The BC government has announced a corporate tax system change that will allow more small and medium-sized businesses to qualify for the small business tax rate. Those eligible for the small business tax rate pay a reduced amount on the first $500,000 of taxable income.
Previously, the maximum taxable capital that businesses could have before becoming ineligible for the reduced tax rate was $15 million, and tax savings would also be gradually reduced once businesses reached $10 million in taxable capital.
Now, businesses can qualify for the small business tax rate with up to $50 million in taxable capital. This change was a result of consultations that indicated the previous $15 million ceiling was preventing businesses from making investments in order to scale and expand. More businesses, particularly those that are capital intensive, will be able to benefit from the reduced tax rate for longer as they continue growing.
The new threshold is in effect for taxation years that begin on or after April 7, 2022.
For more details, please see the official Government of BC news release.
