British Columbia Provincial Budget

The premier of British Columbia tabled the 2014 provincial budget on February 18. The budget contained a number of tax-related changes, not all of which were directly related to income tax.

Medical Service Plan Premiums

The premiums for the provincial health plan will increase by about 4% in 2015 to $72 per month for an individual, $130.50 per month for a couple and $144 per month for a family of three or more. The government promised to enhance the premium assistance program to ensure that families with net income below $30,000 are not affected by the premium increase.

BC Homeowner Grant

The homeowner grant which reduces property taxes to taxpayer’s principal residence will now begin to be phased out when the value of the property exceeds $1.1 million. In prior years, the grant phase-out began at $1.295 million.

Tobacco Taxes

Tobacco taxes increased by about 7% (to $47.80 per carton) effective April 1.

Land Transfer Tax Exemption for First-Time Home Buyers

The exemption from the land transfer tax for first-time home buyers was raised from $425,000 to $475,000 effective February 19.

BC Early Childhood Tax Benefit

The budget introduced a new benefit for parents of children under the age of six. This new benefit of up to $55 per month will be paid along with the Child Tax Benefit to families with net income below $150,000. Families with income between $100,000 and $150,000 will receive a reduced benefit.

BC Mining Flow-Through Tax Credit

The existing credit will be extended to the end of 2014.

Scientific Research and Experimental Development Tax Credit

The existing credit will be extended another three years – to the end of 2017.

Previously Announced Changes

Personal Amounts and most non-refundable credits are indexed annually in BC. The indexation factor for 2014 is 1.001 (i.e. an increase of 0.1%). While most personal amounts will increase due to indexing, the basic personal amount decreases again for 2014. This decrease is a reversal of the increase introduced when BC adopted the HST and was triggered when the province reverted to GST and PST in April 2013.

As a consequence of the federal change to the gross-up of small business dividends announced in the 2013 federal budget, the provincial dividend tax credit rate for such dividends was adjusted. See the results in the article on small business dividends in this issue.