A. PERSONAL INCOME TAX MEASURES

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1 [Type text] MNP Tax Alert BC Region Tax LOWER MAINLAND Am Lidder Dave Cesmystruk Gerard Roddis Keith Vincent Ken Robinson Lee Bass Michael Ellenwood Michael Murphy British Columbia Budget Summary Balanced Budget for 2013 On Tuesday February 19, 2013, the BC Minister of Finance, Michael de Jong, presented the Province s 2013 Budget. The Province delivered on their promise of a balanced budget, while also committing to early childhood development and helping B.C families save for their children s future education needs. In order to do this, Budget 2013 constrains spending growth and introduces some targeted tax changes. The following is a summary of the tax highlights from the 2013 Budget. A. PERSONAL INCOME TAX MEASURES Personal Income Tax Rates A new top personal income tax bracket has been introduced for the 2014 and 2015 tax years only. The income threshold for the new top bracket will be set at $150,000 for Taxable income exceeding this threshold will be subject to a provincial personal income tax rate of per cent. This will increase the income tax rate from per cent to per cent on taxable income over $150,000. The result is an increase in the combined tax rate on income over this threshold from 43.7 per cent to 45.8 per cent, although the Federal rate could change in the upcoming Federal Budget. This two-year temporary measure will expire on December 31, B. CORPORATE INCOME TAX MEASURES General Corporate Income Tax Rate The increase to the general corporate income tax rate to 11 per cent from 10 per cent that was announced in Budget 2012 to be effective April 1, 2014, has been accelerated. The new effective date of the 11 per cent rate is April 1, 2013.

2 [Type text] BC Region Tax (cont'd) OKANAGAN Heather Weber Dave Huston Derek Johnson George Mason Ryan Mackiewich PEACE Kim Drever Tracy Leishman VANCOUVER Kevin Wong Andrew Shaw Angeline Zioulas David Heidt Eric Feilden Katri Ulmonen C. OTHER TAX MEASURES Medicare Protection Act Medical Services Plan premiums will increase effective January 1, Maximum monthly premiums will increase by $2.75 per month to $69.25 for single persons, by $5.00 per month to $ for two person families and by $5.50 per month to $ for families of three or more persons. Premium assistance will be enhanced to ensure those who are currently receiving assistance will not be affected by the increase. Additional details will be released later in the year. Home Owner Grant Act The threshold for the phase-out of the home owner grant is increased from $1,285,000 to $1,295,000 for the 2013 tax year. For properties valued above the threshold of $1,295,000, the grant is reduced by $5 for every $1,000 of assessed value in excess of the threshold. Effective January 1, 2011, the Home Owner Grant Program is amended to provide relief to homeowners who have been disentitled from the grant because they incorrectly applied for a grant on a second residential property rather than on their principal residence. BC Training and Education Savings Grant For BC resident children born in 2007 or later, this one-time grant will provide $1,200 towards a child s Registered Education Savings Plan (RESP) after the child turns 6 years old. No matching or contributions are required in order to receive the grant. In order to receive the grant, a family will need to open an RESP account and apply for the grant before the child turns 7 years old. BC Early Childhood Tax Benefit Effective April 1, 2015 families with children under the age of 6 years can receive up to $55 per child per month ($660 annually per child) as a refundable tax credit. Families with net incomes under $100,000 will receive the maximum benefit. The benefit will start to phase out at $100,000 and will be fully phased out at $150,000 of family net income.

