TaxTips.ca - BC 2008 budget

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British Columbia-> Budget 2008

British Columbia 2008 Budget - February 19, 2008

Further tax changes were announced in the October 22, 2008 Economic Plan.

See the BC Government Budget 2008 website, and Bill 2 - 2008, Budget Measures Implementation Act, 2008.

Carbon tax

The BC 2008 budget introduced a "revenue-neutral carbon tax" which will apply to all fossil fuels beginning on July 1, 2008, subject to approval in the legislature. Detailed information on the carbon tax, including rates by fuel type, can be found on the Ministry of Small Business and Revenue Carbon Tax web page.

Personal tax

Climate action dividend payment to be issued in June 2008

To help offset the carbon tax, a one-time payment of $100 will be made to each BC resident who was aged 18 or over on December 31, 2007. Parents will receive $100 for each child who was under 18 years of age at the end of 2007. Most BC residents will receive their one-time payment in June 2008. To receive the payment, individuals must file an income tax return or notify the province of their eligibility no later than August 31, 2010.

The filing of a tax return is all that is necessary to receive the climate action dividend payment, for the majority of BC residents and their dependent children. Payment will automatically be made for dependents under the age of 18 as of December 31, 2007, as long as you have filed a 2006 or 2007 tax return, and your dependents are registered for the Canada Child Tax Benefit (CCTB). For children who are not registered for the CCTB, an application form can be filled out.

Low income climate action tax credit

Low-income individuals and families will start receiving a climate action tax credit, which will be paid together with the federal GST credit, effective July 1, 2008. The first payment will actually be made in October 2008, but will include the amount for July 2008.

The maximum annual tax credit is $100 per adult plus $30 per child, with single parent families receiving the adult amount for the first child. The maximum annual credit is reduced by 2% of net family income in excess of $30,000 for single individuals and in excess of $35,000 for families.

Personal income tax rates

The two lowest provincial personal income tax rates are being reduced for 2008, in addition to the reductions announced in the 2007 budget. The following table shows the proposed rate changes.

Taxable Income	2008 Current Rates	Proposed Rates
Taxable Income	2008 Current Rates	2008	2009
first $35,016	5.35%	5.24%	5.06%
over $35,016 up to $70,033	8.15%	7.98%	7.70%
over $70,033 up to $80,406	10.50%	10.50%	10.50%
over $80,406 up to $97,636	12.29%	12.29%	12.29%
over $97,636	14.70%	14.70%	14.70%

The marginal tax rate tables have been revised to include the above tax rate reductions for 2008.

Dividend tax credit (DTC) rates

Both the regular and the enhanced dividend tax credit rates will be reduced effective January 1, 2009, to reflect the reduction in both the general and the small business corporate tax rates.

	regular (small business) dividend tax credit rate reduced to 4.2% from 5.1% of taxable dividends
	enhanced dividend tax credit rate reduced to 11% from 12% of taxable dividends

On the BC Dividend Tax Credit page we have added a table showing the revised combined federal/BC marginal tax rates for eligible dividends when the BC dividend tax credit rate reduction and personal tax rate reductions are combined with the federal reduction of the dividend gross-up, and the changes in the federal dividend tax credit rate.

Federal tax changes

Federal budget 2008 income tax measures affecting taxable income and certain tax credits that automatically affect provincial taxes in all provinces and territories except Québec:

	new Tax-Free Savings Accounts (TFSA)
	changes to RESPs
	reduction of gross-up amount for dividends eligible for the enhanced dividend tax credit (see above).
	increase in maximum Northern Residents deduction beginning in 2008
	capital cost allowance changes
	expansion of list of expenses eligible for medical expense tax credit, effective 2008

Corporate income tax rates

Both the small business and the general corporate income tax rates will be reduced effective July 1, 2008. The rate will be pro-rated for tax years that straddle July 1st.

	small business rate reduced to 3.5% from 4.5%
	general rate reduced to 11% from 12%

Property taxes

Home owner grant

Effective for the 2008 tax year:

the threshold for the phase-out of the home owner grant is increased to $1,050,000 of assessed value from $950,000. The grant is reduced by $5 for each $1,000 (0.5%) of assessed value in excess of the threshold.

a home owner grant or low-income grant supplement is provided for up to two taxation years to eligible homeowners or occupants who cease or temporarily cease to occupy their principal residence:

due to property damaged or destroyed by fire, flood or natural disaster, or

for reasons such as medical, travel, work or education

eligible homeowners with disabilities, or with a spouse or relative with disabilities, may qualify for the additional home owner grant if a newly constructed principal residence includes modifications to accommodate the person with the disability.

For more details see the Small Business and Revenue Ministry web page on Budget 2008 Property Taxes.

Property transfer tax for first time home buyers

	threshold increased to $425,000, with proportional exemption for eligible residences with fair market value of up to $450,000
	financing requirements eliminated

For details, see the Small Business and Revenue Ministry information on the First Time Home Buyers Program.

Provincial sales taxes (PST)

The budget announced many new exemptions and reductions of PST. See the BC PST exemptions page for more information.

All of the tax changes are subject to legislative approval.

Revised: October 31, 2011

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