This electronic version is for informational purposes only.
The printed version remains the official version.
Revenue Measures: Supplementary Information
INCOME TAX ACT
PERSONAL INCOME TAX SURTAX RATE REDUCTION
The British Columbia personal income tax surtax is reduced to 15 per cent, from 19 per cent, of provincial tax in excess of $8,660 effective January 1, 2000. The reduction in the surtax rate will reduce the personal income tax top marginal tax rate to 51.3 per cent for the 2000 tax year.
The reduction in the top marginal rate is a component of the government's three-year plan as outlined in Budget 98. The three-year plan commits the government to reduce the top marginal rate to 49.9 per cent by the 2001 tax year.
The following table shows top marginal tax rates, including federal and provincial tax rates, in effect for 1999, 2000 and 2001.
SMALL BUSINESS CORPORATE INCOME TAX RATE REDUCED
Effective July 1, 1999, the small business income tax rate for Canadian-controlled private corporations will be reduced to 5.5 per cent from 8.5 per cent. This change reduces the corporate income tax rate by 35 per cent for about 40,000 small businesses in British Columbia. British Columbia's tax rate will be lower than Alberta's and the second lowest in the country.
BC FAMILY BONUS INCREASED
British Columbia introduced the BC Family Bonus in 1996 and it has been the model used to develop the federal-provincial-territorial National Child Benefit system. The BC Family Bonus is part of British Columbia's contribution to the National Child Benefit system and has ensured that families receive up to $103 per month per child.
Effective July 1, 1999, the BC Family Bonus entitlement will be adjusted such that the monthly benefit provided through the combined BC Family Bonus/National Child Benefit payment will be increased to a maximum of $105 per child per month from $103 per child per month. The increase will provide an additional $24 per child per year for the 235,000 families currently receiving the BC Family Bonus. In addition, families with incomes slightly above the current levels at which benefits are paid will receive a partial payment.
CORPORATION CAPITAL TAX ACT
FOUR-YEAR TAX HOLIDAY FOR NEW INVESTMENTS
Currently, the corporation capital tax includes a two-year holiday for new investments in qualifying expenditures including:
As an additional incentive to undertake new investment, the tax holiday is extended to four years for qualifying expenditures made after March 31, 1999.
SCHOOL TAX RATES SET
A separate residential tax rate is set for each school district. For the 1999 taxation year, the average of residential school taxes, before application of the home owner grant, will be maintained at 1998 levels. This will be accomplished by adjusting residential school property tax rates to reflect changes in average assessed values. This rate-setting policy complies with the requirements of the Tax and Consumer Rate Freeze Act. There will be a small revenue increase due to the addition of new residential properties to the tax base.
Individual 1999 school district residential tax rates will be set in April, when authenticated assessment roll data are available to calculate the rates according to the provincial residential school tax rate formula.
Even with the freeze on average residential tax levels, individual tax bills may change. Some homeowners will experience an increase in their school taxes, while others will have offsetting reductions. The variation in individual tax bills will occur because changes in the assessed value of any individual property are likely to differ from changes in the average provincial and school district assessed values.
For each of the eight non-residential property classes, a single, province-wide rate is set. Most non-residential school tax rates will remain unchanged from 1998 levels. The school tax rate for the managed forest land class will be reduced in accordance with the Memorandum of Understanding with the Private Forest Landowners Association announced in January 1999. In total, non-residential school tax revenues will increase by 1.5 per cent, mostly due to new construction.
TAXATION (RURAL AREA) ACT
PROVINCIAL RURAL AREA TAX RATES
For the 1999 taxation year, the average of residential rural area property taxes will be maintained at the 1998 level, consistent with the Tax and Consumer Rate Freeze Act. A small increase in the residential tax rate will be offset by a reduction in average assessed values. The residential tax rate will be set in April, when authenticated assessment roll data are available. There will be a small revenue increase due to the addition of new residential properties to the tax base.
Some rural area residential property owners will experience an increase in their rural area property taxes, while others will have offsetting tax reductions. Homeowners whose property values have increased by more than the provincial average will see an increase, while other homeowners will see no change or a reduction.
The tax rates for the eight non-residential property classes will remain unchanged for 1999. Tax revenues will increase by about 0.7 per cent, with revenues from new construction more than offsetting the decline in average non-residential property values.
