Please find following the tax changes, not only in the recent budget, but all the changes since the election in May 2019:
Since taking office in May 2019, government has delivered on its commitment to reduce the tax burden on Albertans and Alberta businesses by repealing the carbon tax and cutting corporate tax rates to lower the cost of living and leave more money for businesses to invest and create jobs.
Job Creation Tax Cut
Cutting corporate business tax rates from 12% to 8% by 2022, combined with enhancing capital cost allowance rates and reducing red tape, gives Alberta the most competitive corporate tax system in Canada.
As of July 1, 2019, Alberta has the lowest general corporate tax rate in Canada (11%) and will have, by far, the lowest rate when the Job Creation Tax Cut is fully implemented (8% on Jan. 1, 2022).
By 2022, Alberta’s rate will be 30% lower than the next-lowest announced provincial rate and a lower combined federal provincial corporate tax rate than 44 U.S. states.
Combined Federal and Provincial/State Corporate Tax Rates, Canada and U.S.
Source: Alberta Treasury Board and Finance; *Nevada, Ohio, Texas, and Washington impose gross receipts taxes instead of corporate income taxes, which are not reflected in the rates shown. Gross receipts taxes, which typically apply to total gross revenues, are generally considered more harmful to the economy than corporate income taxes.
Low taxes for all industries
The province is shifting to a low rate, broad based tax approach that leaves business decisions in the hands of the private sector, not government. As part of this approach, Budget 2019 proposes to eliminate existing targeted tax credits that benefit certain corporations.
As such, the following targeted corporate tax credits are being eliminated:
- Alberta Investor Tax Credit
- Community Economic Development Corporation Tax Credit
- Capital Investment Tax Credit
- Interactive Digital Media Tax Credit
- Scientific Research and Experimental Development Tax Credit
Eliminating these 5 tax credits will reduce Alberta’s tax expenditures by over $400 million by 2022 23, supporting our commitment to bring spending to more affordable levels.
In contrast to targeted tax credits, Alberta’s corporate tax rate reductions and enhanced Capital Cost Allowances (CCA) create a competitive environment for all industries to grow and succeed. These measures provide a much greater boost to overall business competitiveness than targeted tax credits.
It is estimated that over 100,000 Alberta corporations will benefit from the Job Creation Tax Cut, as opposed to approximately 1,500 corporations that would have benefited from the five targeted tax credits.
About 75% of businesses that benefit from the general corporate tax reductions will also benefit from Alberta’s competitive 2% small business tax rate, meaning these small businesses can grow without high corporate tax rates punishing their success.
Targeted tax credits also come with red tape, which makes them a relatively inefficient way to deliver benefits to businesses. The application process for some tax credits involves multiple steps and can take over a year before an application results in a payment by government. In contrast, the Job Creation Tax Cut and enhancements to the CCA regime are implemented within existing tax-filing processes, with no additional compliance or administrative burden.
Alberta Child and Family Benefit
Beginning in July 2020, the new Alberta Child and Family Benefit (ACFB) will replace the Alberta Family Employment Tax Credit and the Alberta Child Benefit with a single program that provides more benefits to lower income families while reducing administrative costs.
The ACFB will refocus child benefits to better support the families most in need, with many receiving higher benefits than they do currently.
With these changes, Alberta will continue to have some of the most generous child benefits in the country, delivering about $290 million in benefits to over 190,000 families on an annual basis.
Freezing the personal income tax system
Personal income tax rates and tax brackets will remain at 2019 levels.
Table 1. Personal income tax rates and tax brackets
|Tax rate||Tax bracket|
|10%||Up to $131,220|
|12%||$131,220.01 to $157,464|
|13%||$157,464.01 to $209,952|
|14%||$209,952.01 to $314,928|
|15%||$314,928.01 and up|
Tax credits and personal amounts
Alberta’s non-refundable tax credits and basic personal amount – the amount of income you can earn tax free –remain at 2019 levels. These are nearly 20% higher than the next highest province.
