Refunds for international business activity

To receive a tax refund under the international business activity (IBA) program, a corporation or foreign bank authorized to carry on business in Canada that carries on an international business or an IB specialist must be registered and submit a refund application form to the Ministry of Finance (ministry) within 18 months after the end of the tax year.

A refund will only be paid after all B.C. and federal income taxes for the tax year are paid. To be eligible for a refund under the IBA program, all income taxes payable for the tax year must be paid within 3 years after the end of the tax year. Corporations, foreign banks authorized to carry on business in Canada and IB specialists are required to provide proof that all income taxes have been paid before a refund will be issued.

Corporations, foreign bank authorized to carry on business in Canada and IB specialists must notify the ministry by filing an amended IBA refund form within 90 days of any income tax reassessment that may impact the calculation of the tax refund.

Refunds for IBA corporations

International businesses (other than international patent businesses and foreign banks)

A registered corporation that isn't a foreign bank can apply for a refund of up to 100% of the B.C. corporate income tax paid on income earned from eligible international business (other than an international patent business), as follows:

Tax refund = [A/(B X C)] X D where:

• A is the corporation's net income for income tax purposes from its international business. IB income does not include certain dividend income or assistance included in income under Section 12(1) of the Income Tax Act (Canada)
• B is the corporation's net income for income tax purposes, less any net capital losses and dividends deducted in determining the corporation's taxable income for the year
• C is the percentage of taxable income allocated to B.C. for the tax year
• D is the corporation's B.C. income tax (after deducting all tax credits and deemed payments)

To apply for a refund, read the guide, and complete and file the IBA Tax Refund of a Corporation (FIN 578) (PDF, 280KB) together with all applicable attachments. 

International patent businesses

For international patent businesses, a registered corporation can apply for a refund of up to 75% of the B.C. corporate income tax paid, up to a maximum refund of $8 million per year, as follows:

Tax refund = lesser of:

• $8 million, or
• [A/(B x C)] X D X 75% where:
  • A is the corporation's net income for income tax purposes from its international patent business. IB income does not include certain dividend income or assistance included in income under Section 12(1) of the Income Tax Act (Canada)
  • B is the corporation's net income for income tax purposes, less any net capital losses and dividends deducted in determining the corporation's taxable income for the year
  • C is the percentage of taxable income allocated to B.C. for the tax year
  • D is the corporation's B.C. income tax (after deducting all tax credits and deemed payments).

For corporations registered for less than 365 days in a tax year, the $8 million limit is prorated based on the number of days registered. The $8 million limit must be shared among associated corporations where each corporation is eligible to claim a tax refund for an international patent business.

To apply for a refund, read the guide, and complete and file the IBA Tax Refund of an International Patent Business (FIN 546) (PDF, 280KB) together with all applicable attachments.

Foreign banks

Foreign banks authorized to carry on business in Canada can apply for a refund of up to 100% of the B.C. corporate income tax paid on income earned from international financial activities of a Canadian banking business, as follows:

Tax refund =  [A/(B x C)] X D where:

• A is the foreign bank's net income from its branch financial statements, as defined in paragraph 20.2(1) of the federal Income Tax Act, less Canadian sourced losses.  IB income does not include assistance included in income under Section 12(1)(x) of the Income Tax Act (Canada)
• B is the foreign bank's net income for income tax purposes, less any net capital losses deducted in determining the foreign bank's taxable income for the year
• C is the percentage of taxable income allocated to B.C. for the tax year
• D is the foreign bank's B.C. income tax.

Refunds for IB specialists

Employer’s requirements

A registered corporation or foreign bank authorized to carry on business in Canada that employs IB specialists must prepare and file IB specialist reports with the ministry for each IB specialist employed. The corporation or foreign bank authorized to carry on business in Canada must file the report within 90 days of the calendar year-end or 30 days of discontinuance of the international business. Please contact the ministry for a template.

Refund eligibility

An individual is eligible to claim a tax refund for a tax year if:

• The individual was an IB specialist at some time in the year,
• The individual was resident in B.C. on the last day of the tax year (or the last day the individual was resident in Canada),
• A registered corporation or foreign bank authorized to carry on business in Canada has filed the employer’s report for the year,
• The individual has received at least:
  • $100,000 in remuneration from the corporation or foreign bank authorized to carry on business in Canada for the year of the claim, if the IB specialist is registered as an international financial business specialist, a designated international business specialist, an administrative support services specialist, or a back-up office services specialist, or
  • $250,000 in remuneration from the corporation or foreign bank authorized to carry on business in Canada for the year of the claim, if the IB specialist is registered as an executive specialist, 
• The individual meets the requirements in respect of the particular type of IB specialist for which they are registered, and
• The individual meets the specific requirements in respect of the particular type of IB specialist for that part of the year that they are registered.

A specialist’s total remuneration includes salaries, wages, commissions, and other remuneration, but does not include any amount described in section 7 (security options) of the Income Tax Act (Canada). If an IB specialist was only registered for a portion of the tax year, the minimum remuneration threshold is prorated at $274 for each calendar day in the tax year the individual was registered ($685 per calendar day for executive specialists).

Refund calculation

Tax refund = (A/B) X C X applicable percentage where:

The first year of eligibility begins on the day the individual was first registered as an IB specialist. The applicable percentage rate (refund rate) for an IB specialist is 100% for the first two years of eligibility, 75% in the third year, 50% in the fourth year and 25% in the fifth year.

The actual refund rate for a particular tax year will be a blended rate that will depend on the date of registration. For example, if an IB specialist registered on July 1, 2010, the refund percentage rates would be 100% between July 1, 2010 and June 30, 2012, 75% between July 1, 2012 and June 30, 2013, 50% between July 1, 2013 and June 30, 2014, and 25% between July 1, 2014 and June 30, 2015. 

The applicable percentage rate for each tax year will be provided to the IB specialist by the ministry.

For an IB specialist who was registered as an IFA specialist prior to March 4, 2010, the applicable percentage is 75%.

To apply for a refund, read the guide, and complete and file the IBA Tax Refund of an IB Specialist (FIN 550) (PDF, 240KB) together with all applicable attachments.

Send us your application

Mail or courier your application to the Ministry of Finance, Income Taxation Branch:

• Mailing address 
  PO Box 9444 Stn Prov Govt,
  Victoria BC V8W 9W8
   
• Courier address
  1802 Douglas Street,
  Victoria BC V8T 4K6

Contact us  

Contact us with your questions about the IBA program:

• Victoria: 250-953-3082
• Vancouver: 604-660-2421
• Toll Free within Canada and USA: 1-800-663-7867
• Outside of Canada and USA: 1-604-660-2421