Employee Tax Incentives: IB Specialist and the Executive Specialist
A company in the International Business Activity (IBA) program can also apply to register an employee as an IB Specialist or an Executive Specialist, and qualify for a refund of BC income tax.
A Tax Incentive for Employees
- A registered Specialist is entitled to receive a refund of provincial tax on income earned in the international financial business (IFB) at a rate of 100% for years 1 and 2, 75% for year 3, 50% for year 4, and 25% for year 5.
- The IB Specialist program is administered by B.C.’s Ministry of Finance. Please visit their website for information about registration and eligibility.
- Only employees of companies registered in the IBA program can apply for the tax incentive.
- There is no fee to register an employee as a Specialist.
International Business (IB) Specialist
- The type of IB Specialist is defined by the underlying business. There are three categories:
- International Financial Activity Specialist;
- Administrative Support Services and Back-Up Office Services Specialist; and
- Designated Business Specialist (currently film distribution only).
- In all cases, the employee’s annual compensation must be greater than $100,000. (Compensation is salaries, wages, commissions, and other remuneration, but does not include any amount described in section 7 (employee stock options) of the Income Tax Act (Canada)).
- Employees of companies where the qualifying business is patent business are excluded.
- The individual must be a member of the executive management of the corporation.
- The individual has entered into a written contract that requires the individual to work in the international business of the corporation.
- The individual must have been non-resident before entering into the contract, or must have previously been an IB specialist.
- The individual must have been a non-resident of Canada at the end of the year before the year of application.
- The individual must enter into the written employment contract on or after March 3, 2010.
- The individual, and any person related to the individual, must deal at arm’s length with the registered corporation.
- There is no requirement for executive specialists to devote a certain per cent of their time to the international business of the corporation. However, a corporation may only apply to register a maximum of two executive specialists for the corporation, including all affiliated corporations.
- The employee’s annual compensation must be greater than $250,000. (Compensation is salaries, wages, commissions, and other remuneration, but does not include any amount described in section 7 (employee stock options) of the Income Tax Act (Canada)).
- Patent activities qualify.
- The employer of the Specialist must first register the company with the BC Ministry of Finance in the IBA program in order for the individual to be eligible for the tax refund.
- A refund is paid only after all British Columbia and federal income taxes for the taxation year are paid.
- Returns must be filed within 18 months of the end of the taxation year.
The IBA program is administered by the BC Ministry of Finance. For more information regarding the legislation or provincial registration, please visit their website. The information on this website is provided for convenience and guidance only and is not a replacement for the legislation. Businesses considering accessing the benefits under the International Business Activity Act should consult with their professional advisors on the applicability of the legislation to their particular circumstances.