Tax highlights from the 2017 Alberta budget

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Tax highlights from the 2017 Alberta budget

Published
March 2017

Tax highlights from the 2017 Alberta budget

Finance Minister Joe Ceci tabled the 2017 Alberta provincial budget on March 16, 2017. The operational budget for the 2017-2018 fiscal year forecasts a deficit of $10.3 billion. The budget also anticipates deficits of $9.7 billion in 2018-2019, and $7.2 billion in 2019-2020.

On the tax side, there were no announced changes to personal and corporate income tax rates. The government did announce that it intended to make adjustments to the dividend tax credit and political contribution tax credit.

The following pages are a summary of the changes announced in the budget. Please note that these changes are still proposals until passed into law by the provincial government.

Personal Tax Matters

Personal income tax rates

There were no personal tax rate increases announced in this budget. Tax brackets and personal credit amounts have been indexed by 1.3% for 2017. The table below shows Alberta tax rates and brackets for 2017.

Taxable income range 2017 tax rates
$18,691 - $126,625 10%
$126,626 - $151,950 12%
$151,951 - $202,600 13%
$202,601 - $303,900 14%
$303,901 and over 15%

The table below shows the 2017 combined federal and provincial highest marginal tax rates for various types of income.

Type of income 2017 combined tax rates
Regular income 48.00%
Capital gains 24.00%
Eligible dividends 31.71%
Non-eligible dividends 41.24%*

*The rate for non-eligible dividends is subject to change as noted below.

Indexation of personal tax credits

The basic personal amount is equivalent to the amount of income you can earn without paying any tax. The basic, spousal, and eligible dependant amounts were increased by 1.3% for 2017, from $18,451 to $18,690. The general indexing provision will also increase other non-refundable tax credits by the same percentage.

Dividend tax credit

Since 2009 Alberta’s tax system has been fully integrated, so shareholders do not incur double taxation on dividend income. The budget indicates the government’s intention to introduce legislation to adjust the dividend tax credit rate on non-eligible dividends for 2017 and subsequent years to better reflect the impact of income tax changes made by the federal government. No other details were provided in the budget documents.

Political contribution tax credit

The budget proposes to extend the political contribution tax credit to allow individuals to contribute to party leadership elections and candidate nomination races. This change is effective for contributions made on or after January 1, 2017. The existing tax credit structure remains in place as does the contribution maximum of $2,300 per individual contributor

Alberta investor tax credit

This credit was first mentioned in the 2016 budget but no details were provided at that time. The total budget for this credit is $90 million over three years to be funded on a first-come first-served basis until the annual funding is exhausted. The provision provides a 30% tax credit to investors who make equity investments in eligible Alberta businesses that undertake research, development, or commercialization of new technology, new products or new processes. This credit is also applicable to businesses engaged in interactive digital media development, video post-production, digital animation or tourism. Eligible corporations can apply to be enrolled in the program.

If approved, individuals and corporations that invest in these corporations may be eligible for tax credit certificates. Individuals can use these certificates when filing their income tax returns to claim a refundable tax credit of up to $60,000 per year. The tax credit is non-refundable for corporate taxpayers and there is no maximum on the amount of credit that can be claimed.

Climate Leadership Plan

Carbon levy

The carbon levy applies to purchases of all fossil fuels that produce greenhouse gas emissions when consumed for combustion purposes. The carbon levy is $20 per tonne of carbon dioxide-equivalent emissions for 2017, rising to $30 per tonne in 2018. The rates on major fuels are as follows:

Type of fuel 2017 tax ($20 per tonne) 2018 rate ($30 per tonne)
Diesel 5.35 cents/litre 8.03 cents/litre
Gasoline 4.49 cents/litre 6.73 cents/litre
Natural Gas $1.011/gigajoule $1.517/gigajoule
Propane 3.08 cents/litre 4.62 cents/litre

As noted in the 2016 budget, the government is providing a non-taxable rebate based on household income, to offset these additional costs of the carbon levy to low and middle income individuals.

Corporate Tax Matters

Corporate income tax rates

The budget leaves most 2017 corporate income tax rates unchanged from 2016, other than the previously announced 1% reduction in the small business rate effective January 1, 2017. The table below shows Alberta tax rates and the small business limit for 2017.

Category 2017 tax rates
General rate 12%
Manufacturing & processing rate 12%
Investment income rate 12%
Small business rate 2%
Small business limit $500,000

The table below shows the 2017 combined federal and provincial corporate income tax rates for various types of income earned by a Canadian Controlled Private Corporation (CCPC).

Type of income 2017 combined tax rates
Small business income 12.5%
Active income over $500,000 27.0%
Manufacturing & processing income 27.0%
Investment income 50.7%
Capital investment tax credit

This credit was first mentioned in the 2016 budget but no details were provided at that time. The total budget for this credit is $70 million over two years. The provision provides a 10% non-refundable credit on up to $5 million of investment by a corporation on eligible capital expenditures for manufacturing, processing and tourism infrastructure.

Other Proposals

Education property tax rates

Alberta’s education property tax rates will be frozen for the 2017-2018 year. This means that rates for residential property and farmland will remain at $2.48 per $1,000 of assessed value. Commercial property rates will remain at $3.64 per $1,000 of assessed value.

University tuition

The budget proposes to freeze post-secondary tuition rates for the third consecutive year.

Publish date: 
March, 2017