As the title says there is a new change for the exemption limit for first time home buyers when it comes to the transfer tax. First time home buyers got full exception on the purchase price if it was under $425,000.0 and partial exception between $425,000.00 and 450,000.00
As of today full exception on purchase price $475,000.00 and partial between $475,000.00 and $500,000.00 – of course they have to meet the other requirements of living in the home and property size.
Young families and new homeowners were the main beneficiaries of the tightly confined wiggle room in B.C.’s latest budget, one touted by Finance Minister Mike de Jong as boring but balanced.
In an effort to keep to his “razor-thin” estimated surplus, Mr. de Jong offered little in the way of new spending beyond what was previously announced before last year’s provincial election. New money will go toward child care, with $17.7-million set aside to help create 1,000 new licensed child-care spaces. Part of the money will also support the creation of a provincial child-care registry.
Tax framework for B.C. LNG industry
Over the next year, British Columbians with young children will begin to receive extra money from the province. As of April, 2015, monthly cheques of up to $55 per child – under the age of six – will be sent to families, while the government will deposit $1,200 into new education savings accounts. Both programs were previously announced.
“Since announcing this a year ago, the registration rate for RESPs in British Columbia has raised 10 per cent,” Mr. de Jong said.
Kyle Richings subsists on a single income and he perked up at the mention of more money being devoted to child care. His family lives in Victoria, with Mr. Richings’s wife staying home to look after their two-year-old son.
“If we just had to live on only my income, without any savings, it’d be pretty nasty,” Mr. Richings said. “The biggest benefit is just money in your pocket, that child benefit, no strings attached.”
For first-time home buyers, the threshold for the provincial transfer tax will be increased from $425,000 to $475,000. “The tax and thresholds were set when property values were very different. No one can argue with that,” Mr. de Jong said. Effective Wednesday, the measure could save home buyers up to $7,500, according to budget documents.
The targeted measures do not benefit everyone. “Houses will cost less and children will cost less, which makes little impact for people without children or those not buying houses,” said Steven Masuch, a 28-year-old who lives in downtown Vancouver. Like many his age, he can’t afford to buy a house. He and his partner aren’t interested in having children.
There will be no changes to provincial income taxes for most earners, though a previously announced tax hike for people with incomes above $150,000 will start this year. The temporary measure will expire in 2015.
Disappointed by the few changes to the province’s tax regime, Chartered Professional Accountants of British Columbia warned that higher corporate and sales taxes were causing investors to hesitate before moving jobs to the province.
“It’s not about high taxes, but about uncompetitive taxes,” said Richard Rees, speaking for the province’s CPAs. While B.C.’s taxes are higher than neighbouring Alberta’s, they are among the lowest in the country.
“I’m a bit worried about how low corporate taxes are in B.C.,” said Mr. Masuch, a software developer and small business owner. “It just seems like a bit of corporate favouritism.”
The province’s medical premiums are also set to increase by 4 per cent, an extra $60 annually for a two-person family.
Following the federal government’s announcement last week adding 40 cents per pack of cigarettes, smokers in British Columbia will now face an additional 32 cents per pack in provincial tax. Calling the health costs of smoking “incredible,” Mr. de Jong said that part of the $50-million raised by the higher taxes will be earmarked for cancer research.
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By the numbers;
“We continue to balance on a razor’s edge.” – Mike de Jong
The province projects a budget surplus of $175-million for the fiscal year ending this March, fulfilling the Liberals’ election pledge. The surplus is somewhat more than what Mr. de Jong predicted at the end of the third quarter – $165-million – but it is smaller than the $197-million surplus projected in last February’s budget.
The budget surplus for the upcoming year is forecast to be $184-million. Economic growth is expected to be two per cent.
The provincial debt for 2014-2015 is projected to be $64.7-billion.
Chad Hipolito for The Globe and Mail
“I don’t want to suggest a cascade of dollars flowing into the Prosperity Fund in the next five years.” – Mike de Jong, referring to the fund established last year to use profits from liquefied natural gas for, among other things, paying down provincial debt
Last year, British Columbia had promised to outline how it planned to levy taxes to realize the government’s much-touted dream of LNG riches, leading to a debt-free province. But Mr. de Jong was forced to admit the complexities of coming up with the regime mean the details will not be available until fall.
The government does not expect the first plant to begin production until 2018, and revenues are not expected to begin until after that.
Tuesday’s budget included the structure of how that tax regime will work: a two-tier system with a 1.5-per-cent tax applying for the first three years, transitioning to a tax of up to seven per cent by the sixth year and beyond.
The exact tax rate for the second phase will be introduced in the fall after an assessment of global and provincial conditions.
Measures for individuals
“Admittedly, the tax relief in this budget is pretty thin.” – Mike de Jong
In an effort to get into the black and to bolster an election campaign based on a balanced budget, the Liberal government introduced several new taxes on individuals last year.
The 2014-2015 plan has fewer of those. Medical Services Premiums, boosted last year, continue the pre-arranged climb. Effective Jan. 1, 2015, the premiums will rise by about four per cent, amounting to about $5.50 a month for a family of three or more.
Tobacco taxes will rise as of April 1 by 32 cents per pack. That is over and above the increase announced last week in the federal budget.
The B.C. Training and Education Savings Grant – a one-time payment for children born in B.C. in 2007 or later and whose parents have contributed to a registered education savings plan – kicks in with payments of $1,200 per child by the end of the coming fiscal year.
As well, starting in April 2014, the B.C. Early Childhood Tax Benefit of $55 per month per child under the age of six will begin to be paid out. The benefit is income-tested.
John Lehmann/The Globe and Mail
“We’re not going to ask taxpayers to shoulder this burden on their own. We see the potential for partnerships with the industrial sector.” – Mike de Jong on skills training
Funding for advanced education actually drops by just over $16-million, which the government says is a result of finding efficiencies and not cutting student services. Critics, however, question whether the number can reflect the government’s stated priority on skills development.
Provincial funding for Kindergarten to Grade 12 nudges up barely, with a $22-million increase over last year.
The spending estimates make no provision for higher expenses due to a judge’s ruling last month ordering the province to reinstate contract language for teachers that was in place prior to 2002. The language, wiped out by the Liberals, dictated class sizes and composition, and Education Minister Peter Fassbender has said following the ruling would cost $1-billion.
The province has filed its intention to appeal. If it loses, the money to pay for it this year would wipe out the $300-million contingency fund intended for unforeseen disasters such as forest fires and floods.
Murray Mitchell/The Canadian Press
“We have more work to do.” – Mike de Jong on job creation
The government is devoting $29-million over three years to push the LNG strategy forward.
Another $9-million has been pledged for environmental assessments of resource development of proposed LNG facilities, as well as pipelines, mining and other major projects.
The province has also underlined a commitment of $5-million over five years to the Aerospace Association of Canada Pacific Division.
Still, Mr. de Jong acknowledged jobs growth isn’t where the province would like it to be, noting that though employment has been stable, job growth has been flat.