The BC Budget (tabled on February 17, 2015) contained no major announcements and no general corporate or personal tax rate changes. Nonetheless, it provides opportunity for personal tax planning for high rate tax payers, and extends useful assistance to early stage businesses in BC.
The combined top rate of BC tax is 45.8% (16.8% of BC tax + 29% of Federal tax). The top rate applies to income over $150,000. It was introduced by the 2013 Budget, to apply for 2014 and 2015, and at the time was described as a temporary measure. Its repeal is automatic (by virtue of a mechanism built in to the 2013 Budget Measures Implementation Act), but there was always concern that the province would retain the top rate for 2016 and later years by bringing in new legislation.
In delivering the 2015 Budget, the Minister of Finance confirmed that the top rate will revert to 43.7% in 2016. Assuming that this is the case, it suggests that top rate taxpayers should consider:
- Deferring recognition of gains and income items to 2016
- Recognizing losses where possible in 2015
- Carrying back losses from 2016 and later years to 2015 or 2014.
As ever, such planning requires careful consideration of a taxpayer’s particular circumstances to avoid unexpected results.
Small Business Venture Capital Tax Credit
The budget for the small business venture capital tax credit is increased by $3 million for direct investments in eligible new corporations. This allows for up to $10 million of additional equity financing for 2015 (since the tax credit is 30%).
Tax Credits Extended
The following tax credits have all been extended:
- BC Training Tax Credit – to the end of 2017
- BC Mining Flow-Through Share Tax Credit – to the end of 2015
- BC Interactive Digital Media Tax Credit – to August 31, 2018
- Digital Animation or Visual Effects Tax Credit – expanded to include post-production, for
productions starting principal photography on or after March 1, 2015.
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