Alberta Budget Report 2018

Last updated: Mar. 23, 2018 

On March 22, 2017, the Honourable Joe Ceci, President of Treasury Board and Minister of Finance, presented his fourth budget and the fourth budget of Alberta’s NDP government.

The budget contained no new taxes, and no new tax increases or decreases that had not previously been announced.

Highlights

• Deficit of $8.8 Billion predicted for 2018-19
• Projects deficits of $7.9 billion in 2019-20 and $7 billion in 2020-21
• $4.3 billion deficit projected in 2021-22, and $1.4 billion in 2022-23
• Surplus of $0.7 billion is projected for 2023-24.
• No changes to personal or corporate tax

Alberta faces 5 more years of deficit and billions of dollars in mounting debt before it sees a balance sheet back in the black. 

It tells a story of an economy still recovering from a lingering oil price shock and struggling with the market access problems with its crude.

While there was no budget commitment to support a Calgary Winter Olympic bid, the province did say money is earmarked for that purpose.

Some big ticket items to note:

• Health budget hits a record $22.1 Billion.
• Increase in Health spending by 2.9%
• Education increase by 2.4% to $8.35 billion
• Community and social services by 4.5% to $3.66 billion.

There is no introduction of a provincial sales tax in Alberta.

Personal Tax Measures

Personal income tax rates – No change

It was confirmed today that personal tax rates for 2018 will be indexed by 1.2%.  The rate brackets will continue to be subject to inflation indexing.  As a result, Alberta’s personal income tax rates are:

Alberta Tax Rates	2017 Taxable Income	2018
10.0%	$0 to $126,625	$0 to $128,145
12.0%	$126,625 to $151,950	$128,146 to $153,773
13.0%	$151,950 to $202,600	$153,774 to $205,031
14.0%	$202,600 to $303,900	$205,032 to $307,547
15.0%	$303,900 and over	$307,548 and over

Alberta’s combined federal and provincial top marginal rates for income, capital gains and eligible dividends are as follows:

Personal Combined Federal/Provincial Top Marginal Rates
	2017	2018
Interest and regular income	48.0%	48.0%
Capital gains	24.0%	24.0%
Eligible dividends	31.7%	31.7%
Non-eligible dividends	41.2%	41.6%

Combined federal and Alberta Personal Tax Rates 2018
Bracket	Ordinary Income*	Eligible dividends **	Non-eligible dividends **
$205,032 to $205,842	43%	24.81%	35.84%
$205,843 to $307,547	47%	30.33%	40.84%
Above $307,547	48%	31.71%	41.64%

 * The rate on capital gains is ½ the ordinary income rate.
** The rates apply to the actual amount of the taxable dividends received from taxable Canadian corporations

Alberta Non-Refundable Tax Credits

The government confirmed today that personal tax credits for 2018 will be indexed by 1.2%.

The maximum tax credits amounts and actual Alberta tax credits for 2017 and 2018 are set out below.

Alberta Non-Refundable Tax Credits
	2017		2018
	Maximum Amount	Alberta Tax Credit	Maximum Amount	Alberta Tax Credit
Basic Personal Amount	$18,690	$1,869	$18,915	$1,892
Spousal Amount	18,690	1,869	18,915	1,892
Eligible dependent amount	18,690	1,869	18,915	1,892
Age amount	5,208	521	5,271	527
Infirm dependent amount	10,820	1,082	10,949	1,095
CPP Contributions	2,564	256	2,594	259
EI Contributions	836	84	858	86
Pension income amount	1,439	144	1,456	146
Disability amount	14,417	1,442	14,590	1,459
Disability supplement	10,819	1,082	10,949	1,095
Tuition and education amounts	Variable	Variable	Variable	Variable
Adoption expenses	12,783	1,278	12,939	1,294
Medical expenses	Variable	Variable	Variable	Variable
Medical expenses (other dependents)	Variable	Variable	Variable	Variable
Caregiver amount	10,819	1,082	10,949	1,095
Interest on student loans	Variable	Variable	Variable	Variable
Donations & Gifts -first $200 – over $200	200 75% of income	20 Variable	200 75% of income	20 Variable
In general, credits are multiplied by 10% to arrive at the deduction from Alberta Tax.  In the case of donations and gifts over $200, the credit is 21%

Corporate Tax Measures

Corporate Tax Rates

No changes to corporate taxes were announced.

As a result, Alberta’s corporate income tax rates remain as follows:

Corporate Income Tax Rates
	Alberta		Combined Federal & Alberta
	2018	2019	2018	2019
General	12%	12%	27%	27%
Small business*, **	2%	2%	12%	11%

*On first $500,000 of active business income
** On 24 October 2017, the federal government tabled a notice of ways and means motion to implement reductions in the small-business corporate income tax rate which were announced on 16 October 2017. The federal small-business rate is reduced from 10.5% to 10.0% effective 1 January 2018 and will be further reduced to 9.0% effective 1 January 2019.

Note: As announced in Budget 2016, Alberta’s small-business corporate income tax rate was reduced from 3% to 2% effective 1 January 2017. The small-business limit remains at $500,000.

Interactive Digital Media Tax Credit

This credit reimburses eligible interactive digital media companies up to 25% of their eligible labour costs.

The credit will be available for expenses incurred after 1 April 2018.

An additional credit of up to 5% will be available to eligible interactive digital media companies hiring under-represented groups.

Further details will be available once regulations have been released.

Alberta Investor Tax Credit (AITC)

The Alberta Investor Tax Credit provides a 30% tax credit for investors who make equity investments in eligible Alberta businesses that undertake research, development or commercialization of new technology, products or processes, as well as for businesses engaged in interactive digital media development, video post-production, digital animation or tourism.

The AITC was originally planned to operate for 3 years; however, in order to continue supporting investment in non-traditional sectors, the AITC will be extended until 2021-22.

Investors will be eligible to receive an additional 5% credit if they invest in eligible business corporations that meet diversity and inclusion criteria.

The new diversity and inclusion criteria requirements will be provided when the corresponding regulations are introduced.

Capital Investment Tax Credit (CITC)

The Capital Investment Tax Credit provides a 10% non-refundable tax credit of up to $5 million for a corporation’s eligible capital expenditures on manufacturing, processing and tourism infrastructure.

The CITC was intended to operate for 2 years, but to continue to encourage investment in Alberta, the CITC will be extended until 2021-22.

Other Measures

(Not related to income tax)

Carbon Tax Levy

No changes have been proposed to the carbon tax levy.

Cannabis

The budget confirmed that the sale of cannabis in Alberta will be taxed by the federal government under a federal excise tax.  

The tax will apply when sold by licensed producers as follows:

• $1 per gram or 10% of the producer’s price, whichever is greater (with Alberta receiving 75% of the amount collected), and
• An additional amount equivalent to 10% of the estimated retail price (with Alberta receiving the entire amount collected).

(Source: Alberta Government)