B.C.’s 2017-2018 tax budget has some big changes

 

The province of British Columbia released its 2017–2018 budget on February 21, 2017, and it included several changes to taxes that may affect your bottom line. Keep in mind though, that these changes will only happen if the Liberal Party remains in office after the provincial election on May 9. If the Liberals are unseated, things could change again.

The biggest change introduced for the next tax season is lower Medical Services Plan Premiums for families with a net income of less than $120,000. That’s good news for a lot of us. But it’s not the only change that may affect you and yours. Here’s what you need to know:

A healthy reduction in Medical Services Plan (MSP) premiums
Although it won’t begin until January 2018, the change to MSP premiums is going to cut the cost of this important expense by 50% for families with a net income under $120,000. Families below this income level will save up to $75 per month under the new policy (that’s $900 over the course of the year.) Singles will save too – to the tune of $450 a year. In 2018, income thresholds (which determine eligibility for MSP assistance) will increase as well – so more people than ever are going to pay less for their healthcare. Seniors and taxpayers with dependent children will be given the highest breaks under the new policy. We’ve laid out the old and new MSP rates in the following tables, so you can see exactly what you’re eligible for.

BC Medical Services Plan Changes in Monthly Premiums
Single Taxpayers
Adjusted Net Income 2017 2018
$0 to $24,000 $0.00 $0.00
$24,001 to $26,000 $11.00 $0.00
$26,001 to $28,000 $23.00 $11.50
$28,001 to $30,000 $35.00 $17.50
$30,001 to $34,000 $46.00 $23.00
$34,001 to $38,000 $56.00 $28.00
$38,001 to $42,000 $65.00 $32.50
$42,001 to $120,000 $75.00 $37.50
Over $120,000 $75.00 $75.00
BC Medical Services Plan Changes in Monthly Premiums
Couples
Adjusted Net Income 2017 2018
$0 to $27,000 $0.00 $0.00
$27,001 to $29,000 $22.00 $0.00
$29,001 to $31,000 $46.00 $23.00
$31,001 to $33,000 $70.00 $35.00
$33,001 to $37,000 $92.00 $46.00
$37,001 to $41,000 $112.00 $56.00
$41,001 to $45,000 $130.00 $65.00
$45,001 to $120,000 $150.00 $75.00
Over $120,000 $150.00 $150.00
BC Medical Services Plan Changes in Monthly Premiums
Senior Couple
Adjusted Net Income 2017 2018
$0 to $27,000 $0.00 $0.00
$27,001 to $29,000 $22.00 $0.00
$29,001 to $31,000 $46.00 $23.00
$31,001 to $33,000 $70.00 $35.00
$33,001 to $37,000 $92.00 $46.00
$37,001 to $41,000 $112.00 $56.00
$41,001 to $45,000 $130.00 $65.00
$45,001 to $120,000 $150.00 $75.00
Over $120,000 $150.00 $150.00
BC Medical Services Plan Changes in Monthly Premiums
Senior Couple
Adjusted Net Income 2017 2018
$0 to $33,000 $0.00 $0.00
$33,001 to $35,000 $22.00 $0.00
$35,001 to $37,000 $46.00 $23.00
$37,001 to $39,000 $70.00 $35.00
$39,001 to $43,000 $92.00 $46.00
$43,001 to $47,000 $112.00 $56.00
$47,001 to $51,000 $130.00 $65.00
$51,001 to $120,000 $150.00 $75.00
Over $120,000 $150.00 $150.00
BC Medical Services Plan Changes in Monthly Premiums
Single Parent – Two Children
Adjusted Net Income 2017 2018
$0 to $30,000 $0.00 $0.00
$30,001 to $32,000 $11.00 $0.00
$32,001 to $34,000 $23.00 $11.50
$34,001 to $36,000 $35.00 $17.50
$36,001 to $40,000 $46.00 $23.00
$40,001 to $44,000 $56.00 $28.00
$44,001 to $48,000 $65.00 $32.50
$48,001 to $120,000 $75.00 $37.50
Over $120,000 $75.00 $75.00
BC Medical Services Plan Changes in Monthly Premiums
Coupls – Two Children
Adjusted Net Income 2017 2018
$0 to $33,000 $0.00 $0.00
$33,001 to $35,000 $22.00 $0.00
$35,001 to $37,000 $46.00 $23.00
$37,001 to $39,000 $70.00 $35.00
$39,001 to $43,000 $92.00 $46.00
$43,001 to $47,000 $112.00 $56.00
$47,001 to $51,000 $130.00 $65.00
$51,001 to $120,000 $150.00 $75.00
Over $120,000 $150.00 $150.00

A word to the wise on education amounts
BC has followed the federal government’s lead by eliminating the provincial education amount. That may not be great news, but there is a bit of a silver lining. While federal education amounts will end in 2017, B.C.’s provincial amount won’t be eliminated until January 2018 – giving you a bit of breathing room on this change. Taxpayers will be able to carry forward unused amounts from previous years to 2018, and the tax credit for tuition fees stays the same.

Hot tip for volunteer firefighters
Did you know there are 4,500 volunteer firefighters in British Columbia, and 2,500 search and rescue volunteers? That’s a lot of really helpful people, and they’re all about to get a well-deserved boost. The 2017 tax budget provides $3,000 for every volunteer firefighter and search and rescue person in the province. Volunteers who qualify for either of the federal amounts will also qualify for the provincial amount, producing a provincial tax savings of $151.80 and a federal tax savings of $450. That’s kind of a smokin’ deal!

Personal tax levels remain the same
For the third year running, there are no changes to the rates personal tax residents will pay next year, but the income levels relating to those percentages have all gone up by 1.8% to account for inflation. Depending on your income, you could be in a different tax bracket next year. Take a look at this chart to see where you fit in.

Alberta Personal Tax Rates
2015 2016 2017
5.06% of taxable income up to $37,869 5.06% of taxable income up to $38,210 5.06% of taxable income up to $38,898
7.7% of taxable income between $37,869 and $75,740 7.7% of taxable income between $38,210 and $76,421 7.7% of taxable income between $38,898 and $77,797
10.5% of taxable income between $75,740 and $86,958 10.5% of taxable income between $76,421 and $87,741 10.5% of taxable income between $77,797 and $89,320
12.29% of taxable income between $86,958 and $105,592 12.29% of taxable income between $87,741 and $106,543 12.29% of taxable income between $89,320 and $108,460
14.7% of taxable income between $105,592 and $151,050 14.7% of taxable income in excess of $106,543 14.7% of taxable income in excess of $108,460
16.8% of taxable income in excess of $151,050

Small business gets a break
Mom and Pop shops will pay a little less next year. As of April 1, 2017, the small business corporate tax rate is down from 2.5% to 2%. While bigger businesses aren’t in line for a reduction, rates haven’t gone up for them either. The general corporate tax rate is staying steady at 11%.

Changes to power charges that pack a punch
Over the next couple of years B.C. businesses are going to enjoy decreasing PST rates on their energy bills. As of Oct. 1, 2017, the rate on electricity will go down from 7% to 3.5%, and starting April 1, 2019, all electricity for B.C. businesses will be fully exempt from PST. This change is in step with existing policies for B.C. farmers and residential consumers, who are already exempt from PST charges on electricity.