3 VANCOUVER ISLAND James Kungel Alladin Versi Land Tax Deferment Act Currently the Property Tax Deferment Program for Families with Children allows eligible homeowners who financially support a child under the age of 18 to defer their property taxes. Effective on the later of March 19, 2013, and Royal Assent, the program has been expanded to allow an eligible homeowner who financially supports a child aged 18 or over to defer taxes if the child is enrolled in an educational institution or is disabled. The deferment program is also amended to allow for disposal of a portion of the property. Currently, eligible homeowners could defer payment of property taxes until any part of the property is sold. The Act has been amended to allow for the continuation of deferment on the disposition of a portion of the property, provided the principal residence is still located on the property retained and equity requirements are fulfilled. Property Transfer Tax Act The exemption for the transfer of a family farm from a deceased s estate has been expanded to include a family farm owned by the deceased that was, immediately before the deceased s death, used and farmed by one or more of the deceased, a member of the deceased s family, or a family farm corporation. Previously the exemption allowed only a family farm that was used and farmed, immediately before death, by the deceased. Carbon Tax Update The BC carbon tax was implemented on July 1, 2008, with tax rates for each fuel equal to $10 per tonne of carbon dioxide equivalent (CO2e) emissions. The rates were increased by $5 per tonne annually until reaching $30 per tonne of CO2e on July 1, Budget 2013 reconfirms that carbon tax rates will not be increased and will remain at $30 per tonne of CO2e. Carbon Tax Relief for Agri-Food and Agriculture Sector The government will also provide a carbon tax relief grant for commercial greenhouse vegetable and floriculture growers. The grant will be set at 80% of the carbon tax paid on specified fuels and will be available for the 2013 and future years. Eligibility criteria will be similar to the 2012 temporary carbon tax relief grant for commercial greenhouse and floriculture growers.

4 The government also intends to provide a carbon tax exemption for farmers on the purchase of coloured motor fuel for use in on-farm equipment such as tractors and fuel used on-highway in eligible farm vehicles. Tobacco Tax Budget 2012 announced increases to tobacco tax rates effective April 1, 2013 (due to the elimination of the HST and in efforts to adjust tobacco tax rates to keep the overall tax on tobacco and tobacco s constant). Budget 2013 provides for further tax rate increases effective October 1, See table below for details. Cigarettes (per carton of 200 cigarettes) Fine-cut tobacco (per gram) Cigars (per cigar) Maximum tax on cigars Current Effective Effective April 1, 2013 October 1, 2013 $37.00 $42.60 $ cents 21.3 cents 22.3 cents 77% of sales 90.5% of sales 90.5% of sales $6 per cigar $7 per cigar $7 per cigar

5 ABOUT MNP Founded in 1945, MNP has grown from a single office in Manitoba to over 75 full and part-time locations across Canada. MNP is now the seventh largest chartered accountancy and advisory firm in Canada. Our roots in our communities are a big part of how we do business. Because we live and work in the same communities as our clients, we understand the markets they deal with. When they talk, we listen. And we provide clear, straightforward business advice to help get you where you want to go. MNP has a proven track record providing traditional accounting and assurance services to our public sector clients. With our experiences, we have gained valuable insight into the Canadian public sector, and the specific requirements of our clients. A key strength of MNP is our approach to addressing your needs. We believe in teamwork and applying the appropriate resources to each engagement. This means when you have a need for a service, we will meet with you to understand your specific requirements and assemble the best team for the situation. D. Transition to Provincial Sales Tax The Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 has been introduced in the Legislature. Subject to the approval of the Legislature, the PST, as amended, will be re-implemented on April 1, The PST will be at 7% and will generally apply to the same goods and services that were previously subject to PST. There are also significant measures introduced regarding residential construction and the new housing industry in the form of rebates before April 1, 2013 and Transitional taxing measures after April 1, Those involved in the residential construction industry need to be aware of these specific rules, especially relating to the penalties for non disclosure on contracts for sales. The New Provincial Sales Tax will be effective April 1, 2013, and in addition the Accommodation (Hotel) tax of 8% will be reinstated along with the Liquor Tax of 10%. For information on transitional rules and timelines, please visit DISCLAIMER This communication contains a general overview of the subject matter and is current as of the date of publication. The information should not be regarded as a substitute for professional advice. MNP LLP accepts no responsibility for any loss or damage caused by your reliance on information contained in this publication.