More businesses will be able to recover and grow through expanded access to the provincial small business tax rate, according to BC’s Ministry of Jobs, Economic Recovery and Innovation.
“The past two years have been challenging for small and medium-sized businesses as they deal with the continuing effects of the pandemic, climate change and inflation that is being fuelled by global uncertainty,” stated minister of finance Selina Robinson, in a media release on October 18. “We are standing behind BC businesses by helping ensure access to the small business tax rate as they work through recovery, and innovate and grow.”
Previously, access to the small business tax rate was gradually reduced when the taxable capital of businesses was more than $10 million. Access to the small business tax rate ended when businesses had $15 million or more of taxable capital. With the change, access to the small business tax rate will be gradually reduced when businesses have between $10 million and $50 million in taxable capital.
Growing BC businesses will be able to scale up by remaining eligible for the BC small business tax rate for longer, as the tax rate will not phase out until the $50-million taxable capital threshold ceiling, according to the release. The change will benefit a wide range of businesses but will largely support those that are capital intensive.
This includes businesses that have taxable capital between $10 million and $15 million, where business owners may decide not to invest in their business to acquire new equipment in order to keep access to the small business tax rate. This may look like a company, such as a craft brewery, considering adding a production line to its operations, or a company needing to buy specialized equipment, such as a computer numerical control (CNC) machine.
“Small and medium-sized businesses play an important role in our province; they provide good jobs, develop innovative products for the market and are strong supporters of their communities,” stated Ravi Kahlon, minister of jobs, economic recovery and innovation. “We are moving forward with the StrongerBC Economic Plan and important tax improvements like this as we continue to bring further improvements businesses need to succeed.”
The new, higher taxable capital ceiling will apply to taxation years that begin on or after April 7, 2022, which aligns with the federal approach, once passed. Aligning with the federal government's approach is one of many steps the province is taking to support BC businesses through BC’s StrongerBC Economic Plan, according to the release.
The $1.5-billion plan provides targeted and broad support for businesses to adapt and grow, including tax measures, such as the PST rebates for incorporated businesses and the increased employment incentive program.
Small business week is October 16 to 22 in BC.
