2013-2014 British Columbia budget highlights
June 27, 2013
BC Minister of Finance, Michael de Jong, presented the 2013 BC Budget-June update the afternoon of June 27, 2013. As the budget of February 19th was not passed due to the election, this budget update reiterates a number of measures laid out in that budget. Having gained a clear mandate to lead the province in the recent BC election, this budget update focuses on measures designed to benefit BC families and help make family life more affordable, along with continued spending discipline.
The June update includes the following new tax measures or clarifications since the February budget:
- Notwithstanding the temporary increase in the top provincial personal income tax rate from 14.70 per cent to 16.80 per cent for the 2014 and 2015 tax years, the tax credit rate on donations over the $200 threshold will be maintained at 14.70 per cent.
- The update clarifies the provincial sales tax transitional rules for certain taxable services.
- As announced in February, there is an exemption from carbon tax provided to farmers for purchases of coloured gasoline or diesel fuel. This exemption is effective January 1, 2014.
The following is a summary of the tax highlights previously announced and subsequently confirmed in this budget update:
- The general corporate income tax rate is increased to 11 per cent from the current 10 per cent, effective April 1, 2013, a year earlier than previously announced.
- A two-year increase in the personal income tax rate for individuals earning more than $150,000 is introduced. Rates will increase by 2.1 percentage points to 16.8 per cent, starting January 1, 2014 and expiring December 31, 2015.
- A new BC Early Childhood Tax Benefit is introduced. Effective April 1, 2015, families with young children will receive up to $55 per child per month.
- For children born in 2007 or later, a one-time $1,200 BC Training and Education Savings Grant is provided. To obtain the grant, a family must open an RESP account and apply for the grant before the child turns seven years old.
- Taxes on cigarettes are further increased by $2 per carton, effective October 1, 2013.
- A 3% minimum royalty for all natural gas wells that qualify for the Deep Well Royalty Credit Program is introduced.
Details on these measures can be found in our budget release of February 19, 2013.
The focus of the budget update released June 27th is on reinforcing the commitment to deliver a “balanced” budget. The forecasted surplus has been revised to $153 million in 2013-2014, $154 million in the following year, and $446 million in the third year – all estimates being slightly down from what was originally forecast in February. The government is relying on four key steps to achieve these surpluses, namely continued spending discipline, targeted tax measures, stable economic growth, and sale of surplus properties. Net economic growth is expected to generate $1.1 billion in added revenue.
Financial reporting under IFRS - change in future rates
With the adoption of IFRS by Canadian publicly accountable enterprises, the general corporate income tax rate increase proposal may have an impact on their financial statements in 2013. Under IFRS, deferred tax balances are calculated using the future tax rates that are expected to apply, based on tax rates and tax laws enacted or substantively enacted at the end of the reporting period.
With the current majority Liberal government, the proposed changes will be considered substantively enacted after a budget implementation bill receives first reading in the Legislature. The budget implementation bill received its first reading in the Legislature today and the changes are effective for IFRS purposes in the second quarter of 2013.
For further details, we refer you to the Ministry of Finance website.
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