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EMPLOYER HEALTH TAX DEADLINES

It has been a few months since the introduction of the Employer Health Tax in British Columbia.

It is mandatory for all employers in British Columbia to be registered for the tax if they are above the exemption threshold.

General employers (entities that are not charities or not-for-profits) with eligible wages above $600,000 in 2018 should have registered by May 15th, and should have made installment payments on June 15th and September 15th. One additional installment payment is due on December
15th, and a final payment is due on filing on March 31, 2020.

Each of these installments should be 25% of their estimated Employer Health Tax based on the lessor of 2018 or 2019 eligible wages.

If the employer has eligible wages between $500,000 and $600,000, they only need to be registered by December 31, 2019, with one payment made on March 31, 2020. Employers with eligible wages below $500,000 do not need to register.

If an employer still has not registered, they can do so at E-Tax BC. Payments can also be made through this account.

They can also use online banking, under the payee “BC – EMPLOYER HEALTH TAX (installment or tax return payments)”.

BC SPECULATION AND VACANCY TAX INTRODUCED

The provincial government of British Columbia has introduced legislation which will tax those individuals who own multiple homes in certain areas of British Columbia.

Originally titled as the “BC Speculation Tax”, it has been renamed as the “BC Speculation and Vacancy Tax”.

It will apply to those who own multiple properties in Metro Vancouver, the Capital Regional District (excluding the Gulf Islands and the Strait of Juan de Fuca), Kelowna, West Kelowna, Nanaimo, Lantzville, Abbotsford, Chilliwack and Mission.

The tax rate on homes will vary depending on the taxation residence of the homeowner. In 2018, both Canadian residents and non-residents will pay a tax of .5% of the assessed value per home per year.

In 2019, the rate for Canadian residents will remain at .5%, whereas the rate for non-residents will increase to 2%.

It is estimated that approximately 2/3 of the people who will be paying the tax will be from British Columbia.

Homeowners can avoid the tax if they rent out the property for at least six months in the year. There is also a credit available for residents of British Columbia which would apply to the first $400,000 of assessed value in the home, which will reduce the tax payable by $2,000 per year.

Municipalities had argued for the option to decide if they wanted the speculation tax to apply in their community. The provincial government denied this request.

Developers working on housing projects, as well as individuals suffering medical emergencies, moving to a residential care facility, or suffering a marriage breakup are also exempt from the new tax.

As well, if a spouse is required to have a second home which is closer to their place of employment by 100km, they will also qualify for the exemption. Several other minor exemptions are also available.

Homeowners in the designated areas will receive forms in the mail in February 2019, at which time they will have to declare whether the property is their primary residence. If it is rented out, they will have to declare the length of time it was rented out in the year.

Provincial Education Credit Eliminated… (Again)

There has been another change to the education tax credit for students in British Columbia. As discussed in the Autumn  newsletter, the previous  provincial government had planned to eliminate the provincial education  tax credit. When the  new government came to power, they cancelled the plans for eliminating this credit. However, in the provincial budget  this spring, it was announced once again that the credit would be eliminated, as of January 1, 2019.

Short Term Accommodations Taxed

Effective October 1, 2018, new rules will be in place for short term accommodation providers in British Columbia.

As of that date, unless an owner is listing their property on an online accommodation platform such as Air BNB, or they have an exempt property, they must be registered for Provincial Sales Tax (PST), and if applicable, Municipal Regional and District Tax (MRDT).

The rate of tax for PST is 8%, and the MRDT can be up to 3%. If the provider is registered on an online accommodation platform, the platform will start collecting the taxes for them.

In the past, there were exemptions available if a provider had less than 4 units of housing available. This exemption will be removed when the new rules come into place.

It will be replaced by an exemption from registration for providers who have revenue of less than $2,500 in the last 12 months, can reasonably expect to have revenue of less than $2,500 in the next 12 months, and are not registered on an online accommodation platform.

Long term accommodations are still exempt under the new rules. However, there has been a reduction in the number of days needed to qualify for this exemption.

Previously a unit had to be rented for a month to be considered long term accommodation. Under the new guidelines, the rental property only has to be rented for 27 days to qualify.

Online classified listings and listing services that do not collect tax on behalf of the owner are not online accommodation platforms for the purposes of the new regulations.

Providers may also need to charge Goods and Services Tax on their accommodations. There have been no changes to these regulations.

Small Businesses Untouched

Pie charts and percent

In the recent provincial budget, the provincial corporate tax rate increased from 10% to 11%. This rate applies to all companies which earn over $500,000.

For small companies who earn less than $500,000, their provincial corporate tax rate has not changed from 2.5%. Combined with the federal corporate taxes, small companies pay a total income tax rate of 13.5%.