British Columbia Finance Minister Selina Robinson tabled the Provincial Government’s 2022 budget on February 22, 2022.
On Tuesday, February 22, 2022, British Columbia Minister of Finance Selina Robinson tabled the 2022 Budget. The Budget aims to make life better for people by continuing to invest in B.C.’s economic, environmental and social strengths.
A. Income Tax Measures
Business Tax Measures
Corporate Tax Rates
No new corporate income tax rate changes were announced in this year’s Budget. The current corporate income tax rates for 2022 are summarized below:
|Small Business Corporations||General Corporations|
M&P - Manufacturing & Processing
Scientific Research and Experimental Development Tax Credit Extended
The scientific research and experimental development (SR&ED) tax credit is extended for five years to August 31, 2027. The credit provides tax relief for businesses of all sizes and sectors that conduct research and development.
Qualifying corporations that are Canadian-controlled private corporations (CCPCs) may claim a refundable tax credit of 10 percent of the lesser of:
- The corporation's SR&ED qualified B.C. expenditures for the tax year, or
- The expenditure limit (generally $3 million), as defined in the federal Income Tax Act
A non-refundable tax credit may be claimed for expenditures in excess of the expenditure limit and may also be available to other corporations that are not eligible for the refundable credit.
Shipbuilding and Ship Repair Industry Tax Credit Extended
The shipbuilding and ship repair industry refundable tax credit is extended for two years to the end of 2024. This is a tax credit for eligible employers that employ apprentices in the B.C. shipbuilding and ship repair industry.
Clean Buildings Tax Credit Introduced
Effective February 23, 2022, a new temporary tax credit for retrofits that improve the energy efficiency of multi-unit residential buildings with four or more dwellings and prescribed types of commercial buildings is introduced. Taxpayers meeting certain requirements may be eligible for a refundable tax credit of five percent of eligible expenditures paid. Eligible expenditures must be made before April 1, 2025, and under a contract entered into after February 22, 2022.
A qualifying retrofit is an alteration or renovation of an eligible building that is:
- Undertaken for the purpose of reducing the energy use intensity of the building
- Certified by the Ministry of Finance, and
- Completed before April 1, 2026
To claim the clean buildings tax credit the taxpayer must be (i) a corporation with a permanent establishment in B.C., or (ii) an individual (including a trust) that is resident in B.C. or is not resident in B.C. but earned income in B.C.
Personal Tax Measures
Personal Tax Rates
No new personal income tax rate changes have been announced in this year’s Budget. The top marginal personal income tax rate for B.C. is 20.50 percent for 2022. The current top combined federal and B.C. marginal rates for 2022 are summarized below:
|Salary, business income, interest||53.50%|
Training Tax Credits Extended
The training tax credit is for employers and apprentices who take part in eligible apprenticeship programs administered through the Industry Training Authority. The Budget proposes to extend the training tax credit for two years to December 31, 2024. An enhanced tax credit is available for First Nations individuals or persons with disabilities for eligible trade programs.
B. Sales Tax Measures
Exemption for Used Zero-Emission Vehicles Introduced
Effective February 23, 2022, used zero-emission vehicles are exempt from provincial sales tax (PST). The exemption applies to sales of all used zero-emission vehicles from motor dealers and private sales of used zero-emission vehicles that have been driven for at least 6,000 kilometres. The exemption is scheduled to end on February 22, 2027.
Passenger Vehicle Surtax Threshold for Zero-Emission Vehicles Increased
Effective February 23, 2022, the passenger vehicle surtax threshold for zero-emission vehicles is increased to $75,000 from $55,000. The increased surtax threshold is scheduled to end on February 22, 2027.
Exemption for Heat Pumps Introduced
Effective April 1, 2022, heat pumps are exempt from PST. Heat pumps purchased before April 1, 2022, and installed into real property on or after April 1, 2022, will be eligible for a refund for the PST paid.
Tax Rate on Fossil Fuel Heating Equipment Increased
Effective April 1, 2022, the PST on a fossil fuel combustion system is increased from seven percent to 12 percent. An effective tax rate of seven percent applies in relation to contracts entered into before February 23, 2022. For contracts entered into on or after February 23, 2022, the applicable tax rate will be 12 percent. Detailed transition rules will be published by the Ministry of Finance.
Exemption for Tobacco Removed
Effective July 1, 2022, PST will be applied to tobacco. This measure will align B.C.’s tax policy with the majority of other provinces which impose tax on the sale of tobacco.
Purchase Price of Private Vehicle Sales for Tax Purposes Adjusted
Effective October 1, 2022, tax on private sales of motor vehicles will be based on the greater of:
- The reported purchase price, and
- The average wholesale value of the vehicle
This measure would align B.C.’s treatment of private vehicle sales with the majority of other provinces and is intended to address tax avoidance arising from the underreporting of the price of motor vehicles from private sales. The measure will not apply for trade-in motor vehicles.
Tax Collection, Remittance, and Reporting Obligations for Marketplace Facilitators Introduced
Effective July 1, 2022, businesses that facilitate certain sales or leases through their online platform, including accepting payment from a consumer (marketplace facilitators), will be required to collect and remit tax on those sales and leases made in B.C. This obligation will apply to sales of taxable goods shipped from within Canada, certain taxable services (including short-term rentals and other taxable accommodation), software, and leases of goods made through a marketplace facilitator. Collection and remittance of PST on these transactions would be the marketplace facilitator’s (and not the seller’s) responsibility.
Additionally, effective July 1, 2022, marketplace facilitators will be required to charge PST on marketplace facilitation services provided to sellers.
The government will work over the coming months to expand the collection obligations to the sales of goods shipped from outside Canada to consumers in B.C.
C. Other Tax Measures
Speculation and Vacancy Tax Act
Exemption for Strata Accommodation Properties
The exemption for residential properties that are defined as “strata accommodation properties” in the Assessment Act originally set to expire at the end of the 2021 tax year will be made permanent.
Exemption for Hazardous or Damaged Residential Property
Effective for the 2021 tax year only, the exemption for hazardous or damaged residential property is expanded to apply to properties damaged by the floods in late 2021 in Abbotsford, Chilliwack and Mission (even where the property was uninhabitable for less than 60 days to the extent that other exemptions were not available because of the disaster).
Motor Fuel Tax Act
Effective February 23, 2022, hydrogen fuel is classified as a Category 1 alternative motor fuel and is exempt from motor fuel tax provided that the hydrogen is purchased for use in an internal combustion engine vehicle and is not produced by electrolysis using coal-generated electricity (some exceptions apply).
Budget 2022 introduces a number of technical amendments to various enactments including the Carbon Tax Act, Income Tax Act, Land Tax Deferment Act, Motor Fuel Tax Act, Property Transfer Tax Act, Provincial Sales Tax Act, and the Speculation and Vacancy Tax Act for clarity and certainty.
This report is provided by MNP. It is for informational and educational purposes only as of the date of writing. This information should not be considered investment, tax or legal professional advice. For specific advice about your situation, please consult a tax, accounting, legal or financial professional. The information contained in this report has been drawn from sources believed to be reliable but is not guaranteed to be accurate or complete. CDSPI, CDSPI Advisory Services Inc., MNP and our affiliates are not liable for any errors or omissions in the information, analysis or views contained in this report, or for any loss or damage suffered.