Corporate Tax Reduction Announced in British Columbia Budget Update
September 2005
Release No: 05-03
Corporate Tax Reduction Announced in British Columbia Budget Update
Overview
On September 14, 2005, Finance Minister Carole Taylor released an update to the 2005
B.C. budget which was tabled on February 15, 2005. Economic growth in B.C. continues to be impressive – the Ministry of Finance forecasts economic growth of 3.4 per cent for 2005, 3.2 per cent for 2006 and 3.1 per cent for 2007 to 2009. Due to this strong performance, the government’s revised revenue projections show increased revenue when compared to the original projections. This improvement has allowed the government to reduce the general corporate income tax rate and provide new funding for seniors and First Nations.
Revised Budget Projection
British Columbia Revised Budget Projections |
(in millions $) |
|
Actual
2004/2005 |
Revised
Estimate
2005/2006 |
Projected
2006/2007 |
Revenue |
30,821 |
32,202 |
32,139 |
Expenditures |
(30,658) |
(32,876) |
(33,198) |
|
163 |
(674) |
(1,059) |
Commercial crown corporation net income
Forecast allowance |
2,412
-
|
2,274
(300)
|
2,259
(600)
|
Surplus |
2,575 |
1,300 |
600 |
Business Tax Changes
Corporate Tax Rate Reduced – Effective July 1, 2005, the general corporate income tax rate will be reduced to 12 per cent from the current rate of 13.5 per cent. The rate for taxation years straddling July 1, 2005 will be prorated. The small business rate will remain at 4.5 per cent.
New Life Science Patent Tax Incentive – Effective January 1, 2006, B.C. will provide a new tax incentive for the international commercialization of life science patents, to build on B.C.’s growing stature as a centre for biotechnology research and development.
How B.C. Compares
The following chart compares top personal and corporate tax rates and sales taxes for all provinces and territories, as announced to September 14, 2005.
|
Top 2005 |
Top Corporate Rates for 2005 |
|
|
Personal Rates
% |
General
% |
M&P
% |
Small Business
% |
Retail Sales
Tax
% |
BC |
43.70 |
34.12 (1) |
34.12 (1) |
17.62 |
7.0 |
Alta. |
39.00 |
33.62 |
33.62 |
16.12 |
- |
Sask. |
44.00 |
39.12 |
32.12 |
18.12 |
7.0 |
Man. |
46.40 |
37.12 |
37.12 |
18.12 |
7.0 |
Ont. |
46.41 |
36.12 |
34.12 |
18.62 |
8.0 |
Qué. |
48.22 |
31.02 |
31.02 |
22.02 |
7.5 (2) |
N.B. |
46.84 |
35.12 |
35.12 |
15.12 (3) |
8.0 (4) |
N.S. |
48.25 |
38.12 |
38.12 |
18.12 |
8.0 (4) |
P.E.I. |
47.37 |
38.12 |
38.12 (5) |
19.62 (5) |
10.0 (2) |
Nfld. |
48.64 |
36.12 |
27.12 |
18.12 |
8.0 (4) |
Yukon |
42.40 |
37.12 |
24.62 |
17.12 (6) |
- |
N.W.T. |
43.05 |
36.12 |
36.12 |
17.12 |
- |
Nunavut |
40.50 |
34.12 |
34.12 |
17.12 |
- |
- Rate reduced from 35.62% effective July 1, 2005
- Provincial sales tax applies on GST. Effective combined rate is 15.025% in Québec and 17.7% in P.E.I.
- Rate reduced from 15.62% effective July 1, 2005.
- As part of the HST (combined rate is 15% with GST).
- Prior to April 1, 2005, the M&P rate and the small business rate were 29.62% and 20.62% respectively.
- The tax rate for M&P profits eligible for the small business deduction is 15.62%.
Please note: this material is general in nature and should not be relied upon to replace the requirement for specific professional advice. © February 2005, BDO Dunwoody LLP
