In 1972, the Canadian government introduced a budget measure to tax credit unions at small business rates. This was intended to offset the inability of credit unions to obtain equity financing in the capital markets, a tool frequently employed by the banks. In 2013, the Harper government lost track of that logic and began a phaseout of that special status, which will be completed in 2017. The federal tax rate for credit unions will go from 11 per cent to 15 per cent on most (or all) of their income. B.C., Saskatchewan and Ontario, who had similar tax programs in place, were faced with the decision to follow suit or stand by their credit unions. Saskatchewan and Ontario held their ground. B.C. has not. Instead, B.C. is on course to phaseout the small business treatment of credit unions over five years, starting in 2016. By 2020, the B.C. tax rate will more than quadruple from 2.5 per cent to 11 per cent.
Thanks. God bless.