On February 22, 2022, British Columbia’s Finance Minister Selina Robinson announced the 2022 British Columbia Budget. New measures are intended to promote a stronger society, economy, and environment. No changes were made to the existing provincial personal and corporate tax rates.
Crowe MacKay’s tax experts summarize how British Columbians will be impacted by the new tax measures.
The SR&ED tax credit has been extended for an additional five years, until August 31, 2027.
This tax credit is available to businesses of all sizes and sectors that conduct research and development activities. All British Columbians are expected to benefit from the long-term economic growth resulting from research and development.
As of February 23, 2022, a new tax credit is temporarily available for those who retrofit and improve energy efficiency for multi-unit residential buildings that have four or more dwellings and prescribed types of commercial buildings.
Taxpayers who improve their building’s energy efficiency to meet prescribed energy use targets after the retrofit is completed can receive a refundable tax credit of 5% of the eligible expenditures paid. Eligible expenditures are to be submitted before April 1, 2025, and under a contract entered into after February 22, 2022.
The training tax credits have been extended for two years, until the end of 2024, with an enhanced tax credit available to First Nations individuals or persons with disabilities for all trade programs.
The shipbuilding and ship repair industry tax credit has been extended for two years, to the end of 2024, with an enhanced tax credit available to First Nations individuals or persons with disabilities for eligible trade programs.
Effective from 2022 to 2024, the total tax credit budget has temporarily increased to $41 million. The budget increase of $2.5 million is being allocated to investments in clean technology businesses. The credit provides investors up to 30% of their equity investment, potentially leading to up to $8.3 million in additional equity financing for qualifying corporations annually.
The exemption for strata accommodation properties applies to residential property defined in the Assessment Act as a strata accommodation property. The exemption was set to expire at the end of the 2021 tax year but has now been made permanent.
Effective for the 2021 tax year only, the exemption for hazardous or damaged residential property is expanded to apply to properties damaged by the floods in late 2021 in Abbotsford, Chilliwack and Mission. The exemption generally requires that a property is uninhabitable for a period of at least 60 days. The temporary expansion now allows properties in those areas to claim the exemption even if the property was uninhabitable for less than 60 days if the disaster prevented the owners from claiming another exemption under the Act. The exemption is available in the following calendar year after the damage occurs if the residence is still not inhabitable before March 1.
Effective February 23, 2022, used zero-emissions vehicles are exempted from provincial sales tax. This exemption applies to the sale of all zero-emissions vehicles from motor dealers, as well as private sales of used zero-emissions vehicles that have been driven for at least 6,000 kilometers. This exemption program will apply for five years to encourage the adoption of zero-emissions vehicles. The program is scheduled to end February 22, 2027.
Effective February 23, 2022, the passenger vehicle surtax threshold for zero-emission vehicles has increased from $55,000 to $75,000, reflecting that the capital cost of zero-emissions vehicles is greater than the cost of comparable internal combustion engine models. The increased surtax will apply for five years to encourage the adoption of zero-emission vehicles. The program is scheduled to end February 22, 2027.
Effective April 1, 2022, heat pumps are exempt from provincial sales tax. If a heat pump is purchased before April 1, 2022, to fulfil a contract where the heat pump is affixed or installed into real property on or after April 1, 2022, the person who paid the provincial sales tax on the heat pump will be eligible to apply for a refund of that tax.
Additional measures are in place to incentivize the installation of heat pumps. Effective April 1, 2022, the provincial sales tax on fossil fuel combustion systems that heat or cool buildings or water will increase from 7% to 12%. Fossil fuel combustion systems will generally be subject to a tax rate of 7%. For contracts entered into on or after February 23, 2022, fossil fuel combustion systems will be subject to the 12% rate if they are affixed or installed into real property on or after April 1, 2022.
Detailed transition rules will be published by the Minister of Finance.
Effective October 1, 2022, tax on private sales of motor vehicles will be based on the greater of the reported purchase price and the average wholesale value of the vehicle. The measure will not apply to motor vehicles involved in a trade-in.
Effective July 1, 2022, businesses that facilitate sales or leases of certain goods, services, or software for third parties through their online platform, including accepting payment from a consumer, will be required to collect and remit provincial sales tax on those sales and leases made in B.C. Sellers will be relieved of their obligation to collect and remit tax on sales and leases made through a marketplace facilitator.
Additionally, effective on July 1, 2022, marketplace facilitators will be required to charge provincial sales tax on marketplace facilitation services they provide to sellers.
For more information on the 2022 British Columbia Budget, please visit the Government of British Columbia's website.
This article has been published for general information. You should always contact your trusted advisor for specific guidance pertaining to your individual tax needs. This publication is not a substitute for obtaining personalized advice.
If you are looking for Tax Services, Crowe MacKay provides personalized support. Our tax professionals will help you maximize tax-planning opportunities and ensure the minimum amount required by law is paid.
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