budget_highlights-webThe federal government will phase out issuing refund cheques to businesses by April 2016.

Thus, businesses will need to provide their E-banking infor-mation on the prescribed RC 366 before that date. We will be initiating that process for you.

Out of season tax law change (must be an election year!)
The federal government announced a new tax break for families that will apply retroactively for 2014. The existing pension splitting concept for retirees has been morphed into a similar benefit for families with children under age 18. The benefit arises from transferring income, on the tax filing, from the higher to the lower earning spouse. The win from this can arise from differing marginal tax rates of the couple. If there is a stay-at-home partner, the win is mitigated somewhat because the higher income spouse will lose the dependent credit. While the amount that can be transferred has a high ceiling of $50,000, the amount of benefit from doing this is capped at only $2,000, which is much less than some benefits from pension splitting.

Testamentary trust taxation
This budget advances the initiative from the previous budget, which makes a radical and significant change to the taxation of testamentary trusts. Commencing with the 2016 tax year, exist-ing testamentary trusts will no longer enjoy the favourable tax structure along the marginal tax scale, and instead be taxed like inter-vivos trusts at the top rate (now 45.8% in BC). New testamen-tary trusts will be able to enjoy the previous ad-vantage for the first 36 months after death. If the trust continues after that, the top rate will apply.

The government’s love of calendar year-ends bears as well. Existing testamentary trust will need to transition to a December 31 year-end in 2016. New testamentary trusts after 2015 will be al-lowed 36 months with their own fiscal year-end, but, after that, also must transition to a calendar year-end.

Other changes kick in from 2016, including the requirement for quarterly tax instalments and re-moval of the $40,000 MinTax exemption.

The adoption credit limit will be in-creased to $15,000 per child, per couple, starting for tax year 2014.

Estate donations
Existing law allows someone to include charitable giving in their will. That tax break could be claimed on either or both of the final two tax years of the deceased, but never in the testamentary trust. The law will broaden, starting in 2016, so that the dona-tion can be made up to 36 months after death and may be claimed in the trust or carried back to the final two years of the deceased.

A piece of business tax law created in 1972 may be discontinued. The cumu-lative eligible capital account for eligible capital property is proposed to be elimi-nated, with a new depreciation class to take its place. This would apply for new acquisi-tions of such property as well as transitioning-out pre-existing CEC balances. Various tran-sitional rules will be needed to clear away fairly the old CEC balances in the future. This is only a proposal at this time, and thus would need to come forward more formally in a subsequent budget.

BC Recycling Regulations

recycling-webThis new program is effective May 2014. Businesses are exempt if their revenue is under $1M or if their packaging and printed paper sup-plied in BC is less than 1,000 kgs pa. Also, registered charities and businesses operating as a single point of retail are exempt. Lastly, “low volume” businesses, with between 1-5,000 kgs pa will need to register at http://multimaterialbc.ca/stewards/register-and-report, and may simply pay a flat fee of either $550 or $1200, and not be involved in detailed tracking, The government reports that this should only affect 3,000 businesses in BC.