What are the tax requirements for corporations operating in British Columbia?
In addition to federal corporate tax, all corporations operating in B.C are required to pay provincial corporate tax on taxable income. Corporations with taxable sales must also register for and collect GST and PST, unless the corporation is a small supplier or a small seller, respectively. Additionally, the Employer Health Tax and WCB premiums are levied on employers with B.C. remuneration.
Corporate tax returns must be filed with CRA for each fiscal year a corporation has a permanent establishment in B.C. The combined federal and provincial corporate tax is calculated on worldwide active business income as follows:
- Income of a Canadian Controlled Private Corporation (CCPC) below $500,000 – 11.00%.
- Income of a CCPC above the small business limit – 27.00%.
- Income of non-CCPCs – 27.00%.
- Investment income – 50.67%.
Corporate tax returns are due six months after the corporation’s year-end, however, any tax owing is due three months after year-end. Monthly or quarterly installments are required when a corporation had a total tax payable greater than $3,000 in the prior year.
Corporations operating in British Columbia with worldwide taxable income exceeding $30,000 are required to register for GST unless the product or service sold is tax-exempt. GST registrants must charge 5% on all taxable supplies and can claim input tax credits (ITCs) for all purchases and operating expenses used in a business’s commercial activities. Corporations with taxable income less than $30,000 can voluntarily register for GST. Once registered, GST must be charged on all taxable sales and GST ITCs can be claimed.
Where the GST collected exceeds ITCs, net tax is payable to CRA. However, if ITCs are greater than GST collected, a refund for the difference can be claimed. Installments are required where GST owing in the prior year was $3,000 or more.
The filing dates for GST returns are determined by the business’s annual taxable income and can be annual, quarterly or monthly.
If your business sells or leases new and used taxable goods or services in British Columbia your company is required to register for and charge PST on all taxable sales. Businesses that are located in B.C., do not have an established business location, and have less than $10,000 in anticipated revenues in a 12-month period are not required to charge PST.
The PST rate for most goods and services is charged at 7%.
Reporting requirements are determined by the amount of PST collected and can be annual, quarterly and monthly depending on the amount of PST collected.
Employer Health Tax (EHT)
B.C. employers with wages, benefits, and allowances (B.C. remuneration) greater than $500,000 in a calendar year are required to register for the Employer Health Tax (EHT). EHT is calculated as follows:
- B.C remuneration $500,001 – $1,500,000:
- 2.95% x (B.C. remuneration – $500,000)
- B.C. remuneration greater than $1,500,000:
- 1.95% x B.C. remuneration
A business operating in more than one province only needs to include remuneration for employees reporting for work in B.C. in the calculation.
Where a corporation is considered associated, the connected corporations are required to share the $500,000 exemption amongst the associated unit.
When an employer begins or stops operating in B.C. in the calendar year the exemption is prorated for the portion of the year where a permanent establishment exists.
All B.C. employers are required to pay WorkSafeBC premiums. Premiums are calculated using a premium rate determined by the products or services sold, increased or reduced depending on the number of claims for the individual corporation.
If you would like to discuss your corporate tax requirements as a business operating in British Columbia, please contact a member of the EPR tax team by completing the contact form below. Our tax experts can advise on the best structure to reduce or minimize the impact of the taxes.
Canadian and foreign tax laws are complex and have a tendency to change on a frequent basis. As such, the content published above is believed to be accurate as of the date of this post. Before implementing any tax planning, please seek professional advice from a qualified tax professional. EPR Maple Ridge Langley, Chartered Professional Accountants will not accept any liability for any tax ramifications that may result from acting based on the information contained above.