Alberta’s taxation system
The government of Alberta recognizes the importance of a competitive, equitable, and efficient tax system, and it is committed to ensuring that this system remains in place.
Personal income tax is a type of tax that applies to individuals.
The Canada Revenue Agency collects personal income tax on behalf of the Alberta government in the same way that the federal government collects federal income tax.
Personal income tax rates are as follows:
| Tax rate | Taxation in a specific 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 |
As a result of the reduced corporate income tax rate, the dividend tax credit rate was changed on January 1, 2021, to reflect the lower corporate tax rate. The date of adjustment implementation was January 1, 2021, and it went into effect immediately following the first of the year.
Income tax on corporations
As part of the Job Creation Tax Cut programme, the provincial government in Alberta has said that its corporate income tax rate will be lowered from 12 percent to 8 percent. The government of Alberta is moving up the deadline to reduce the corporate income tax rate to 8 percent to July 1, 2020, compared to the original time frame of July 1, 2021. This element of the provincial recovery plan is especially important. The two percent tax rate affects businesses with less than $500,000 in gross annual income.
| Corporate income tax rate | Tax rate |
|---|---|
| July 1, 2015 to June 30, 2019 | 12% |
| July 1, 2019 | 11% |
| January 1, 2020 | 10% |
| July 1, 2020 | 8% |
Alberta’s CCA regime was strengthened to attract investment and business, and this occurred concurrently with federal measures.
The ability to quickly write off new capital assets for tax purposes enables corporations to improve cash flow and make new asset investment more appealing. According to the federal announcement, this programme will be phased out between 2023 and 2027.