Sign up for tax alert emails    GTNU homepage    Tax newsroom    Email document    Print document    Download document

March 8, 2023
2023-5273

Canada: Alberta issues budget 2023/24

  • The Alberta budget for 2023/2024 has been tabled.

  • The budget contains tax measures affecting individuals and corporations.

  • This Alert summarizes the key tax measures.

Executive summary

On 28 February 2023, Alberta Finance Minister Travis Toews tabled the province’s fiscal 2023/24 budget. The budget contains tax measures affecting individuals and corporations.

The Minister anticipates a surplus of CA$2.4b[i] for 2023/24 and projects further surpluses of $2.0b for 2024/25 and $1.4b for 2025/26.

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

Detailed discussion

Business tax measures

Corporate income tax rates

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

Alberta’s 2023 corporate income tax rates are summarized in Table A.

Table A – 2023 Alberta corporate income tax rates1

 

Alberta

Federal and Alberta combined

Small-business tax rate2

2%

11%

General corporate tax rate2, 3

8%

23%

1 The rates represent calendar-year-end rates unless otherwise indicated.

2 The corporate income tax rates for manufacturers of qualifying zero-emission technology are reduced to 7.5% for eligible income otherwise subject to the 15% general corporate income tax rate or 4.5% for eligible income otherwise subject to the 9% small-business corporate income tax rate.

3 An additional tax applies to banks and life insurers at a rate of 1.5% on taxable income (subject to a $100 million exemption to be shared by group members), effective for taxation years ending after 7 April 2022 (prorated for taxation years straddling this effective date).

Other business tax measures

The Minister also proposed the following business tax measure:

Agri-Processing Investment Tax Credit – Corporations in the agri-food sector will be entitled to a non-refundable tax credit of 12% on eligible capital investments in Alberta of at least $10 million made on or after 7 February 2023. Applications will be accepted starting in spring 2023, and more information will be made available once program regulations are brought forward. Corporations will be able to carry forward unused credits for a period of 10 years.

Personal tax

Personal income tax rates

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

The 2023 Alberta personal income tax rates are summarized in Table B.

Table B – 2023 Alberta personal income tax rates

First
bracket rate

Second
bracket rate

Third
bracket rate

Fourth
bracket rate

Fifth
bracket rate

$0 to $142,292

$142,293 to $170,751

$170,752 to $227,668

$227,669 to $341,502

Above $341,502

10%

12%

13%

14%

15%

For taxable income in excess of $227,668, the 2023 combined federal-Alberta personal income tax rates are outlined in Table C.

Table C – Combined 2023 federal and Alberta personal income tax rates

Bracket

Ordinary income1

Eligible dividends

Non-eligible dividends

$227,669 to $235,6752

43.32%

27.85%

36.92%

$235,676 to $341,502

47%

32.93%

41.15%

Above $341,502

48%

34.31%

42.30%

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

2 The federal basic personal amount comprises two elements: the base amount ($13,521 for 2023) and an additional amount ($1,479 for 2023). The additional amount is reduced for individuals with net income in excess of $165,430 and is fully eliminated for individuals with net income in excess of $235,675. Consequently, the additional amount is clawed back on net income in excess of $165,430 until the additional tax credit of $222 is eliminated; this results in additional federal income tax (e.g., 0.32% on ordinary income) on net income between $165,431 and $235,675.

Personal tax credits

This budget proposes changes to the following personal credits/amounts:

  • Charitable donations tax credit – The charitable donations tax credit rate on the first $200 of contributions will be increased from 10% to 60% effective in 2023.

  • Adoption expenses tax credit – A 10% non-refundable tax credit is available for certain agency, legal and administrative fees and travel-related costs incurred as part of the adoption process. The maximum allowable expenses for the credit are increased to $18,210 for 2023 to match the federal amount. The maximum amount will be indexed annually thereafter.

Other personal tax measures include the following:

  • The Alberta Government previously resumed the indexation of the personal income tax system, effective 1 January 2022. Personal income tax credit amounts and tax bracket thresholds are higher, by 2.3% in 2022 and 6% in 2023.

Other tax measures

Fuel tax

The Alberta Government has paused the collection of fuel taxes on gasoline and diesel until 30 June 2023. In July 2023, fuel tax rates for gasoline and diesel will once again be determined quarterly based on average oil prices.

Education property tax

To improve affordability in recent years, the government has limited the increase in the total education property tax requisition. The total requisition was frozen for 2020/21 and 2021/22 and increased by only 1.5% in 2022/23. As costs continue to increase due to high inflation, the government will freeze the education property tax requisition at the 2022/23 level of $2.5 billion for 2023/24.

_________________________________________

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

Ernst & Young LLP (Canada), Calgary

Ernst & Young LLP (Canada), Edmonton

_________________________________________

Endnotes

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

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

Copyright © 2024, Ernst & Young LLP.

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.

 

"EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

 

Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct Opt out of all email from EY Global Limited.

 


Cookie Settings

This site uses cookies to provide you with a personalized browsing experience and allows us to understand more about you. More information on the cookies we use can be found here. By clicking 'Yes, I accept' you agree and consent to our use of cookies. More information on what these cookies are and how we use them, including how you can manage them, is outlined in our Privacy Notice. Please note that your decision to decline the use of cookies is limited to this site only, and not in relation to other EY sites or ey.com. Please refer to the privacy notice/policy on these sites for more information.


Yes, I accept         Find out more