BC Budget Update - Corporate Tax Cut
Corporate Tax Rate
The small business corporate income tax rate will be reduced from 2.5% to 2% effective April 1, 2017. This means that the combined Federal and Provincial tax rate for small business income, up to $500,000 per year, will be 12.5% in British Columbia (subject, of course, to any changes coming in the Federal Budget).
The Government projects this measure to reduce tax revenue by approximately $70 million per year. Overall corporate tax revenue is between $3 and $3.5 billion per year; total provincial revenue is in the order of $50 billion per year.
Tax Credits Extended
The following tax credits have all been extended:
- Scientific Research and Experimental Development Tax Credit – to August 31, 2022.
- Mining FlowThrough Share Tax Credit – to the end of 2017.
- BC Training Tax Credit – to the end of 2020.
- Book Publishing Tax Credit – to March 31, 2019.
The Interactive Digital Media Tax Credit has been expanded to include qualifying BC labour employed in the development of augmented reality and virtual reality products. Moreover, for corporations with qualifying expenses greater than $2 million, their principal business no longer need be the development of interactive digital media.
The Mining Exploration Tax Credit has been expanded to include costs incurred (after February 28, 2015) for environmental studies and community consultation.
As a result of the change to the small business corporate tax rate, the dividend tax credit on ineligible dividends will be decreased from 17% to 15% effective for 2017 onwards.