Revelstoke Credit Union facing ‘double whammy’ of tax hikes

With Federal tax credit eliminated, and possible new tax under B.C. NDP government, Revelstoke Credit Union faces $100,000+ to books.

A decision by the federal government to eliminate a tax deduction for credit unions could have a negative impact on the Revelstoke Credit Union, says its Chief Executive Officer.

The news came as part of the budget released last month, and was a big surprise, said Robert Bobicki.

“The biggest thing is that it is going to affect our capital and our ability to build further capital,” she said. “Right now, with all of the margins being squeezed and the regulators looking for more capital, when we earn anything more than that $500,000, instead of being able to give that community giving or member rewards, we now in turn are going to have start paying a portion of that for yet another tax.”

The tax credit in question was created in the 1970s as a way to allow credit unions to better build capital since they don’t have the same access to capital markets that banks do.

According to the 2013 budget document, the phase-out of the tax credit over the next five years is “to improve the neutrality and fairness of the tax system.”

David Phillips, the CEO of Credit Union Central of Canada, said the tax increase will make it more difficult for credit unions to compete with major commercial banks. “Providing credit unions with access to a lower income tax rate is good policy for a government that seeks to encourage the growth of competitive alternatives to the large Canadian commercial banks,” he said.

The move comes as credit unions in B.C. are bracing themselves for the potential re-instatement of the corporate capital tax should the NDP win power in the upcoming provincial elections. The one per cent tax on capital would cost the RCU about $100,000, said Bobicki.

She said in 2012 the credit union gave $30,000 to its community giving program, $160,000 to member rewards, $18,800 in dividends, and put more than $300,000 into retained earnings to build capital. The tax increases could cost the RCU more than $100,000.

“This is a double whammy, if in fact we do have a new government,” she said, stressing that she was non-partisan. “Where it hurts is that we’re strong and healthy and all of that, it’s the times right now – short lived I’m really hoping – where the net incomes are lesser than normal, to then in turn give have to give a portion of that already reduced profitability to another tax is extremely frustrating.”

 

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Sternwheelers once plied Okanagan Lake

Vessels once transported passengers and goods along the Okanagan Valley

Fires ignite on Revelstoke’s Mt. Begbie; Kamloops Fire Centre blazes holding

Crews working throughout region over holiday weekend to contain wildfires

QUIZ: How much do you know about British Columbia?

On this B.C. Day long weekend, put your knowledge of our province to the test

Fourteen blazes sparked in Kamloops Fire Centre

Lightning the suspected cause of all fires but one; cause of Solco Creek blaze remains unknown

VIDEO: Otter pups learn to swim at B.C. wildlife rescue facility

Watch Critter Care’s Nathan Wagstaffe help seven young otters go for their first dip

Alberta man presumed to have drowned after cliff jumping in Peachland

Emergency responders began rescue efforts at around 2:40 p.m. on Aug. 1.

Michael Buble among 13 British Columbians to receive Order of B.C.

Ceremony will be delayed to 2021 due to COVID-19

U.S. border communities feel loss of Canadian tourists, shoppers and friends

Restrictions on non-essential travel across the Canada-U.S. border have been in place since March 2`

Rollout of COVID-19 Alert app faces criticism over accessibility

App requires users to have Apple or Android phones made in the last five years, and a relatively new operating system

Reported Big White wildfire dubbed ‘smoke chase’

Crews responded to the area but could not locate a fire

Alleged impaired driver sparks small wildfire near Lytton after crash: B.C. RCMP

Good Samaritans prevented the blaze from getting out of control

Wildfire in West Kelowna’s Rose Valley grows to 3 hectares

The fire was first reported at around 2:30 p.m. on Aug. 2.

Most Read