SOCIAL SERVICE TAX ACT
EXEMPTION PROVIDED FOR BOOMSTICKS
Boomsticks are long, high-quality logs used in the forest industry to form a boom to tow logs over water to either a mill site or assembly point. Under the Social Service Tax Act, each boomstick may be either taxable or exempt depending on the specific circumstance of each purchase, use and subsequent use. Although industry practice is to maintain an inventory of boomsticks, it is virtually impossible to track each boomstick to determine the appropriate application of tax. In addition, firms may structure their affairs to avoid the payment of tax. The unique nature of boomsticks imposes a significant compliance and administrative burden on both industry and government for relatively little revenue.
In recognition of the compliance burden on industry associated with the application of tax to boomsticks, an exemption for boomsticks is provided effective March 31, 1999.
PARTIAL REFUND OF PROVINCIAL SALES TAX FOR ELIGIBLE FACTORY MANUFACTURED ALTERNATIVE FUEL VEHICLES
An exemption is currently provided for after-market propane and natural gas conversion kits for motor vehicles for energy conservation and environmental reasons. Factory manufactured alternative fuel vehicles (AFV) are subject to tax on the full purchase price.
Factory manufactured AFVs often provide greater environmental benefits than after-market conversions and are generally more expensive than comparable gasoline or diesel fuel models. To encourage the purchase and use of those vehicles, and to provide a benefit similar to after-market conversion kits, a partial refund of provincial sales tax payable on new qualifying factory manufactured AFVs is introduced effective March 31, 1999.
New qualifying alternative fuel cars, trucks and vans are eligible for a refund up to $500. New qualifying alternative fuel buses are eligible for a refund up to $5,000.
Qualifying AFVs include new factory manufactured motor vehicles designed to operate:
The refund will be available for sales or leases. Adjustments will be made to the purchase price for purposes of determining whether an AFV is subject to the luxury tax. The adjustment will avoid imposing a higher rate of tax on an AFV than a comparably equipped gasoline or diesel powered model.
EXEMPTION PROVIDED FOR PRODUCT LABELS TO BE ATTACHED TO GOODS FOR SALE
The current application of tax to product labels creates uncertainty for business and increases compliance and administrative costs for both business and government. To eliminate this uncertainty an exemption is provided for product labels to be attached to goods for sale or lease effective March 31, 1999.
ADDITIONAL EXEMPTIONS FOR BONA FIDE FARMERS
Effective March 31, 1999, the following are added to the list of items that can be purchased exempt from the provincial sales tax by bona fide farmers for farm purposes:
COLLECTION OF PROVINCIAL SALES TAX BY REVENUE CANADA ON THE PERSONAL IMPORTATION OF TAXABLE GOODS INTRODUCED
Provincial sales tax is currently payable on taxable goods brought into British Columbia for use. Most businesses voluntarily remit tax on taxable commercial goods and audit programs are in place to collect tax from those that do not. However, the province lacks an effective way to collect tax on taxable personal goods (non-commercial) imported through the postal system, delivered to residents by couriers, or brought into the province by returning residents through international borders.
Effective September 1, 1999, Revenue Canada will begin collecting provincial sales tax on personal goods imported through the postal system or delivered to residents by couriers, and brought across international borders by returning residents. Revenue Canada currently collects provincial sales taxes on the personal importation of goods for most other provinces. The tax will only apply where people exceed the existing federal personal exemption limits.
MOTOR FUEL TAX ACT
FUTURE EXEMPTION FOR ETHANOL USED IN GASOLINE BLENDS
Currently, blends of ethanol and gasoline containing at least 85 per cent ethanol are exempt from the motor fuel tax.
A tax exemption will be provided for ethanol used in low ethanol blends of gasoline once a commercial scale ethanol plant is in operation in the province. This measure is intended to encourage the development and construction of an ethanol production plant in British Columbia, increase the future use of ethanol in gasoline and develop commercially viable ethanol production technologies using readily available wood residues.
MINERAL TAX ACT
TAXATION OF PLACER MINING REFORMED
The application of the Mineral Tax Act to placer mines is problematic for both industry and government. The difficulties for placer mine operators relate to compliance costs associated with completing mineral tax returns relative to the amount of tax remitted. The difficulty for government includes determining when a placer mine is a commercial operation and required to file a tax return, and determining the value of equipment for tax purposes.