Table 2. Basic personal and spousal amounts
|Basic personal amount ($)||19,369||10,682||16,065||9,626||10,582||15,269||10,264||8,481||9,160||9,414|
|Spousal amount (max. $)||19,369||9,147||16,065||9,134||8,985||15,269||8,716||8,481||7,780||7,692|
Source: Alberta Treasury Board and Finance; *other provinces’ amounts known as of Oct. 4, 2019. In Quebec, unused tax credits may be transferred from one spouse to another after accounting for non-refundable tax credits in the calculation of the individual’s income tax.
Education and tuition tax credits
Alberta’s generous education and tuition tax credits stand out as a significant outlier when compared with other provinces.
To reduce tax expenditures and better align overall post‑secondary funding with amounts provided in other provinces, Alberta will eliminate its education and tuition tax credits beginning with the 2020 tax year. These changes align with recent changes in Ontario and Saskatchewan.
Alberta students will still be able to claim amounts earned prior to 2020. These measures are estimated to reduce tax expenditures by $20 million in 2019‑20, $90 million in 2020‑21 and $115 million in 2021‑22.
Tobacco taxes continue to be an important part of Alberta’s strategy to reduce tobacco use.
Tobacco taxes decrease the affordability of tobacco products, which encourages users to quit and deters non‑users from ever starting. This is particularly true for young people, who are more responsive to the cost of tobacco products.
As part of Alberta’s efforts to reduce tobacco use and deter non‑users from ever starting, the tobacco tax increased October 25 at 12:01 am:
- by $5 per carton (to $55) of 200 cigarettes
- by 3.75 cents (to 41.25 cents) per gram of loose tobacco
- to 142% (up from 129%) of the taxable price of the cigar with a minimum tax per cigar of 27.5 cents and a maximum of $8.61
With this increase, Alberta’s tax rate on cigarettes will become more comparable to the rates in neighbouring provinces. These changes are estimated to generate $45-55 million per year in additional revenue.
Provincial taxes per carton of 200 cigarettes*
Sources: Statistics Canada and Alberta Treasury Board and Finance; *Alberta’s tax rate reflects the rate increase on October 25, 2019. Other provinces’ tax rates known as of October 4, 2019. Sales tax amounts are calculated using a 12-month average retail price for a carton of cigarettes in Canada (September 2018 to August 2019).
Education property tax
Education property tax rates will be frozen in 2019‑20. The residential / farmland rate will remain at $2.56 per $1,000 of equalized assessment, while the non‑residential rate will remain at $3.76.
While rates are frozen, revenue from the tax will rise 1.7% due to a growing assessment base. Education property tax revenue will fund about 30% of education operating costs.
The Alberta government continues to take a lower share of revenue from the property tax base than municipalities do. Since government assumed responsibility for education property tax in 1994, the province’s share of total provincial‑municipal property tax revenue collected has fallen from 51% to 25% in 2018.
Alberta’s tax advantage
After factoring in these changes, Alberta will continue to have a significant tax advantage compared to other provinces, with the most competitive corporate income taxes, low personal income taxes and no sales tax, payroll tax or health premium.
If Alberta had the same tax system as any other province, Albertans and Alberta businesses would pay at least $13.4 billion more in taxes.
Alberta’s tax advantage, 2019-20 ($ billions)*
Source: Alberta Treasury Board and Finance; *This graph shows the total additional provincial tax and carbon charges that individuals and businesses would pay if Alberta had the same tax system and carbon charges as other provinces. This information reflects tax rates for other provinces known as of October 4, 2019. This comparison includes personal and corporate income tax, sales tax, fuel tax, carbon charges (excluding the fuel charge under the federal carbon pricing backstop), tobacco tax, health premiums, payroll tax, liquor tax and markups, land transfer tax and other minor taxes.