The B.C. NDP government has reduced the small business income tax rate from 2.5 per cent to two, effective April 1, 2017.
During the provincial election campaign, both the NDP and the B.C. Liberals promised to reduce the small business income tax by that amount.
The B.C. Liberals said they would make the change retroactive. The NDP also promised to raise the large corporate income tax from 11 to 12 per cent at the start of the new fiscal year, which is April 1, 2018.
The tax cut is part of the Budget Measures Implementation Act, 2017, which was passed on Nov. 2. The government said B.C. now has the second lowest small-business corporate income tax rate and is tied with Alberta and Saskatchewan.
“Small business forms the backbone of our economy and we need to do all we can to support its continued growth,” Jobs, Trade and Technology Minister Bruce Ralston said Thursday.
“That’s why we are lowering the small-business corporate income tax rate by 20 per cent, so B.C.’s small-business owners can keep more of their hard-earned revenue and reinvest it back in their communities.”
The tax benefits for credit unions has also been restored, retroactive to Jan. 1, 2017. According to the government, credit unions will be taxed at lower rates so they have access to more of the credit union’s funds to reinvest into local economies and small business.
The small-business corporate income tax rate generally applies to Canadian-controlled private corporations in B.C. on active business income less than $500,000 per year.