How To Qualify For The BC Sales Tax Credit
February 3, 2022 Andrew AdolphTax Credits
The BC Sales Tax Credit is a tax benefit for low-income residents of British Columbia. Although this credit is small, it’s worth claiming if you qualify. Keep reading to learn more.
What Is The BC Sales Tax Credit?
The BC sales tax credit is a dollar-for-dollar income tax reduction for Canadians in British Columbia. You may claim up to $75 for yourself and $75 for your spouse or common-law partner.
If you’re single, your credit reduces by 2% of your net income over $15,000, up to $18,750. If you have a spouse or common-law partner, your credit decreases by 2% of your family’s net income over $18,000.
Before the BC sales tax credit, eligible taxpayers could receive the BC HST credit, which existed from July 2010 to January 2013. The HST credit was a non-taxable, quarterly payment bundled with the goods and services credit and the BC climate action tax credit.
At the time, the HST credit allocation per family member was $230. Individuals who earned up to $20,000 and families with incomes amounting to $25,000 were entitled to receive the maximum credit.
A 4% reduction of the net family income over the threshold was applied. Moreover, only one spouse could claim the HST credit in the case of married couples.
Who Can Claim The BC Sales Tax Credit?
You can claim the refundable BC sales tax credit if you were a resident of the province on December 31 of the tax year and you:
- Were at least 19 years old
- Had a spouse or common-law partner, or
- Were a parent
Here are some things to note if you had a spouse or common-law partner on December 31 of the tax year:
You and your spouse or common-law partner should decide who will claim the sales tax credit for both of you.
If you are the one claiming the extra tax credit for your spouse or common-law partner, know that they must have been a resident of BC on December 31 of the tax year.
You are not eligible for the BC sales tax credit if any of these conditions apply to you:
- Your family’s adjusted net income was $18,750 or more, and you were single, divorced, separated, or widowed on December 31 of the tax year.
- Your family’s adjusted net income was $25,500 or more, and you had a spouse or common-law partner on December 31 of the tax year.
- You spent more than six months in prison (or a similar institution) during the tax year.
Note that you may not claim this credit on a return for a person who died during the tax year.
Can I claim the BC sales tax credit?
If you’re eligible, you may claim the credit through the British Columbia Credits form (BC479) when you file your T1 Income Tax Return. You can claim the BC sales tax credit within three years after the end of the tax year.
How To Calculate The BC Sales Tax Credit
To calculate your eligibility for the credit and the amount you qualify for, use Form BC479, British Columbia Credit. If you use tax software such as TurboTax, the software will automatically complete this form.
You may notice that as soon as you open the tax return, it will indicate a refund of $75.00 for singles and $150.00 for couples (since you haven’t entered any income entries yet). Know that the credit amount is still subject to change and can be removed entirely once you and your spouse enter your income.
To calculate the amount that you can claim:
- Subtract $15,000 from your income as an individual or $18,000 as a couple.
- Multiply the remaining income by 2%.
- Finally, subtract this amount from the maximum claim amount of $75 for individuals or $150 for couples.
The receivable credit will amount to $75 or less for individuals and $150 or less for families.
What Is The Maximum Amount You Can Receive?
You may receive a maximum of $75 as an individual and $75 for your spouse or common-law partner.
- If you’re single: Your credit diminishes by 2% of your net income above $15,000.
- If you have a cohabiting spouse or common-law partner: your credit decreases by 2% of your family’s net income above $18,000.
Note that if your individual income surpasses $18,750, and your spouse’s combined income reaches $25,500, the credit is nullified.
For example, suppose you and your spouse/common-law partner have a combined income of $27,000. In this case, you would deduct $18,000 as a couple earning $9,000. You would then multiply your total claim ($75) by two to get $150. Finally, take 2% of $150 (This figure is reduced by 2% of the amount that your combined income exceeds $18,000. ($9,000 x 2% is $180.)
Important: A negative amount results in to claim of zero.
Did you know that you could still qualify for the BC sales tax credit even if you don’t have a tax obligation? So if the sum of these credits exceeds the taxes you have to pay, you may qualify for a reimbursement for the difference. Claim these credits by attaching an accomplished Form BC479, British Columbia Credits to your return.
Want to know if you’re eligible and how much credit you can claim? Call 604-204-6173 or email email@example.com to set up a free consultation.
For more tax resources, visit the Blog.
- Canada Revenue Agency. (n.d.). Government of Canada. Canada.ca. Retrieved January 12, 2022, from https://www.canada.ca/en/revenue-agency/services/forms-publications/tax-packages-years/general-income-tax-benefit-package/british-columbia/5010-pc/information-residents-british-columbia.html
- Province of British Columbia. (n.d.). Sales tax credit. Province of British Columbia. Retrieved January 12, 2022, from https://www2.gov.bc.ca/gov/content/taxes/income-taxes/personal/credits/sales-tax
- TurboTax Canada. (2020, November 19). Claiming the British Columbia Sales Tax Credit. TurboTax Canada. Retrieved January 12, 2022, from https://turbotax.intuit.ca/tips/claiming-the-british-columbia-sales-tax-credit-5488
Andrew Adolph is a CPA and former CRA auditor with 25 Years of experience. He helps businesses to not par any more in sales taxs than the law says they must and acts as an advocate for you if you are being audited, so you can fous on your business.