Home > Doing Business in British Columbia > Business Taxation

Business taxes in British Columbia are levied at the federal, provincial and local level. The basic features of the tax system are similar to those of the United States.

Tax Taxing Jurisdiction Tax Rate 2008* Tax Base Notes
Corporate Income Tax Federal General rate: 19.5%

(Canadian controlled private corporations pay 11% on the first $400,000 of taxable income) 		Net income from financial statements adjusted to comply with the federal Income Tax Act

Tax adjustments include depreciation and loss carryovers

Provincial tax is not deductible for federal tax purposes

Loss carryovers: forward 10 years and back 3 years

Statutory depreciation rates for tax purposes (Capital Cost Allowances or CCA); examples:

  • Machinery and Equipment: 50%
    (Straight-line method)
  • Computer Equipment: 55%
  • Office Equipment: 20%
  • Buildings and Structures - used in manufacturing and processing : 10%
  • Buildings and Structures - other non-residential buildings: 6%

CCA rates are generally calculated using the declining-balance method

Federal and provincial income tax credits are provided for qualified R&D, film production and other activities – Business Incentives
Provincial 11%

(Canadian controlled private corporations pay 3.5% on the first $400,000 of taxable income)
Withholding Taxes Federal

Rates vary by type of payment and country-specific tax treaties. Canada/US Tax Treaty rates:

  • Dividend payments 5%
  • Interest and most other payments 10%
 Payments of dividends, interest, royalties, and fees to a non-resident by a Canadian subsidiary  
Goods and Services Tax (GST) Federal 5% See notes

GST is a flow-through tax for business with generally no direct impact on costs

Businesses pay 5% GST on goods and services purchased from suppliers, and collect 5% GST on sales to customers (export sales are zero-rated, and no tax is collected). GST paid on business purchases is claimed as an input tax credit. If credits exceed GST collected, a refund is claimed, or if less, a payment is due.

In a few cases (e.g., financial services), sales are GST-exempt, and firms are not entitled to claim input credits (note that credits are available to firms making zero-rated sales, e.g., exports)


Tax Taxing Jurisdiction Tax Rate 2008* Tax Base Notes
Sales Tax Provincial 7.0%

“Tangible personal property” and some services, unless exempted. Statutory exemptions include:

  • Production machinery and equipment
  • Pollution control systems
  • Construction labour
  • Production materials, inventories, catalysts and reagents
  • Toll-free in-bound telephone service

  
Property Transfer Tax   1% of the first C$200,000+ 2% of the balance Purchase price of real property Applies only to land purchase for new construction
Canada Pension Plan
(social security)		 Federal 4.95% Net contributory earnings up to C$44,900 per employee (maximum annual contribution per employee C$2,049.30)  
Employment Insurance (unemployment insurance) Federal 2.42% Insurable earnings up to C$41,100 per employee (maximum annual contribution per employee C$995)  
Workers’ Compensation (industrial accident and disability insurance) Provincial

Rates vary by industry and individual employer’s safety record*. Examples:

  • Software development: 0.12%
  • Electronics manufacture: 0.35%
  • Biopharma manufacture: 0.47%

*Rates available on-line: Workers’ Compensation Board of BC

Assessable earnings up to C$66,500 per employee. Maximum annual contribution per employee. Examples:

  • Software development: C$79.80
  • Electronics manufacture: C$232.75
  • Biopharma manufacture: C$312.55
  

Tax Taxing jurisdiction Tax Rate 2008* Tax base Notes
Property Tax Provincial

Rate (% of assessed value) varies by type of activity

  • Business Class 0.79%
  • Light Industry Class 0.79%
  • Major Industry Class 1.25%

Assessed value of real property (land and buildings).

“Tangible personal property” (e.g., machinery and equipment, inventories, furniture) is fully exempt from property taxes

Annual market value assessment of property

Tax is collected at one source by municipal governments

Municipal

Rate (% of assessed value) varies by type of activity and community. Example, City of Surrey (Greater Vancouver):

  • Business Class: 1.007173%
  • Light Industry Class: 1.086602%
  • Major Industry Class: 1.679870%

See Community and Regional Profiles  (Taxation) for community-specific rates

* Updated on January 10, 2008