Claiming the British Columbia Sales Tax Credit: A Step-by-Step Guide
Understanding the BC Sales Tax Credit: A Guide for Low-Income Taxpayers
When you pick up an item from a shelf in British Columbia, the price tag doesn’t include the sales tax you’ll pay at the register. The BC sales tax credit is designed to help offset the cost of provincial sales tax (PST) for low-income individuals and families residing in BC. Even if you don’t earn income, you can still receive a refundable credit by filing your tax return. Here’s a breakdown of how it works and who qualifies.
What Is PST and How Much Is It in BC?
Provincial sales tax (PST) in British Columbia is 7%, applied to most goods, services, and software purchased in the province. This tax is added at the point of sale and is separate from the 5% federal goods and services tax (GST). Together, BC residents pay a combined 12% sales tax on most purchases.
Certain essential items, such as basic groceries, health products, and school supplies, are exempt from sales tax in BC.
What Is the BC Sales Tax Credit?
The BC sales tax credit is a refundable credit aimed at helping low-income residents offset the cost of the PST. You can claim this credit when you file your income tax return. Even if you didn’t earn income, you may still be eligible to receive a refund through this credit.
How Much Is the BC Sales Tax Credit?
- Individuals: The maximum credit is $75 for an individual.
- Couples: Married or common-law partners can receive a combined maximum of $150.
The credit is reduced by 2% of your net income over $15,000 for individuals and $18,000 for couples. The credit is completely phased out when income reaches $18,750 for individuals or $25,500 for couples.
Example: John and Sharon have a combined income of $27,000. After deducting $18,000 from their income, they are left with $9,000 ($27,000 – $18,000 = $9,000). They would initially be eligible for the full $150 credit (2 x $75), but their claim is reduced by 2% of the excess income, or $180 ($9,000 x 2%). Since their reduction is more than their credit, they would receive no credit.
Who Is Eligible for the BC Sales Tax Credit?
To qualify for the BC sales tax credit, you must:
- Be 19 years of age or older.
- Have a spouse or common-law partner, or be a parent.
- Have lived in BC on December 31 of the tax year.
Additionally, individuals who spent more than 6 months in prison during the tax year are not eligible for the credit.
How to Claim the BC Sales Tax Credit
To claim the BC sales tax credit, you’ll need to file an income tax return. Use form 5010-TC BC479 to calculate your eligibility and claim amount.
If you use tax software, such as TurboTax, the form is completed automatically. Initially, your tax return may show the maximum refund of $75 or $150, but this amount will be adjusted once your income is entered.
To calculate your claim amount manually:
- Subtract $15,000 from your income (or $18,000 for couples).
- Multiply the remainder by 2%.
- Subtract this amount from the maximum credit ($75 for individuals, $150 for couples) to determine your final credit.
By claiming this credit, low-income residents can receive up to $150 to offset the cost of provincial sales tax, making life in BC a little more affordable.
Key Takeaways
- The BC sales tax credit helps low-income families offset the cost of provincial sales tax.
- The maximum credit is $75 for individuals and $150 for couples.
- The credit amount is income-based and is calculated using a specific formula.
