Return to fair taxation for BC credit unions a win for all British Columbians: First West Credit Union

Budget 2017 Update recognizes unique co-operative structure of credit unions and their strategic impact on B.C.’s economy

VICTORIA, B.C. (Sept. 11, 2017) — First West Credit Union welcomed today’s announcement by Finance Minister Carole James to restore the full provincial preferential income tax treatment for credit unions.

“We’re very pleased that Minister James has recognized that credit unions by their structure, mandate and values are distinctive from banks and therefore should be taxed differently,” says First West Credit Union CEO Launi Skinner.

Skinner, who has been a leading voice on this issue, elaborates on why fair taxation for credit unions matters. She explains that like other B.C. credit unions, First West relies almost entirely on retained earnings to grow its capital. Skinner notes that First West’s capital base is approximately 90 per cent retained earnings—a high quality of capital that is well above the average 45 per cent that banks maintain[1].

“Taxes are paid out of a credit union’s retained earnings and in turn affects the amount that a credit union can lend,” says Skinner. “In short, the lower a credit union’s retained earnings, the less it can lend competitively to working families and small businesses in our communities, two groups that are critical to the growth and prosperity of communities across B.C.”

In 2013, the federal government made controversial changes to the way credit unions were taxed. For 40 years prior, successive federal governments recognized the important differences between cooperatively-owned credit unions and shareholder-owned banks by providing a specific deduction to credit unions. When the federal government changed its tax approach for credit unions it triggered changes in both Saskatchewan and B.C.’s tax legislation.

In British Columbia, which has the largest credit union system in the country, no intervening action on taxation was taken by government and so beginning in 2016, the provincial tax burden for credit unions began to increase. In January of 2017, the previous provincial government introduced a one-year pause on further tax increases while the Credit Union and Financial Institutions Act was being reviewed.

Today’s decision by the new B.C. government comes on the heels of the BC Chamber of Commerce policy announcement that advocated for a reinstatement of the small business tax benefit for the province’s credit unions.

[1] Canadian Credit Union Association 2015 Community and Economic Report, pg. 3. https://www.ccua.com/publications

About First West Credit Union
First West Credit Union offers members the financial strength, comprehensive product selection and extended branch network of a large financial institution while maintaining local brand identities and a unique grassroots approach to service. Led by Launi Skinner, First West is British Columbia’s third-largest credit union with nearly $12 billion in assets under administration, approximately 240,000 members and more than 1,750 employees. It operates 54 branches throughout the province under the Envision Financial, Valley First, Enderby & District Financial and Island Savings divisions. Visit firstwestcu.ca for more information.

Follow us on Twitter: @firstwestcu

Media Contact

Jason Brown
Manager, Public Relations & Communications
604.539.7415
mediarelations@firstwestcu.ca