Central 1 Credit Union

Central 1 Credit Union

February 18, 2014 20:46 ET

Central 1 Credit Union Welcomes B.C. Government Decision to Maintain Tax Benefits for B.C. Credit Unions Through 2016

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Feb. 18, 2014) - Central 1 Credit Union commends the B.C. government on its decision to maintain the provincial extended small-business tax benefit for the province's 44 credit unions through 2016.

"We are pleased that the government has listened to the concerns raised by credit unions and thousands of their members about the impact a tax hike would have on credit union operations," said Don Wright, President & CEO of Central 1.

The 2013 federal budget announced the elimination of the extended small-business tax benefit for credit unions over the next five years. British Columbia provides a similar tax rate for credit unions because they are eligible for the federal reduction. Phasing out the federal reduction would have meant that the lower B.C. tax rate would also be removed without legislative changes to protect it.

"In today's budget, Finance Minister de Jong promised to adjust current legislation to shelter credit unions from the full impact of the negative federal income tax change for three years," said Wright. "This will be of significant benefit to credit unions, their members and the communities in which they live and work. We hope that we can convince the government to make this benefit permanent."

"As Minister de Jong noted in his speech, jobs in the finance sector aren't confined to large multi-national banks. B.C. is home to one of Canada's longest-established and fastest-growing credit union movements," said Wright.

Nearly 1.9 million British Columbians are members of credit unions and 42 B.C. communities rely on credit unions as their only financial institution.

Credit unions directly employ more than 8,700 British Columbians. In 2012 and 2013, B.C.'s credit unions invested $43.9 million in charitable donations and 21,240 hours of volunteer work in the province.

In recent months, credit unions have met with MLAs and the ministry of finance to explain that they are subject to different rules than banks, and are required by provincial legislation to maintain a significant capital base, including a pool of retained earnings to protect consumers but cannot raise capital through equity markets.

Each year, a large portion of credit unions' profits is reinvested into retained earnings to ensure they follow prudent financial practices and remain compliant with regulations. A significant tax increase would have eroded those profits and had a negative impact on credit unions' abilities to create jobs and invest in B.C. communities.

About Central 1

Central 1 is the central financial facility and trade association for the B.C. and Ontario credit union systems. Central 1 represents a consumer-oriented, full-service retail financial system that serves 3.2 million members and collectively holds $91 billion in assets and is owned primarily by its member credit unions, 44 in B.C. and 94 in Ontario.

With offices in Vancouver, Mississauga and Toronto, Central 1 provides liquidity management, direct banking and payment service solutions as well as a wide range of trade services. For more information, visit www.central1.com.

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