2013 British Columbia Budget Comes Back with Tax Increases Intact
June 27, 2013
British Columbia’s newly re-elected Liberal government reintroduced the 2013 B.C. budget on June 27, 2013. The budget, which remains essentially the same as the budget originally presented on February 19, 2013, increases both corporate and personal tax rates. The budget reintroduces the increase in the B.C. general corporate tax rate to 11% (from 10%), effective April 1, 2013. The small business corporate income tax rate remains at 2.5%, and the budget reintroduces a new top tax rate of 16.8% for individuals with income above $150,000. The reintroduced budget also clarifies that the tax credit rate on donations that exceed the $200 threshold will be maintained at 14.7%.
B.C’s Bill 2 containing the 2013 budget measures received first reading on June 27, 2013. As a result, these measures are considered substantively enacted for purposes of IFRS and Accounting Standards for Private Enterprise (ASPE) as of this date, since B.C. has a majority government.
The government has revised its deficit forecast so that the projected deficit has decreased to $1,146 million (from $1,228 million) in 2012/13. The government is projecting surpluses of $153 million in 2013/14, $154 million in 2014/15 and $446 million in 2015/16. The projections include a forecast allowance totaling $650 million and a Contingencies Vote allocation of $675 million over the three-year plan.
Selected budget measures reintroduced in the June budget are highlighted below. For details on these and other tax measures included in the budget, see KPMG’s TaxNewsFlash-Canada 2013-03, “2013 British Columbia Budget Raises Tax Rates”.
Business Tax Changes
Corporate income tax
Highlights of business tax
· Scale back the Industrial School Property Tax Credit for light industry classifications
· Introduce a minimum 3% royalty for certain natural gas wells.
Personal Tax Changes
Personal income tax
Highlights of personal tax
· Increase Medical Services Plan premiums
· Increase the threshold for the phase-out of the homeowners grant
· Pay a one-time grant to qualifying B.C. children’s Registered Education Savings Plans
· Introduce a refundable child tax credit.
We can help
Your KPMG adviser can help you assess the effect of the tax changes in this year’s British Columbia budget on your personal finances or business affairs, and point out ways to take advantage of their benefits or ease their impact. We can also keep you abreast of the progress of these proposals as they make their way into law and help you bring any concerns you may have to the attention of the B.C. Ministry of Finance.
Information is current to June 27, 2013. The information contained in this TaxNewsFlash-Canada is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG’s National Tax Centre at 416.777.8500.
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