The provincial government released the 2018 BC budget last week, so what does it mean for you? Here are some of the key ways the province’s new budget will impact your finances.
Effective January 1, 2020, MSP (Medical Services Plan) premiums will be eliminated for individuals and replaced by a payroll health tax for businesses. This translates to savings of $900 a year for individuals with a net income of over $42,000 (based on 2017 premiums and assuming the individual currently pays their own MSP premiums).
BC Ferries fares changed
Effective April 1, 2018, there will be several changes to BC Ferries fares, including fare freezing on major routes (Swartz Bay to Tsawwassen, Duke Point to Tsawwassen and Horseshoe Bay to Departure Bay), a 15% discount on other routes and a 100% senior’s discount on Monday to Thursday sailings.
Online accommodation platforms taxed
Starting on a date still to be specified, online accommodation platforms (like Airbnb and VRBO) will be expected to register, collect and remit provincial, municipal and regional district tax on accommodations.
Luxury vehicle surtax increased
Effective April 1, 2019, luxury surtax rates on passenger vehicles will increase up to 20% for vehicles value over $150,000 (15% if between $125,000 to 149,999) from the current 10% (12% for second-hand vehicles).
Fair PharmaCare program funded
Effective January 1, 2019, Fair PharmaCare deductibles will be eliminated for families with net incomes below $30,000, and reduced for families with incomes between $30,000 to $45,000.
New child care benefit introduced
Effective September 2018, there will be a new child care benefit for families. Families with pre-tax incomes of $45,000 or less will receive the full $1,250 benefit per child (up to the cost of care), while those who make up to $111,000 will receive a reduced amount, scaled according to income. An online benefit calculator will help parents budget for what they will receive based on their income and the type of licensed care. The benefit is expected to help up to 86,000 families by the end of 2020-21.
New child care fee-reduction program introduced
Effective April 1, 2018, parents with children in licensed care will be eligible for the following fee reductions if their child care provider opts in to the program:
- up to $350/month for group care for infants/toddlers
- up to $200/month for family care for infants/toddlers
- up to $100/month for group care for children aged 3-5
- up to $60/month for family care for children aged 3-5
The fee reductions are expected to benefit up to 50,000 families.
Caregiver tax credits consolidated
Starting in 2018, the BC caregiver tax credit and BC infirm dependent tax credit will be consolidated into a single non-refundable credit. It will no longer be available for non-infirm seniors living with their adult children. For the 2018 tax year, the maximum new B.C. Caregiver Credit amount is $4,556 for certain infirm dependents.
BC education tax credit eliminated
The BC education tax credit will be eliminated on January 1, 2019. Unused credits from years before 2019 can still be claimed in 2019 and later years. This tax credit helps reduce the amount of BC personal income tax that students owe. This follows the federal government’s elimination of the federal education and textbook tax credits effective January 1, 2017. However, the tuition tax credits (BC and federal) are still in place.
New speculation tax introduced
A new annual property tax on residential properties is proposed for home owners who pay little or no income tax in BC or leave their home vacant. The 2018 tax rate will be $5 per $1,000 of assessed value in 2018 (and will increase to $20 per $1,000 in 2019). Some exemptions will be available, such as for a principal residence or qualifying long-term rental property. A new non-refundable tax credit will be available for those who pay BC income tax, but do not qualify for an exemption.
Foreign buyers tax increased and expanded
Effective February 21, 2018, the additional property transfer tax for foreign entities & taxable trustees (i.e., foreign buyers tax) increased to 20% (from 15%) and will now apply beyond Metro Vancouver to areas including Fraser Valley, the Capital Regional District (Victoria), Nanaimo, and the Regional District of Central Okanagan. Some exemptions are available in these expanded areas.
Property transfer tax rate changed
Effective February 21, 2018, an additional 2% transfer tax applies to any portion of a property’s fair market value (FMV) over $3 million, when an event triggers property transfer tax.
Property tax home owner grants changed
Eligible BC properties can receive the “basic” 2018 Home Owner Grant (HOG) of $570 on eligible properties used as a principal residence with assessed values of up to $1.65 million in 2018 (up from $1.6 million in 2017) to reduce the property tax owed. For properties assessed over $1.65 million, the basic Home Owner Grant is reduced by $5 per $1,000 of valuation over this $1.65 million limit. The 2018 basic property tax grant is completely eliminated if a property is assessed over $1,764,000.*
In 2018, the “additional” home owner grant worth $275 (which is available, for example, if the registered homeowner is age 65 or older, is disabled or a veteran, etc.) is completely eliminated for properties assessed over $1,819,000.*