2021 British Columbia Budget Highlights

On Tuesday, April 20, 2021, British Columbia’s Minister of Finance Selina Robinson tabled the 2021 Budget. Budget 2021, A Stronger BC for Everyone, focuses on supporting people and businesses through the pandemic and preparing the province for recovery once it ends. The Government estimates a deficit of $9.7 billion for 2021-22, with declining deficits to $4.3 billion projected for 2023-24.

Below are highlights from the announcements:

A. Corporate Tax Measures

Corporate Tax Rates

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

Extensions to Existing Tax Credits

Budget 2021 extends the following tax credits:

• The Book Publishing Tax Credit is extended for five years to March 31, 2026.
• The mining flow-through share tax credit eligibility period is temporarily extended by 12 months. The 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.

B. Personal Tax Measures

Personal Tax Rates

No new personal income tax rate changes were announced in this year’s Budget. The top marginal personal income tax rate for B.C. is 20.50 percent for 2021. The current top combined federal and B.C. marginal rates for 2021 are outlined below:

Requirement to Repay B.C. Emergency Benefit for Workers Waived

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 (CERB) based on their gross income. This mirrors a Federal change to the CERB.

Climate Action Tax Credit Increase Aligned with Carbon Tax Rate 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 $56.60 per child on July 1, 2022.

C. Other Measures

Carbon Tax Act

Carbon Tax Rate Increases Delayed

As previously announced in September 2020, carbon tax rates were set at $45 per tonne of carbon dioxide equivalent emissions effective April 1, 2021. This tax rate increase was originally scheduled for April 1, 2020, however, it was delayed to support businesses and families during the COVID-19 pandemic. The tax rate increase to $50 will be effective April 1, 2022 (originally scheduled for April 1, 2021).

Provincial Sales Tax Act

Exemption for Electric Bicycles and Tricycles Introduced

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

For purposes of these exemptions, electric bicycles and tricycles must have pedals or hand cranks that allow for human propulsion, wheels with a minimum diameter of 350 millimetres and maximum motor power of 500 watts. Additionally, they are subject to a motor-assisted maximum speed of 32 kilometres per hour and must not have the appearance of a motorcycle, moped or scooter.

PST Rebate for Select Machinery and Equipment

The Government of British Columbia has recently released additional information regarding the previously announced PST Rebate for Select Machinery and Equipment. As of April 1, 2021, rebate applications can be filed online. Further to the information provided in September 2020, Class 38 has been added as another eligible class for equipment. There are very specific instructions as to how the rebates must be filed, as well as the information required to be included in the rebate applications.

For further information, please see the updated MNP Tax Alert on our website. 

Exemption for New Resident’s Effects Temporarily Expanded

Under normal conditions, the personal effects of a new resident are generally exempt from PST if they are brought into B.C. within one year of the individual becoming a resident. In response to COVID-19 travel restrictions, this exemption has been temporarily expanded and a new time frame now applies to any person who became a resident of B.C. on or after March 11, 2019. Individuals who would otherwise qualify for the exemption 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.

New Measures to Address PST Refunds on Select Vehicle Transactions

Effective on a date to be set by regulation, the PST 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.

Motor Fuel Tax Act

Eligibility for Fuel Tax Refund for Persons with Disabilities Expanded

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-percent 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.

The motor fuel tax refund for persons with qualifying disabilities provides refunds of up to $500 per calendar year.

Tobacco Tax Act

Increased Tax Rates for Cigarettes, Heated Tobacco Products and Loose Tobacco

Effective July 1, 2021, the tax rate on cigarettes is increased to 32.5 cents from 29.5 cents per cigarette (to $65 from $59 per carton of 200 cigarettes). The default tax on heated tobacco products is also increased to 32.5 cents from 29.5 cents per heated tobacco product. 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.

The tax rate on loose tobacco is increased to 65 cents from 39.5 cents per gram. This increase better aligns the tax on “roll-your-own” tobacco with the level of tax that applies to premade cigarettes.