Whether you’re relocating from another province or moving internationally, you’ll benefit from British Columbia’s robust economy and unique tax advantages. As you prepare to pay taxes in the province for the first time, this Remitly guide will introduce you to the British Columbia and Canadian tax systems to help you get started. Read on to learn more about personal income tax rules, tax rates, and available credits for individuals and families.
Introduction to British Columbia’s Tax System
Paying required taxes is important for anyone who’s just moved to Canada, as well as for long-time Canadian residents. In British Columbia, you’ll pay two main types of taxes: income tax and sales tax.
Income tax in British Columbia
Income tax is a tax paid on income earned through work, investments, and other sources. As a resident of British Columbia, you’re responsible for both federal and provincial income taxes and for filing income tax returns once per year.
Sales tax in British Columbia
When you pay for certain products and services, the seller charges sales tax on the purchase and then submits payments to the Canadian Revenue Agency (CRA). In British Columbia, you pay two types of sales tax:
- Goods and Services Tax (GST): A 5% federal sales tax
- Provincial Sales Tax (PST): A sales tax paid to British Columbia, which was 7% as of March 2024
Some goods and services are exempt from GST and PST, such as:
- Basic groceries
- Agricultural products
- Most farm livestock
- Most fishery products
- Prescription drugs and drug-dispensing services
- Some medical devices
- Feminine hygiene products
- International transportation services
Key tax considerations when moving to British Columbia
Under Canadian law, you pay provincial tax to the province where you reside as of December 31 of the tax year. As a result, you’ll need to file a 2024 British Columbia provincial tax return if you lived in the province on December 31, 2023.
If you immigrated to Canada from another country in the middle of a tax year, you may be responsible for paying income taxes in your country of origin as well as in Canada. Seek a tax expert’s advice to ensure you fulfill any foreign tax obligations.
Understanding income tax rates in British Columbia
There are three key factors to consider when completing your federal and British Columbia tax returns: your income, your tax rate, and what deductions and credits you qualify for. Keep reading to learn more about each of these factors.
Calculating income for federal and British Columbia provincial taxes
When calculating your income for federal and provincial taxes, you’ll include the following:
Employment income
Employment income is what you make for your work or profession, such as:
- Wages
- Commissions
- Research grants
- Clergy housing allowance
- Foreign employment income
- Royalties
- Self-employment income
Capital gains
Capital gains are profits made when you sell an asset, such as an investment or a home. If you made any capital gains during the tax year, you typically add 50% of the amount to your income for federal and provincial tax purposes.
Principal residences are the exception to this rule. If you made a profit selling your primary residence, you normally wouldn’t need to add the capital gain to your income for your federal or provincial returns.
Investment income
Interest, dividends, and other money that you make from investments are investment income.
You’ll normally add 100% of the interest earned. If you receive dividends, how much you’ll add to your income varies by dividend type:
- Eligible dividends: When issuing companies pay taxes at a higher rate, their dividends are deemed eligible. When adding these dividends to your income, you’ll typically multiply them by 138%.
- Non-eligible dividends: When issuing companies pay taxes at a lower rate, their dividends are non-eligible. You’ll typically multiply these dividends by 115% when adding them to your income
Other income
Other types of income that you may need to add to your income for federal and provincial tax purposes include:
- Pension plan income
- Savings plan income
- EI benefit income
- Worker’s compensation
- Social assistance payments
- Rental income
Federal and provincial tax rates
The Canadian federal and British Columbia tax systems are both graduated, meaning that tax rates increase as income increases. The table below provides a quick overview of federal and provincial tax rates for the 2024 tax year.
| Federal income amount | Federal tax rate | British Columbia provincial income amount | British Columbia provincial rate |
|---|---|---|---|
| On the portion of taxable income that is $55,867 or less, plus | 15% | On the portion of taxable income that is $47,937 or less, plus | 5.06% |
| On the portion of taxable income over $55,867 up to $111,733, plus | 20.50% | On the portion of taxable income over $47,937 up to $95,875, plus | 7.70% |
| On the portion of taxable income over $111,733 up to $173,205, plus | 26% | On the portion of taxable income over $95,875 up to $110,076, plus | 10.50% |
| On the portion of taxable income over $173,205 up to $246,752, plus | 29% | On the portion of taxable income over $110,076 up to $133,664, plus | 12.29% |
| On the portion of taxable income over $246,752, plus | 33% | On the portion of taxable income over $133,664 up to $181,232, plus | 14.70% |
| On the portion of taxable income over $181,232 up to $252,752, plus | 16.80% | ||
| On the portion of taxable income over $252,752 | 20.50% |
Tax credits and deductions for British Columbia
Both Canada and British Columbia allow taxpayers to reduce their tax obligations through:
- Tax deductions: A tax deduction is an amount you deduct from your income before applying the tax rate and calculating your tax obligation.
