The Federal and BC Budget proposals outlined above include a series of measures designed to impact individuals, businesses, and property owners. Here’s a breakdown of some of the key changes:
Federal Budget Proposals:
- Working Canadian Rebate:
Eligible individuals can receive a $250 tax-free rebate if they meet criteria such as having worked in 2023, earned less than $150,000, filed their 2023 tax return by December 31, 2024, and are Canadian residents as of March 31, 2025. - Short-Term Rental Expenses:
Income tax deductions for expenses related to short-term rentals (e.g., Airbnb) will be denied if the property is in a jurisdiction that prohibits short-term rentals or if operators are non-compliant with licensing requirements, effective from January 1, 2024. - Foreign Buyers Ban:
The two-year ban on foreign buyers of Canadian homes is extended until January 1, 2027. - Volunteer Tax Credits:
The tax credit for volunteer firefighters and search and rescue volunteers is doubled to $6,000. - Capital Gains Inclusion Rate Increase:
The inclusion rate for capital gains will increase from 50% to 66.67%, effective for capital gains realized after June 25, 2024. Individuals will still retain the 50% inclusion rate on the first $250,000 of capital gains annually. - Lifetime Capital Gains Exemption Increase:
The exemption limit will rise to $1,250,000 for dispositions occurring after June 25, 2024. - Canadian Entrepreneurs’ Incentive:
A new incentive will reduce the capital gains inclusion rate by half on the disposition of certain shares by founders. - Alternative Minimum Tax (AMT) Changes:
The AMT rate increases from 15% to 20.5%, with exemptions and deductions also being broadened, effective January 1, 2024. - Home Buyers’ Plan Withdrawal Increase:
The withdrawal limit will increase from $35,000 to $60,000, with a deferred repayment period starting after the fifth year following the first withdrawal, effective April 16, 2024.
BC Budget Proposals:
- Employer Health Tax Exemption Threshold Increase:
The exemption threshold for the Employer Health Tax will rise to $1 million (from $500,000). The rate for remuneration between $1 million and $1.5 million will increase to 5.85%, effective January 1, 2024. - Training Tax Credit Extensions:
The tax credit for employers will be extended until the end of 2027, while the credit for individuals will be extended until the end of 2025. - BC Property Transfer Tax Changes:
- Purchases of new qualifying purpose-built rental buildings will be exempt from property transfer tax, effective from January 1, 2025, to December 31, 2030.
- The first-time homebuyers’ exemption threshold will be raised to $835,000 (from $500,000), with the first $500,000 exempt from property transfer tax, effective April 1, 2024.
- The fair market value threshold for the newly built home exemption will rise to $1,100,000 (from $750,000), effective April 1, 2024.
- New BC Home Flipping Tax:
Starting January 1, 2025, a new tax will apply to the income from the sale of residential real estate owned for less than two years. The tax rate will be 20% for properties sold within 365 days of purchase, decreasing gradually to zero for ownership periods between 366 and 730 days. Certain life event exemptions (e.g., separation, divorce, job loss) will apply, and individuals selling their primary residence between 366 and 730 days of ownership can exclude up to $20,000 in taxable income.
These proposals are important for anyone impacted by the relevant policies and may significantly affect personal finances, business operations, property transactions, and tax obligations. As always, it’s advisable to consult a tax professional for personalized advice.
