BC Budget 2017 – September Update
On September 11, 2017 British Columbia’s Finance Minister announced a budget update. The implications for compensation and benefit programs are summarized below.
Effective January 1, 2018 the personal income tax rate for individuals with taxable income over $150,000 will be raised by 2.1%, from 14.7% to 16.8%.
Effective January 1, 2018, the premiums for the Medical Services Plan will be reduced by 50% as shown below:
Rate Effective January 1, 2018
|Two person families||$150.00||$75.00|
|Families of three or more persons||$150.00||$75.00|
The reduction in MSP premiums has implications for employers and employees. Some of the considerations which employers should review are set out below.
If employers contribute towards the cost on behalf of employees, they need to include the relevant cost decreases in their budgets for the year beginning January 1, 2018.
2. Payroll Deductions
Assuming that employees contribute towards the MSP premiums, employers must adjust the amount of the employee deductions.
3. Income Tax
MSP premiums paid by an employer on behalf of an employee constitute a taxable benefit to the employee. This needs to be reflected in the employees’ payroll and tax reporting.
Employees should be advised of the above in advance of the effective date. The content of the communication will depend upon the employer/employee cost-sharing.
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