- Tax credits: A tax credit is an amount you deduct after calculating your tax obligation based on tax rates. They fall into two categories:
-
- Non-refundable tax credits: These tax credits can reduce your obligation to no more than $0.
-
- Refundable tax credits: These tax credits can reduce your obligation to below $0, potentially qualifying you for a tax refund.
You may qualify for a range of federal and provincial tax deductions and credits based on your financial situation,
To help you begin exploring potential money-saving deductions and credits, we compiled a list and table of common ones. A knowledgeable tax professional can help you determine whether you qualify for these or other credits and deductions.
Basic personal amount
Offered at both the federal and British Columbia provincial levels, the basic personal amount is a non-refundable tax credit that most taxpayers qualify for. The amount you receive depends on your income.
Spousal amount
The spousal amount is a non-refundable tax credit available to taxpayers whose spouses or common-law partners are financially dependent on them and earn less than their basic personal amounts. It’s available at both the federal and provincial levels.
Canada Child Benefit
Available through the federal government, the Canada Child Benefit helps make providing for children under the age of 18 more affordable for eligible families.
Rather than a tax credit that you claim on your income taxes, it is a program that provides monthly tax-free payments. To receive the benefit, you must apply through the CRA.
Disability tax credit
The federal government and British Columbia offer tax credits to individuals with eligible disabilities. These credits are generally non-refundable.
Dividend tax credit
Canada and British Columbia offer dividend tax credits to reduce taxes owed on dividends. Usually, you need to meet qualifications to claim the credit. For example, you typically need to own the investment for a minimum number of days, and it must be in a Canadian company.
For 2023, the dividend tax credits were:
- 15.0198% for eligible dividends for federal income tax
- 9.0301% for non-eligible dividends for federal income tax
- 12% for eligible dividends for British Columbia income tax
- 1.96% for non-eligible dividends for British Columbia income tax
Canada Workers Benefit
The Canada Workers Benefit is a refundable tax credit available to British Columbia residents who are working and meet income requirements and other qualifications, including:
- Living in Canada for the entire tax year
- Being 19 years old or older or living with a spouse or common-law partner
- Not being currently incarcerated or a full-time student
- Being obligated to pay income taxes in Canada
RSSP tax deduction
The federal government offers the RSSP tax deduction to eligible people who contributed to a registered retirement savings plan (RRSP) for the tax year.
BC Family Benefit
The BC Family Benefit is British Columbia’s version of the Canada Child Benefit, available to eligible families with children under the age of 18. Children eligible for the Canada Child Benefit receive automatic enrollment in the program, and payments are combined with those for the federal child benefit.
BC renter’s tax credit
The BC renter’s tax credit is a refundable British Columbia tax credit for eligible taxpayers renting qualified units in the province. Typically, you must be at least 19 years of age as of December 31st of the tax year or live with a spouse or common-law partner to claim the credit.
| Tax Credit Name | Federal or Provincial? | What It Is |
|---|---|---|
| Basic personal amount | Both | Non-refundable tax credits available to nearly all taxpayers |
| Spousal amount | Both | Non-refundable tax credits available to many taxpayers who are married or are in domestic partnerships |
| Canada child benefit | Federal | Monthly tax-free money for eligible families |
| Disability tax credit | Both | Non-refundable tax credit available for individuals with certain disabilities |
| Dividend tax credit | Both | Non-refundable tax credit for eligible taxpayers claiming dividends as income |
| Canada Workers Benefit | Federal | Refundable tax credit for low-income taxpayers who are working |
| RRSP deduction | Federal | Tax deduction based on eligible contributions to RRSP accounts |
| BC family benefit | Provincial | Automatically available to families eligible for the Canada child benefit |
| BC tax reduction credit | Provincial | Non-refundable tax credit available to low-income residents |
| BC renter’s tax credit | Provincial | Refundable tax credit for low-income renters |
Special considerations for tax filers in British Columbia
Certain taxpayers in British Columbia have special considerations under federal and provincial tax laws. Let’s take a look at two of the most common situations: self-employment and recent immigration.