Effective January 1, 1999, in response to a request from the Organization of BC Placer Mining Associations, the current tax is replaced with a 0.5 per cent royalty payable by placer miners on the value of gold sold.
FEES AND LICENCES
A number of changes to fees and licences will be introduced during the 1999/00 fiscal year. These changes help to cover the government's cost of providing new or existing services. During 1999/00, the government will:
Revenue from forest recreation area user fees, park campground fees, and vehicle impoundment towing and storage fees are retained by contractors who provide these services on behalf of government.
Other fee and licence changes will be introduced during the year as ministries continue to examine their fees and services to ensure that users pay a fair share of the direct costs of providing services.
REVENUE DEDICATED TO THE BC TRANSPORTATION FINANCING AUTHORITY
Effective June 1, 1999, the portion of clear fuel tax dedicated to the BC Transportation Financing Authority is increased to three cents per litre from two cents per litre. The additional one cent per litre is expected to generate approximately $57 million annually to help finance major transportation projects. There is no change to the clear fuel tax rates paid by consumers.
REVENUE DEDICATED TO THE BRITISH COLUMBIA FERRY CORPORATION
Effective April 1, 1999, one cent per litre of the clear fuel tax is dedicated to the British Columbia Ferry Corporation, increasing to 1.25 cents per litre on October 1, 1999. The transfer is expected to generate approximately $64 million in revenue in 1999/00 and $71 million in a full year. The transfer will provide an additional source of secure funding for the ferry system. There is no change to the clear fuel tax rates paid by consumers.
REVENUE DEDICATED TO THE GREATER VANCOUVER TRANSPORTATION AUTHORITY (GVTA)
As part of the agreement to transfer responsibility for transit services in the Lower Mainland to the GVTA, effective April 1, 1999, four cents per litre of the clear fuel tax collected in the Greater Vancouver Transportation Service Area is transferred to the GVTA. The four cent per litre transfer is expected to generate approximately $88 million in revenue annually. There is no change to the clear fuel tax rates paid by consumers.
Also effective April 1, 1999, provincial sales tax revenue collected on parking in the Greater Vancouver Transportation Service Area is transferred to the GVTA. The sales tax revenue collected on parking is estimated to generate $10 million annually. There is no change in the sales tax paid by consumers.
Administrative Measures: Supplementary Information
SOCIAL SERVICE TAX ACT
EXEMPTION PROVIDED FOR MODIFICATIONS TO ADAPT A MOTOR VEHICLE FOR TRANSPORTING PERSONS REQUIRING WHEELCHAIRS
An exemption from social service tax is currently provided for certain specialized devices designed and purchased for use in the transportation of persons with permanent disabilities. Devices related to motor vehicles that are currently eligible for exemption include:
Charges to install, assemble, maintain or repair such equipment are also exempt from tax.
Other modifications to motor vehicles to accommodate individuals using wheelchairs which are being used more frequently for safety reasons, such as lowering the floor, raising the roof or widening the doors, are currently subject to tax, as are the services to provide these modifications.
Effective March 31, 1999, the exemption is expanded to include these modifications.
EXEMPTION PROVIDED FOR HUMAN BLOOD AND BLOOD PRODUCTS
Effective March 31, 1999, human blood and blood products are exempt from the provincial sales tax. This exemption brings the application of British Columbia's sales tax into line with that of the federal government and all other provincial governments.
EXEMPTION PROVIDED FOR SHAMPOOS AND OTHER PRODUCTS FOR TREATING HEAD LICE
Effective March 31, 1999, the exemption for patent medicines is expanded to include products for treating head lice.
EXEMPTION FOR SPECIFIED SAFETY EQUIPMENT EXPANDED TO INCLUDE EMERGENCY GAS SHUT-OFF DEVICES
Effective March 31, 1999, the exemption for prescribed safety equipment is expanded to include emergency gas shut-off devices that are designed to stop the flow of gas to a building in response to significant movement (e.g. an earthquake).
