Highlights of the 2017 BC Budget Personal Tax Measures
On February 21, 2016, British Columbia’s Minister of Finance, the Honorable Michael de Jong presented the 2017 provincial budget, which has been balanced for the fifth consecutive year and surpluses are anticipated over the next 3 years as follows:
|Fiscal Year||Estimated Surplus|
Amongst the tax measures discussed further below, the 2017 budget also provides for new investments for classrooms, mental health services, support for families, children and those most in need. The budget also cuts Medical Services Plan premiums in half for a majority of British Columbians.
Personal Tax Rates
Due to changes to the BC small business tax rate from 2.5% to 2.0%, the BC dividend tax credit rate for non-eligible dividends has decreased to 2.18% (from 2.47%) of the grossed-up dividend for 2017 and later tax years.
The combined federal and BC income tax rates for individuals earning over $200,000 for the 2016 and 2017 tax year is as follows:
|Interest and regular income||47.70%||47.70%|
Medical Services Plan
The following changes to the MSP premiums were announced:
• MSP premiums will remain at $75 per month per adult for 2017,
• Those receiving premium assistance will get a 4% reduction of their rates,
• Effective January 1, 2018, MSP premiums will be reduced by 50% for households with net incomes of $120,000 per year. To receive this reduction, households will have to register, and
• The income threshold at which households are exempt from MSP premiums is increased by $2,000.
The government has announced its intention to completely eliminate MSP premiums; however, no timeline was provided.
Personal Tax Credits
The following changes to personal non-refundable tax credits were announced:
• A new BC volunteer firefighter and search and rescue volunteer non-refundable tax credit of $3,000 will be available for 2017 and subsequent tax years to individuals who provide at least 200 volunteer hours over the course of the year
• A new back-to-school non-refundable tax credit of $250 will be available for the 2016 to 2018 tax years to individuals with school-aged children (5 to 17 years of age)
• The elimination of the education tax credit on January 1, 2018. Any unused credits can be claimed in 2018 and subsequent tax years
Property Transfer Tax
Effective for registrations after February 22, 2017, the threshold for the First Time Home Buyer’s exemption has been increased to $500,000 from $475,000 which will save a first time home buyer a total of $8,000 of property transfer tax. A partial exemption is available for buyers with homes valued between $500,000 and $525,000.
For the 2017 tax year, the threshold for the phase-out of the home owner grant has been increased to $1.6 million (up from $1.2 million in 2016). For properties with a value in excess of $1.6 million, the grant is reduced by $5 for every $1,000 of value over $1.6 million.
The Income Tax Act and the Home Owner Grant Act will be amended to allow for information sharing between the two acts to improve administration and enforcement.
For information on how these changes may impact you, please contact us at 604-936-4377, or send us an email at email@example.com.