Self-employment
If you receive self-employment income as your primary income source or as a side hustle, you’ll likely need to fill out additional forms when filing your federal and British Columbia income tax returns. You may also be able to take advantage of business expense deductions that may reduce your tax obligations.
Check out the CRA guide to self-employment for more information.
Immigrants
Federal and provincial tax laws may limit your ability to claim certain tax credits if you’re an immigrant who moved to Canada during the tax year. The CRA’s official tax guide for newcomers provides tips and helpful information on filing your Canadian tax return for the first time.
How to file your British Columbia taxes
The due date for both federal and provincial income tax returns for the 2023 tax year is April 30, 2024.
Self-employed people and their spouses or common-law partners usually qualify for an extended deadline of June 15, 2024. However, this extension doesn’t change the due date for 2023 tax payments, which is April 30, 2024.
Follow these steps to complete your federal and British Columbia tax returns.
Gather required documents
To ensure that you have everything that you need to complete your tax returns, gather relevant documentation and receipts, such as:
- Social Security number
- T4 Statement of Remuneration Paid
- T5 Statement of Investment Income
- T3 Statement of Trust Income Allocations and Designations
- T5008 Statement of Securities Transactions
- T4A Statement of Pension, Retirement, Annuity, and Other Income
- T4A(P) Statement of Canada Pension Plan Benefits
- T4RSP Statement of RRSP Income
- T4RIF Statement of Income from a Registered Retirement Income Fund
- T4E Statement of Employment Insurance and Other Benefits
- T5007 Statement of Benefits–Workers Compensation or Social Assistance benefits
- T2200 Employment expenses
- Last year’s notice of assessment from the CRA, if applicable
- RRSP deduction limit and unused amounts
- Any other income slips or income documentation received
- Receipts for childcare expenses
- Receipts for adoption expenses
- Receipts for support payments made
- Receipts for moving expenses
- Receipts for tuition
- Receipts for student loan interest paid
- Receipts for charitable donations
- Receipts for medical expenses
- Payment information for taxes owed
- Bank account information for direct deposit of refunds
Complete your tax return online or on paper
With the necessary documents and receipts ready, you’re ready to begin working on your federal and British Columbia provincial tax returns. The first step is filling out your federal Form T1. Then, you can complete your Form BC428 for provincial taxes.
There are four main ways to complete your tax returns:
- Certified tax software: Many people use free and fee-based tax software that asks questions to guide you through the tax forms and automatically perform calculations.
- Authorized representative: You can make a family member or tax professional an authorized representative and have them complete your returns on your behalf.
- Tax clinics: Low- and moderate-income taxpayers can qualify for the services of free tax clinics and have experts assist them with the necessary forms.
- Paper return: If you’re comfortable performing calculations on your own, you can download and print the required forms.
Submit your return
You’ll submit your completed federal and British Columbia tax returns together to the CRA in one of two ways:
- Electronically: Tax preparation software and some tax professionals can file your tax returns electronically to speed up processing.
- By mail: Paper returns can be submitted to the appropriate CRA address.
Options for paying taxes or getting a refund in British Columbia
If you owe taxes to British Columbia or the federal government, you’ll make a payment to the CRA with one of the following methods:
- Direct debit from a Canadian bank account
- Debit or credit card
- Check
- Money transfer platforms, such as PayPal or Interac
- Wire transfer
- Cash
On the CRA website, you can find instructions on how to use each available payment method.
Unless you sign up for direct deposit into a Canadian bank account, federal and/or British Columbia income tax refunds come from the CRA in the form of a check. To opt for direct deposit, visit this web page.
Taxes in British Columbia vs. other provinces
There are a couple of key tax advantages to living in British Columbia:
- Low marginal tax rate for low-income individuals: British Columbia has the third-lowest initial marginal tax rate compared to all provinces and territories.