LIST OF ITEMS THAT CAN BE PURCHASED EXEMPT FROM TAX BY BONA FIDE AQUACULTURISTS EXPANDED
Effective March 31, 1999, the following items are added to the list of supplies that can be purchased exempt from tax by bona fide aquaculturists:
ADDITIONAL CREDIT OR REFUND FOR MULTIJURISDICTIONAL VEHICLES
Motor vehicles operated multijurisdictionally that are registered and licensed under the International Registration Plan are subject to a reduced annual tax based on the age of the vehicle and the percentage of miles traveled in British Columbia. The annual tax is paid each year when the vehicle is licensed. The existing provisions imposing the tax exclude purchasers from the trade-in credit provided to all other purchasers under the Act. In addition, carriers are subject to double taxation if they are required to pay tax on a short-term lease to temporarily replace a tax paid multijurisdictional vehicle while it is being repaired.
Effective March 31, 1999, where a multijurisdictional vehicle is traded in during its licensing year, the operator is eligible for a refund or credit equal to the tax paid on the trade-in vehicle for the balance of that vehicle's licensing year. In addition, a refund is provided for tax paid on a short-term vehicle lease to replace a multijurisdictional vehicle while it is being repaired.
CONVERSION TO BUSINESS USE OF GOODS BROUGHT INTO BRITISH COLUMBIA EXEMPT AS SETTLER'S EFFECTS
The Social Service Tax Act provides an exemption for goods brought into the province by new residents where:
The exemption provided for new residents' effects does not extend to goods to be used for business or commercial purposes. This is to ensure that established British Columbia businesses, which must pay tax on their business-related purchases, are not placed at a competitive disadvantage if a new resident uses non-tax-paid assets for a business purpose. However, under the current application of the tax, it is possible for a new resident to have paid tax on the purchase of goods in another province and be required to pay tax again in British Columbia on the conversion of those goods to business use.
Effective July 1, 1998, the Act is amended to provide an exemption from tax for the conversion of settler's effects to a business use where:
Where satisfactory evidence that the tax has been paid cannot be provided to the Commissioner, an exemption will be provided if:
AUTHORITY PROVIDED TO REGISTER LIENS FOR FAILURE TO PAY TAX ON TAXABLE PURCHASES AND LEASES
The Social Service Tax Act, provides authority to register a lien against a vendor who fails to collect or remit tax collected as required under the Act. There is currently no similar authority to register a lien against a vendor for failure to pay tax on goods purchased by the vendor for own use. The province must therefore rely on more onerous collection methods which are generally only employed as a last resort (i.e., third party demands or writs of seizure and sale).
Effective March 31, 1999, authority is provided to register a lien for failure to pay tax on taxable purchases and leases to allow the province to secure the debt while making arrangements for payment with the debtor. Similar provisions are in place in Ontario and Manitoba.
AUTHORITY PROVIDED FOR COMMISSIONER TO DETERMINE THE VALUE OF TANGIBLE PERSONAL PROPERTY THAT PASSES AT A SALE OR LEASE
Under the Social Service Tax Act, the Commissioner is generally authorized to make an assessment for tax due and taxpayers may appeal the assessment to the Minister. In cases where a valuation of tangible personal property is made, an anomaly exists because the Minister is authorized to make both the valuation and to hear appeals resulting from the valuation. This is contrary to the basic concept that appeals are to provide taxpayers with the opportunity for an independent review.
Effective March 31, 1999, the Commissioner is authorized to make a determination of the value of tangible personal property. Taxpayers may appeal that valuation to the Minister.
PROPERTY TRANSFER TAX ACT
FIRST TIME HOME BUYER REFUND CLAIM PERIOD EXTENDED TO 18 MONTHS
Under the Property Transfer Tax Act, a transferee who is entitled to a first time home buyers exemption, but does not apply at the time of registration, may apply for a refund of tax paid within twelve months from the date of registration.
Various requirements for the exemption must be met within the twelve months following the date of registration. In some cases, taxpayers wait until the end of the twelve-month period before applying for the refund to demonstrate all requirements have been met. Under the existing legislation these taxpayers are ineligible for the refund and there is no legal basis to provide such refunds.
To ensure that otherwise eligible first time home buyers are not disqualified from the exemption for this reason, the refund claim period is extended to 18 months effective January 1, 1998.
EXEMPTION FOR SUBDIVISION OF SINGLE PARCELS AMENDED TO IMPOSE TAX ON NET VALUE TRANSFERRED WHERE EXEMPTION REQUIREMENTS NOT MET
Under the Act an exemption is provided for the subdivision of a single parcel of land if, after subdivision, all of the transferees receive a registered interest with the same fair market value that they held before the subdivision. If after subdivision any transferee receives an increase in their proportion of the fair market value of the property, the subdivision does not qualify for exemption and tax must be paid by all of the transferees on the registration of their interests. Many single parcel subdivisions are currently disqualified from exemption because there is transfer of value, often minimal, between the original owners as a result of the subdivision.
