On February 22, 2024, Minister of Finance, Katrine Conroy, presented British Columbia’s 2024 budget. Introducing a number of measures to address the rising cost of living, an ongoing housing crisis, a faltering healthcare system, and the desire for a more robust, environmentally sustainable economy, the pre-election budget projects a deficit of $7.9 billion, with the current government maintaining its policy of avoiding significant cuts to supports and services.
This year’s budget includes several interesting tax measures, as summarized below.
Provincial Sales Tax (PST) Measures
Amended Definition of Software
The budget contains an amendment, retroactive to April 1, 2013, to clarify the definition of software. Specifically, the definition of software now includes:
- Software as a Service (SaaS);
- Infrastructure as a Service (IaaS);
- Coded instructions or a right to use coded instructions intended to trigger an electronic device to perform a task; and
- Application programming interfaces (APIs).
Undoubtedly, the first two items have been added to the definition in response to the Hootsuite Inc. v. British Columbia (Finance) (2023 BCSC 358) decision that ruled such services were not taxable.
Technical Amendments
Various other technical amendments will be made to the Provincial Sales Tax Act and the Provincial Sales Tax Exemption and Refund Regulation to:
- Allow PST refunds to a person purchasing goods from a vendor that did not collect tax where the purchaser subsequently returns the goods to the vendor after self-assessing PST on the purchase, effective upon royal assent;
- Prevent PST refunds, effective July 1, 2024, where a person acquires goods for export and resale outside British Columbia but behaves as if they are the end user of goods;
- Allow projects using sunlight, wind, tides, air, or water to manufacture clean energy to be eligible for the production machinery and equipment exemption, effective February 23, 2024; and
- Clarify the PST rules when services are provided with taxable leased goods.
Carbon and Motor Fuel Tax Measures
Biomethane Credit Refund Adjustment
This year’s budget contains a proposal to amend the biomethane credit refund under the Carbon Tax to allow for its determination based on the sum of the biomethane credits provided by a qualifying retail dealer in a reporting period rather than the lesser of that sum and the total amount of biomethane blended in a reporting period. This change will enable qualifying retail dealers to claim refunds in future periods where excess biomethane is not required to fulfil contracts from earlier reporting periods. However, refunds will not be permitted on biomethane acquired or blended more than two years before a reporting period. This change will take effect on April 1, 2024.
Carbon Tax Rate Increase
Beginning April 1, 2024, the province’s Carbon Tax rates will increase by $15 per tonne to $80 per tonne, in accordance with federal carbon pricing requirements.
Commodity Tax Technical Amendments
Technical amendments will be made to the Carbon Tax Act, Motor Fuel Tax Act, and Provincial Sales Tax Act, including changes to:
- Provide the director with discretionary authority to require online only filings and submission of information or documents, effective upon royal assent; and
- Update offence provisions and administrative penalties to match those in other provincial tax statutes, effective July 1, 2024.
New Tax on Home Flipping
To discourage speculators from driving up housing prices in British Columbia, the province has announced a measure designed to curb home flipping activity by levying a tax of up to 20% on income from the sale of residential real estate held for less than two years. This new tax, which will take effect for properties sold on or after January 1, 2025, will provide exemptions for various life circumstances resulting in the sale of a property within two years of purchase and certain entities involved in residential construction and real estate development. Further details on the structure and reporting requirements for this tax are expected to be released in the spring.
Property Transfer Tax Measures
The budget includes a few other measures intended to help address housing affordability, including increases to the Property Transfer Tax (PTT) exemption thresholds for eligible first-time home buyers and purchasers of qualifying newly built homes, effective April 1, 2024, and the introduction of a PTT exemption for qualifying new, purpose-built rental buildings, effective for transactions between January 1, 2025, and December 31, 2030.
Employer Health Tax Measure
To help smaller businesses that may be challenged by current inflation rates and labour supply issues, the province has announced that it will double the Employer Health Tax exemption threshold from $500,000 to $1 million, effective January 1, 2024.
More Information
For information on new and extended government funding initiatives included in the 2024 British Columbia budget, please navigate to our Mentor Works website at: https://www.mentorworks.ca/blog/government-funding/british-columbia-bc-budget-2024/
Further details on the 2024 British Columbia budget may be found on the provincial government website at: https://www.bcbudget.gov.bc.ca/2024/default.htm
To read key updates from all of Canada’s 2024 provincial budgets, please visit our Key Changes | 2024 Canadian Federal and Provincial Budgets page.
If you have any questions about how these proposed changes might impact your organization, please do not hesitate to contact the Ryan TaxDirect® line at 1.800.667.1600 or taxdirect@ryan.com.