SMALL-BUSINESS owners in British Columbia will benefit from a cut to the small-business corporate income tax rate from 2.5% to 2%, retroactive to April 1, 2017.
The tax cut is part of the Budget Measures Implementation Act, 2017, which passed on November 2, 2017. The reduction makes B.C.’s small-business corporate income tax rate the second lowest in Canada, 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,” said Jobs, Trade and Technology Minister Bruce Ralston. “That’s why we are lowering the small-business corporate income tax rate by 20%, so B.C.’s small-business owners can keep more of their hard-earned revenue and reinvest it back in their communities.”
Credit unions are also benefiting from the passage of the act, with the restoration of the tax benefit for credit unions, retroactive to January 1, 2017. Credit unions will be taxed at lower rates so they have access to more of the credit union’s funds to re-invest into local economies and small businesses.
“This tax reduction will help small-business owners put more of their hard earned income to work inside their business,” said Richard Truscott, Canadian Federation of Independent Business Vice President, B.C. and Alberta. “The relief will enable entrepreneurs to grow their business, create more jobs, and support their local community.”
The Province says small businesses are a critical part of B.C.’s economy, providing stable jobs and adding to sustainable, long-term economic growth throughout B.C.
“Encouraging economic growth, and supporting tax fairness for small businesses owners, is always welcome,” said Val Litwin, President and CEO of the BC Chamber of Commerce. “This tax break is positive, and will help reduce operational costs, as well as inspire growth and spur job creation in communities in every region of British Columbia.”
- B.C.’s small businesses generated 34% of provincial GDP in 2016, above the Canadian average of 31%.
- Small businesses were the source of 32% of all wages paid to workers in B.C. last year, the highest share of all provinces and above the Canadian average of less than 27%.
- Employment in B.C.’s small-business sector climbed 3.1% in 2016, the highest rate of growth in over a decade.
- 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.
- Small businesses are vitally important to British Columbia, touching every sector of the economy and all regions of the province.
- The Province is establishing a Small Business Task Force to provide recommendations to government on ways to further strengthen the small-business sector in B.C.
- Government provides training assistance for employees and employers through the Canada-B.C. Job Grant and funds Small Business BC, which provides comprehensive services to help with business planning, marketing and human resources.
- Government also supports the One-Stop Business Registry, BizPaL and the Mobile Business Licence Program, which streamline permitting and licensing processes for small businesses.