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New Service Taxes, Investment Credit, Disability Benefit

Full Title:
Budget Measures Implementation Act, 2026

Summary#

  • This bill puts many budget changes into law for British Columbia in 2026. It updates taxes, creates a new business investment credit, adds a new benefit for families with a disabled dependant, and makes some government and property rules changes.

  • Key points include:

    • Adds provincial sales tax (PST) to several professional services starting October 1, 2026.
    • Creates a new BC manufacturing and processing investment tax credit for buying new equipment, with rates that step down from 2026 to 2036.
    • Pauses most inflation adjustments to personal income tax from 2027 to 2030, except for the renter’s tax credit.
    • Starts a new monthly disability supplement for families with a dependant who qualifies for the federal disability tax credit, beginning after June 2027.
    • Dissolves the Office of the Merit Commissioner and moves its functions and records to the Ministry of Finance and the BC Public Service Agency.
    • Changes property assessment and deferment rules and updates some tax credit timelines.

  • Other notable updates:

    • Clarifies how the veterans’ supplement to the Home Owner Grant is calculated.
    • Sets a 6‑year limit to bring enforcement actions under one of the new taxes.
    • Aligns some BC tax definitions and deadlines with federal rules (e.g., flow‑through mining, film/production credits).

What it means for you#

  • Residents and families

    • Personal income tax amounts (like brackets and some credits) will not be adjusted for inflation from 2027 to 2030. This can slowly increase the tax you pay if your income rises with inflation.
    • The renter’s tax credit will keep rising with inflation from 2027 to 2030.
    • Families who have a child or other dependant who qualifies for the federal disability tax credit may get a new monthly BC disability supplement starting July 2027, paid after tax returns are filed. Shared‑custody rules are included.

  • People and businesses buying services

    • PST at 7% will apply to:
      • Accounting services (such as bookkeeping, tax return preparation, audits).
      • Security services (such as security guards, alarms, private investigators).
      • Non‑residential real estate services (for commercial/industrial property, not residential or farm).
    • PST at 7% will apply to 30% of the price (effective 2.1%) for:
      • Architectural services.
      • Engineering services.
    • If you are in BC and buy these services from outside BC, you may still owe PST. If services are partly for work outside BC, only the BC‑related part is taxed (keep records to show this).
    • Start date and transition:
      • New PST on these services starts October 1, 2026.
      • Special rules apply for bills issued or paid before October 1, 2026 for work done after that date.

  • Manufacturers and processors

    • New investment tax credit for new, unused machinery and equipment used in manufacturing or processing in BC.
    • Credit rate starts at 15% for eligible spending from April 1, 2026 to March 31, 2031, then steps down each year to 2.5% by March 31, 2036.
    • You can generally claim up to $2 million of net eligible expenditures per year (shared across associated corporations).
    • You must claim in the year the equipment is “available for use.” There are clawback rules if you sell, convert, or move the equipment within a set period.
    • Some activities do not qualify (for example, liquefaction of natural gas).
    • Simple example: if you buy $1 million of eligible new equipment in late 2026, your credit could be up to $150,000 (subject to other limits and assistance received).

  • Homeowners and property taxpayers

    • Property assessors do not have to consider private restrictions on land use (like some private covenants) when valuing property. Government‑imposed limits (like zoning) can still be considered.
    • Interest on deferred property taxes for 2026 and later will be set by the minister under regulation, which may change future interest costs.
    • Veterans’ supplement to the Home Owner Grant is clarified to top up to an amount set in Schedule 2 (the grant you already receive is subtracted to get the supplement).

  • Film, TV, and other credit users

    • Filing deadlines for certain corporate tax credits are set (generally 18 months for older years and 36 months for newer years). Missing a deadline can mean losing the credit.
    • Some notice requirements are waived if production spending starts or a certificate is revoked on or after January 18, 2026.

  • Public service and government transparency

    • The Office of the Merit Commissioner is dissolved. Its assets and records move to the Ministry of Finance.
    • The “merit commissioner” role is tied to the BC Public Service Agency head, and annual reports must be posted on a public website.

Expenses#

No publicly available information.

Proponents' View#

  • Broadens the PST base to better reflect today’s service economy and ensure out‑of‑province providers do not have a tax advantage.
  • Encourages companies to invest in productivity‑boosting equipment through a time‑limited tax credit, supporting jobs and growth.
  • Provides targeted support to families caring for a person with a disability through a new monthly supplement.
  • Keeps help for renters in line with inflation even while other amounts are paused, focusing relief where housing costs hit hardest.
  • Streamlines government by dissolving a separate office and posting reports online for easier public access.
  • Clarifies property assessment to make values more consistent and predictable.

Opponents' View#

  • Adding PST to accounting, engineering, architectural, security, and commercial real estate services raises costs for households (e.g., tax return prep) and for small and medium‑sized businesses.
  • Pausing most personal income tax indexation from 2027 to 2030 amounts to a stealth tax increase as inflation pushes people into higher tax without a rate hike.
  • New and retroactive tax rules and transitions add complexity and compliance burdens, especially for firms that operate across provinces.
  • The manufacturing credit may pick winners and losers, excludes some activities (like LNG liquefaction), and the $2 million annual cap may be too low for large projects.
  • Dissolving the Office of the Merit Commissioner could reduce independent oversight of hiring in the public service.
  • Changing assessment rules to ignore some private land‑use limits could raise assessed values for certain properties, leading to higher property taxes.