Effective March 31, 1999, the exemption is amended to impose tax only on the increase in the proportion of the fair market value received by a transferee as a result of a subdivision.
EXEMPTION CRITERIA FOR SUBDIVISION OF ADJACENT PARCELS CHANGED TO FAIR MARKET VALUE BASIS AND TAX IMPOSED ON NET VALUE TRANSFERRED WHERE EXEMPTION CRITERIA NOT MET
To facilitate a subdivision, an exemption is provided for a transfer from two or more registered owners of adjacent parcels of land to a trustee, and back to the original registered owners, provided that, after registration of the subdivision, the trustee transfers the same area of land to each of the original owners that they held prior to the subdivision. If any transferee receives a larger area of land after subdivision than was held prior to subdivision, the transaction does not qualify for exemption and tax must be paid by each of the transferees, including the trustee. A number of such subdivisions are currently disqualified from the exemption because there is transfer of a small area of land between the original owners as a result of the subdivision.
Effective March 31, 1999, the exemption is amended to base the exemption on fair market value rather than area and to impose tax only on the net increase in the proportion of fair market value received by a transferee as a result of the subdivision. Thus, only those transferees who receive an increase in their proportion of the fair market value of the property as a result of the subdivision will be liable for tax, and only on that portion related to the increase. Transfers of interests to a trustee which are not transferred back to the original owners are also subject to tax.
EXEMPTION FOR TRANSFERS OF PRINCIPAL RESIDENCES BETWEEN RELATED INDIVIDUALS CLARIFIED FOR TRANSFERS FROM A DECEASED'S ESTATE
The transfer of a person's principal residence or a deceased's principal residence to a related individual is exempt from tax under the Act. The transfer of a property from a living transferor to a related individual who has been living on the property and using it as his or her principal residence for at least six months before the transfer is also exempt. However, there is currently no exemption for the transfer of a property from a deceased to a related individual who has been occupying the property as their principal residence for at least six months prior to the death.
Effective March 31, 1999, an exemption is provided for the transfer of a principal residence from a deceased to a related individual who has been occupying the property as their principal residence for at least six months immediately prior to the death.
DEFINITION OF PARCEL INTRODUCED
The term parcel is used, but not defined under the Act for purposes of the exemption for transfers of principal residences, recreational residences, subdivisions and first time home buyers. The lack of a definition has resulted in uncertainty regarding the application of tax.
Effective March 31, 1999, a definition of parcel consistent with the current administration of the Act is provided.
REFERENCE TO HEARING FOR PURPOSES OF MINISTERIAL APPEALS REMOVED AND MINISTER TO NOTIFY TAXPAYER OF DECISION
Under the Act, the Minister is authorized to determine the amount of tax owing under an appeal based on all relevant information available from the Office of the Administrator, with or without a hearing. Persons who disagree with the Minister's decision have the right to appeal further to the courts. The Act also provides that the Administrator notify the appellant of the Minister's decision. In practice, representations by appellants are generally heard by the Administrator on the Minister's behalf and the Minister notifies appellants directly of the decision rather than through the Administrator.
Effective March 31, 1999, the Act is amended to bring the statute into line with current practice and other taxation statutes. The reference to a hearing is removed and the Act is amended to clarify that the Minister will notify appellants of the decision directly.
MOTOR FUEL TAX ACT
PARTIAL REFUND PROVISION EXTENDED TO TRUCKS OPERATING AN AUGER TO DISPENSE ANIMAL FEED WHILE STATIONARY
A refund equal to the difference between the tax on clear and coloured fuel is currently provided for fuel used by a stationary motor vehicle while pumping ready mix concrete and dry cement or flyash, pumping petroleum products, operating a mobile crane or operating a hydraulic arm mounted on a logging truck.
Effective March 31, 1999, the partial refund is extended to trucks operating an auger to dispense animal feed while stationary.
AUTHORITY TO DYE MOTOR FUEL ON BOARD VESSELS FOR PURPOSES OF FUEL DISTRIBUTION CLARIFIED FOR VESSELS APPROVED BY THE DIRECTOR
Under the Act certain persons may be authorized by the Director to colour fuel. Effective March 31, 1999, the authority to dye motor fuel on board vessels is clarified for vessels approved by the Director.
