as well as the income thresholds for eligibility from July 2024 to the end of the 12-month benefit period.
The B.C. family benefit is a tax-free monthly payment to families with minor children.
Climate Action Tax Credit: Effective July 1, 2024, adjustments will be made to increase B.C. climate action tax credit amounts and eligibility thresholds.
The B.C. climate action tax credit, paid via quarterly payments, serves to alleviate the burden of carbon taxes for individuals and families.
Corporate Income Tax Measures:
Training Tax Credit: The employer training tax credit is extended until the end of 2027 and the apprentice training tax credit until the end of 2025.
Shipbuilding and Ship Repair Industry Tax Credit Extension: The shipbuilding and ship repair industry tax credit is extended until the end of 2026.
Animation Productions Exclusion from the regional and distant location tax credits: Starting June 1, 2024, animation productions will be excluded from regional and distant location tax credits under the film and television tax credit and the production services tax credit. This change aims to deter the increasing practice among animation firms of utilizing the credit to subsidize remote teleworkers, a usage not aligned with the intended purpose of the credit.
Oil and Gas Exploration Expenses: As of February 23, 2024, oil and gas exploration expenses will no longer qualify for the mining exploration tax credit.
Sales Tax measures
Provincial Sales Tax (PST) Refund: Effective July 1, 2024, amendments to the Provincial Sales Tax Act will restrict PST refunds for person acquiring goods for resale outside B.C. while acting as end purchasers.
Software definition
The Provincial Sales Tax Act is also amended retroactively to April 1, 2013, to clarify the definition of “software” for PST purposes, and makes software as a service (SaaS), “infrastructure as a service” (IaaS), and similar related services taxable.
Carbon Tax Biomethane Credit Refund Amendment: Starting April 1, 2024, amendments to the Carbon Tax Act will allow qualifying retail dealers to claim the biomethane credit refund for unused biomethane blended in previous reporting periods.
Other Tax Measures
New Property Taxation Approach on Nisg̱a’a Lands and Treaty Lands:
Commencing with the 2025 taxation year, the Province of B.C. will no longer enforce property taxation requirements on Nisg̱a’a Lands or the Treaty Lands of a Modern Treaty Nation. This introduces a new approach to property taxation and empower Modern Treaty Nations to independently manage property taxation on their treaty lands.
Speculation and Vacancy Vax – Definition of Registered Occupier Amended
Effective January 1, 2024, a person who possesses a residential property under a lease registered in the Land Title Office will be considered the registered occupier of the property under the Speculation and Vacancy Tax. These registered occupiers will be required to file an annual declaration in order to qualify for exemptions, with the first declaration anticipated being due by 2025. This passes on the responsibility for the speculation and vacancy tax from fee simple property owners to registered leaseholders, who hold control over the property’s usage.
Exemption for Farmers Enrolled in Provincial Agricultural Insurance Programs:
Farmers will be exempt from insurance premium tax for coverage under the Farm Income Insurance Act or the Insurance for Crops Act upon royal assent.
For further information, visit https://www2.gov.bc.ca/gov/content/taxes/tax-updates/budget-changes
