On April 20, 2021, the B.C. government released its 2021 budget. The following are highlights of the key tax measures.

Personal tax measures

No personal income tax rate changes were announced in this year’s budget. The current personal combined income tax rates for 2021 are outlined below:

B.C. Emergency Benefit and self-employed individuals

Self-employed individuals are not required to repay the B.C. Emergency Benefit for Workers if they would have qualified for the benefit or the Canada Emergency Response Benefit on their gross income. This mirrors a federal change to the Canada Emergency Response Benefit.

Climate action tax credit increase

Effective July 1, 2021, the climate action tax credit rate remains at $174 per adult and $51 per child due to the delay in the carbon tax rate increase. Rates will increase to $193.50 per adult and $56.50 per child on July 1, 2022, in line with the corresponding carbon tax rate increase.

Corporate tax measures

No corporate income tax rate changes were announced in this year’s budget. The current corporate income tax rates for 2021 are outlined below:

Book publishing tax credit extended

The book publishing tax credit has been extended for five years to March 31, 2026.

Mining flow-through share tax credit eligibility extended

The mining flow-through share tax credit eligibility period during which an expenditure must be incurred by the issuer to be renounced in favour of flow-through shares is temporarily extended by 12 months. The 12-month extension applies to flow-through share agreements entered into on or after March 1, 2018 and before 2021 when using the general rule. It also applies to agreements entered into in 2019 or 2020 when using the look-back rule.

Sales tax measures

Electric bicycles and tricycles

Effective April 21, 2021, electric bicycles and tricycles are exempt from provincial sales tax. In addition, conversion kits used to electrify conventional bicycles and tricycles – as well as parts and services for electric bicycles and tricycles – are exempt from provincial sales tax.

Exemption for new resident’s effects temporarily expanded

Under normal conditions, the personal effects of a new resident are generally exempt from provincial sales tax if they are brought into B.C. within one year of the individual becoming a resident. Effective March 11, 2019, the exemption for a new resident’s effects is expanded to provide more time for new residents to bring their vehicles and other goods into B.C. without being subject to provincial sales tax. The expanded time frame is provided in response to COVID-19 travel restrictions. With this temporary expansion, any person who became a resident of B.C. on or after March 11, 2019 will now have until the earlier of January 1, 2023 or one year following the end of the most recent quarantine order made under the Quarantine Act (Canada), to bring their personal effects into B.C.

Measures to address provincial sales tax refunds on “grey market” vehicles

The provincial sales tax refund for motor vehicles purchased in B.C. and resold within seven days will be eliminated. Persons who purchase vehicles in B.C. will be deemed to have purchased the vehicles for their own use and not for resale unless they represent otherwise to the seller at the time of purchase. This change will maintain the longstanding provincial sales tax treatment of resale inventory but close the provincial sales tax refund process to this type of “grey market” activity. The effective date will be set by regulation.

Other tax measures

Speculation and vacancy tax act

Various amendments were introduced pertaining to the speculation and vacancy tax act:

• Exemption for corporations owned by agents of government
• Exemption for registered charities that hold property through a trustee
• The definition of beneficial owner was updated

Tobacco tax rates for cigarettes, heated tobacco products and loose tobacco increased

Effective July 1, 2021, the tax rate on cigarettes has increased from 29.5 cents per cigarette to 32.5 cents (from $59 per carton of 200 cigarettes to $65). The default tax on heated tobacco products has also increased from 29.5 cents per heated tobacco product to 32.5 cents. A heated tobacco product is a product that contains tobacco and is designed to be heated, but not combusted, in a tobacco heating unit to produce a vapour for inhalation.

Effective July 1, 2021, the tax rate on loose tobacco (tobacco in a form other than cigarettes, cigars or heated tobacco products) is increased from 39.5 cents per gram to 65 cents.

Carbon tax rate

As announced on September 2, 2020, carbon tax rates are set at $45 per tonne of carbon dioxide equivalent emissions (CO2e) effective April 1, 2021. Rates will increase to $50 per tonne of CO2e on April 1, 2022.

Eligibility for the fuel tax refund for persons with disabilities expanded

The motor fuel tax refund for persons with disabilities provides refunds of up to $500 per calendar year to people with qualifying disabilities. Effective April 20, 2021, eligibility for the motor fuel tax refund for persons with disabilities is expanded to include recipients of disability assistance (or a disability supplement) from Indigenous Services Canada. Eligibility is also expanded to include anyone who is in receipt of a 100 per cent disability pension resulting from service as a member of Her Majesty’s forces, whether or not this pension relates to an injury sustained in a war.

Next steps

Contact your Baker Tilly advisor to learn more about how we can help navigate the complexities of the Canadian tax system.