LOGGING AND MINING COLOURED FUEL
Effective March 31, 1999, all unlicensed logging and mining vehicles are authorized to use coloured fuel, but must continue to remit tax at the clear fuel rate for fuel used in vehicles which do not qualify for the coloured fuel tax rate.
CLARIFICATION OF COLOURED FUEL USE IN OIL AND GAS INDUSTRY
Coloured fuel can be used in commercial motor vehicles when used off-highway for the purposes of transporting oil and gas industry related equipment such as drilling rigs and equipment. Effective March 31, 1999, the Act is amended to clarify that the coloured fuel tax exemption for the oil and gas industry does not authorize the industry to use coloured fuel in pick-up trucks and to correct a technical inaccuracy.
INTEREST ASSESSMENT CLARIFICATION
Effective March 31, 1999, amendments are made to clarify the Director's authority to make an assessment for interest currently imposed under the Act.
CLARIFICATION ON PRESCRIBING VEHICLES TO USE COLOURED FUEL
Effective March 31, 1999, the Act is amended to clarify the authority to prescribe the types of vehicles that can use coloured fuel based on make, description and use of vehicles or any combination of these characteristics.
CONSUMPTION TAX STATUTES
COMMISSIONER/DIRECTOR AUTHORIZED TO REFUND TAX WHERE MINISTER REVERSES ASSESSMENT ON APPEAL (SOCIAL SERVICE TAX ACT, TOBACCO TAX ACT AND HOTEL ROOM TAX ACT)
The Social Service Tax Act, Tobacco Tax Act and Hotel Room Tax Act allow a person who disputes a tax assessment or a decision of the Commissioner or Director to appeal the assessment to the Minister. If the Minister sets aside or reduces the assessment, the statutes require that the Minister refund any excess amount paid by the appellant.
For administrative efficiency, such refunds are currently issued by the Commissioner/Director through the usual Consumer Taxation Branch refund process. Because it is not practical for the Minister to issue such refunds directly, the statutes are amended effective March 31, 1999 to authorize the Commissioner/Director to issue the refund on receipt of the decision of the Minister.
VARIOUS TAXATION STATUTES
IMMEDIATE PAYMENT OF THIRD-PARTY DEMANDS INTRODUCED AND AUTHORITY TO SERVE DEMANDS BY FACSIMILE AND OTHER ELECTRONIC MEANS PROVIDED
Where a third party is indebted to a taxpayer who has an outstanding provincial tax liability, the statutes currently provide for the issuance of a demand to that third party to pay such money to the province. Existing provisions allow third parties to wait 90 days before making a payment to the province. In addition, the existing provisions require third-party demands be served in person or by registered mail.
Effective March 31, 1999, provincial revenue statutes are amended to require the immediate payment of third-party demands and to authorize the serving of demands by facsimile and other electronic means.
INTERNATIONAL FINANCIAL BUSINESS (TAX REFUND) ACT
NON RESIDENT BROKER DEFINED
Effective March 31, 1999, amendments are made to define a non-resident broker and to designate that non-resident broker as the other party to a transaction where the transaction involves dealing in securities. The amendment will also eliminate the requirement for a registrant to obtain a declaration from the non-resident broker where the International Financial Business registrant is acting as principal to the transaction.
VALUATION METHOD FOR DAMS, SUBSTATIONS AND POWERHOUSES PRESCRIBED
The British Columbia Assessment Authority (BCAA) has historically used the cost approach to value dams, substations, and powerhouses for generating and transmitting electricity in the same way that it does for major industrial properties. The utilities worked with BCAA to create the cost manual now used to value these improvements for property tax purposes.
However, unlike for major industrial properties, the use of prescribed manuals and depreciation rates for these hydroelectric facilities has not been legislated and the valuations have been the subject of an increasing number of costly assessment appeals. This amendment will retroactively authorize the established use of prescribed cost manuals and depreciation rates. BCAA will continue to work with the affected utilities to ensure that accurate costs and reasonable depreciation rates are used.