- Tax programs for low-income taxpayers: Credits and programs like the BC tax reduction credit and BC family credit can help low-income taxpayers save money.
- Favorable sales tax: British Columbia’s combined GST and PST are lower than those of many other territories and provinces.
The table below shows how British Columbia’s income and sales tax rates compare to other provinces and territories in 2023.
| Province | Lowest marginal tax rate threshold | Lowest marginal tax rate | Highest marginal tax rate threshold | Highest marginal tax rate | GST/HST rate | PST rate |
|---|---|---|---|---|---|---|
| British Columbia | $47,937 | 5.06% | $252,752 | 20.50% | 5% | 7% |
| Alberta | $148,269 | 10.00% | $355,845 | 15.00% | 5% | N/A |
| Manitoba | $47,000 | 10.08% | $100,000 | 17.40% | 5% | 7% |
| New Brunswick | $49,958 | 9.40% | $185,064 | 19.50% | 15% | N/A |
| Newfoundland and Labrador | $43,198 | 8.70% | $1,103,478 | 21.80% | 15% | N/A |
| Northwest Territories | $50,597 | 5.90% | $164,525 | 14.05% | 5% | N/A |
| Nova Scotia | $29,590 | 8.79% | $150,000 | 21% | 15% | N/A |
| Nunavut | $53,268 | 4.00% | $173,205 | 11.50% | 5% | N/A |
| Ontario | $51,446 | 5.05% | $220,000 | 13.16% | 13% | N/A |
| Prince Edward Island | $32,656 | 9.65% | $140,000 | 18.75% | 15% | N/A |
| Quebec | $49,275 | 14% | $119,910 | 25.75% | 5% | 9.98% |
| Saskatchewan | $52,057 | 10.50% | $148,734 | 15% | 5% | 6% |
| Yukon | $55,867 | 6.40% | $500,000 | 15% | 5% | 0 |
How to Calculate Your British Columbia Tax Rate
You don’t have to do this math, but if you’re interested, here’s how your tax is calculated.
Say that you earned $100,000 during the 2023 tax year. You’d begin calculating your federal taxes owed.
You pay 15% of the first $55,867 for your federal taxes, so you multiply $55,867 by 0.15. The math works out to $8380.05.
In 2023, an income of $100,000 falls within the second level of the tax rates, meaning the rest of your income will be taxed at 20.5%.
The first step to performing this calculation is determining how much of your annual income remains, so you’ll subtract $55,867 from $100,000.
Based on this calculation, $44,133 of your income gets taxed at 20.5%, so you multiply that number by .205. The result is $9047.265, which rounds up to $9,047.27.
To calculate your total federal taxes owed, add the sums for each bracket, $8,380.05 and $9,047.27, to get $17,427.32.
Now, you’ll move on to the provincial taxes. Here, your income falls into three brackets, so you’ll perform three calculations and then add the sums together:
- 5.06% on the first $47,937
- 47,937 x 0.056 = $2,425.61
- 7.70% on up to $95,875
- 95,875 – 47,937 = 47,938
- 47,938 x .077 = $3,691.23
- 10.5% on the remainder
-
- 100,000 – 95,875 = 4,125
- 4,125 x .105 = $433.13
Finally, we add the totals from each bracket (2,425.61 + 3,691.23 + 433.13) for a total of $6,549.97.
When discussing tax obligations, your marginal tax rate is the rate you’ll be assessed for your next dollar earned. In our $100,000 example, the federal and British Columbia marginal tax rates are 20.5% and 10.5%, respectively.
Additional Resources and Tools
Have lingering questions about your British Columbia or federal taxes? These resources may be helpful:
British Columbia Tax Calculator
Using a tax calculator can help you prepare your tax forms more quickly and reduce the risk of arithmetic errors. Check out Wealthsimple’s calculators for Canada and British Columbia.
Contact Information for British Columbia’s Tax Services and CRA
The CRA fields questions for both the federal and British Columbia tax systems. You can find the agency’s contact information here.
We hope this guide has helped demystify the federal and British Columbian tax systems and left you feeling more confident about filing your first returns. Because no two people have the exact same financial situation, some of the information outlined above may not apply to you. As a result, it’s a good idea to consult a tax expert for personal guidance before filing your taxes.