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March 2, 2020
2020-5319

Canada: Alberta issues budget 202021

Executive summary

On 27 February 2020, Alberta Finance Minister Travis Toews tabled the province’s fiscal 2020–21 budget. The budget contains no new taxes, other than a vaping products tax, and no tax increases.

The Minister anticipates a deficit of CA$6.8b1 for 2020–21 and projects a further deficit of $2.7b for 2021–22. A surplus of $0.7b is projected in
2022–23.

The following is a brief summary of the key tax measures.

Detailed discussion

Business tax measures

Corporate tax rates

No changes are proposed to the corporate tax rates or the $500,000 small-business limit.

Alberta’s 2020 and 2021 corporate tax rates are summarized in Table A.

Table A – Alberta corporate tax rates 2020–21

 
2020
2021
 
Alberta
Federal and Alberta combined
Alberta
Federal and Alberta combined

Small-business tax rate*

2.00%

11.00%

2.00%

11.00%

General corporate tax rate**

10.00%

25.00%

9.00%

24.00%

* The small-business tax rate and the general corporate tax rate are based on a 31 December year-end.

** Alberta is gradually reducing the province’s general corporate income tax rate from 12.00% to 8.00% by 2022. The general corporate tax rate was reduced to 11.00% effective 1 July 2019, and to 10.00% effective 1 January 2020 and will continue to decrease as follows: 1 January 2021 – to 9.00% and 1 January 2022 – to 8.00%.

Personal tax

Personal income tax rates

The budget does not include any changes to personal income tax rates.

The 2020 Alberta personal tax rates are summarized in Table B.

Table B – Alberta personal tax rates 2020

First bracket rate
Second bracket rate
Third bracket rate
Fourth bracket rate
Fifth bracket rate

$0 to $131,220

$131,221 to $157,464

$157,465 to $209,952

$209,953 to $314,928

Above $314,928

10.00%

12.00%

13.00%

14.00%

15.00%

For taxable income in excess of $209,952, the 2020 combined federal and Alberta personal income tax rates are outlined in Table C.

Table C – Combined federal and Alberta 2020 personal tax rates

Bracket
Ordinary income*
Eligible dividends
Non-eligible dividends

$209,953 to $214,368**

43.22%

25.12%

36.81%

$214,369 to $314,928

47.00%

30.33%

41.15%

Above $314,928

48.00%

31.71%

42.30%

* The rate on capital gains is one-half the ordinary income tax rate.

** An additional federal basic personal amount may be available for individuals with taxable income below $214,368. The additional tax credit is $140 for individuals with taxable income below $150,474; this additional amount is gradually phased out for individuals with taxable income between $150,474 and $214,368, resulting in an additional 0.22% to 0.30% of federal income tax on taxable income in this bracket.

Personal tax credits

This budget proposes no changes to personal tax credits.

Other personal tax measures

The new Alberta Child and Family Benefit (ACFB), which was announced in the 2019 budget will begin 1 July 2020. The ACFB replaces the Alberta Family Employment Tax Credit and the Alberta Child Benefit with a single program. The ACFB includes both a base component and a working component with combined benefits increasing to a maximum of $5,120, subject to certain family income limits.

Other tax measures

Vaping products tax

The Government will implement a 20% tax on the retail sale price of vaping products. The date of implementation for the tax will be announced with the introduction of the legislation in spring 2020.

Tourism levy

In order to level the playing field, the Government will extend the 4% tourism levy to apply to the rental of all short-term rentals offered through online marketplaces. Legislation implementing this change will be introduced in spring 2020.

Education property tax

Education property tax rates will rise by 3.1% in 2020–21. The residential/farmland rate will rise from $2.56 to $2.64 per $1,000 of equalized assessment, while the non-residential rate will rise from $3.76 to $3.88.

Endnote

1. Currency references in this Alert are to CA$.

For additional information with respect to this Alert, please contact the following:

Ernst & Young LLP (Canada), Calgary
Ernst & Young LLP (Canada), Edmonton

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