MINERAL TAX ACT
NINETY DAY TIME LIMIT INTRODUCED FOR APPEALS TO THE COURT FROM MINERAL TAX REVIEW BOARD DECISIONS
Under the Mineral Tax Act an operator may appeal an assessment to the Mineral Tax Review Board within ninety days of the issuance of the Notice of Assessment. The decision of the Mineral Tax Review Board may then be appealed to the Supreme Court. However, there is currently no time limit in the Act to appeal a decision of the Mineral Tax Review Board to the court.
Effective March 31, 1999, a ninety day time limit is introduced for appeals to the court from Mineral Tax Review Board decisions. This is consistent with most other provincial taxation statutes.
REQUIREMENT TO CONTINUE FILING MINERAL TAX RETURNS UNTIL ALL MINERAL INVENTORIES AND MINE ASSETS HAVE BEEN SOLD OR OTHERWISE DISPOSED OF CLARIFIED
Under the Mineral Tax Act, all costs of inventories, equipment, machinery and buildings are allowed as deductible expenses and all proceeds from the sale of these items are to be reported as taxable revenues. The legislation is not clear that a mine which ceases production and completes reclamation before all of its inventories and other mine assets have been sold must continue to file mineral tax returns until all inventories and capital assets have been disposed of.
Effective March 31, 1999, the requirement to continue filing mineral tax returns until all mineral inventories and mine assets have been sold or otherwise disposed of is clarified.
AUTHORITY PROVIDED TO ISSUE ASSESSMENTS WHERE TAX RETURNS NOT FILED
Under the Mineral Tax Act, the Commissioner is required to examine a mineral tax return filed by an operator, assess the tax, interest, and penalties payable, and issue an assessment notice for that year. If the amounts assessed are not paid, the Commissioner may file a certificate with the Supreme Court stating that the amounts were assessed and have not been paid. The certificate has the same force as a judgment of the Supreme Court for the recovery of the debt.
If a return has not been filed, the Commissioner of mineral tax currently has no authority to issue an assessment for tax. To collect the tax owing in such circumstances, the only recourse available to the Commissioner is to take action for the debt in the courts.
Effective March 31, 1999, authority is provided to the Commissioner to issue assessments if tax returns are not filed.
INCOME TAX ACT
AMOUNTS DEDUCTIBLE FOR ROYALTY AND DEEMED INCOME REBATE CALCULATION CLARIFIED
Under the Income Tax Act, taxpayers calculate provincial income tax on the basis that they add back the federal resource allowance and, instead, deduct provincial royalty payments.
This provision has been revised to:
TWO-YEAR SMALL BUSINESS TAX HOLIDAY ELIGIBILITY CLARIFIED
In 1996 the two-year corporate tax holiday for new small businesses was introduced. This program allows qualifying corporations to eliminate provincial income taxes in their first two taxation years.
In some situations, a corporation's first taxation year ends prior to the corporation commencing business operations and, therefore, cannot benefit from the small business tax holiday for that first year. The tax holiday provision will be amended to clarify that the first taxation year eligible for the program is the year in which a corporation's business commences.
Currently a corporation does not qualify for the two-year tax holiday if it is associated at any time with another corporation. This provision is being amended to deny the small business holiday only if the applicant is associated with another corporation in the year of application or a previous taxation year.
REDUNDANT TAX EXEMPTION FOR THE VANCOUVER INTERNATIONAL AIRPORT AUTHORITY ELIMINATED
Effective January 1, 1992, a provincial tax exemption was granted to the Vancouver International Airport Authority. This exemption was an interim measure that was to be repealed once the Income Tax Act (Canada) was amended to exempt income from airport activities. As this provision has been enacted federally the exemption under the provincial Act is not required.
RESTRICTION FOR DOCUMENTARY FILMS TO QUALIFY FOR THE FILM AND TELEVISION TAX CREDIT ELIMINATED
In 1998 a refundable corporate income tax credit was introduced for qualifying film and television productions. To access the credit, the corporation had to be a British Columbia-controlled corporation and the production had to incur a minimum of 75 per cent of total production costs in British Columbia.
Many British Columbia documentary films, by definition, cannot meet this requirement. As such, the requirement that 75 per cent of the production costs be incurred in British Columbia is eliminated for documentary films.
LOGGING TAX ACT
HARMONIZATION OF LOGGING TAX AND TWO-YEAR SMALL BUSINESS TAX HOLIDAY
The Logging Tax Act is being amended to allow logging companies that qualify for the two-year small business holiday to reduce logging tax by the amount of their provincial logging tax credit.
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