Last updated: Oct. 28, 2019
On Oct. 24, 2019, Alberta Finance Minister Travis Toews presented the province’s fiscal 2019–20 budget.
The minister anticipates a deficit of $8.7 billion for 2019-20 and further deficits of $5.9 billion in 2020-21 and $2.6 billion in 2021-22.
A surplus of $0.6 billion is projected in 2022-23.
There are no new personal tax rate changes or corporate tax rate changes, and no introduction of a provincial sales tax in Alberta.
Our tax analysts have reviewed the updates and listed the highlights below.
No change to personal income tax rates
No new personal income tax rate changes have been announced in this year’s budget.
Alberta’s personal income tax rates:
| Alberta tax rates | 2018 Taxable Income | 2019 |
| 10% | $0 to $128,145 | $0 to $131,220 |
| 12% | $128,146 to $153,773 | $131,220 to $157,464 |
| 13% | $153,774 to $205,031 | $157,464 to $209,952 |
| 14% | $205,032 to $307,547 | $209,952 to $314,928 |
| 15% | $307,548 and over | $314,928 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:
| 2018 | 2019 | |
| Interest and regular income | 48% | 48% |
| Capital gains | 24% | 24% |
| Eligible dividends | 31.7% | 31.7% |
| Non-eligible dividends | 42.3% | 42.3% |
Combined Federal and Alberta Personal Tax Rates 2010:
| Bracket | Ordinary Income* | Eligible dividends** | Non-eligible dividends** |
| $209,952 to $210,371 | 43% | 24.81% | 36.56% |
| $210,371 to $314,928 | 47% | 30.33% | 41.16% |
| Above $314,928 | 48% | 31.71% |
42.31% |
* 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 that personal tax credits for 2019 will be indexed by 1.024%.
The maximum tax credits amounts and actual Alberta tax credits for 2018 and 2019 are set out below:
2018 2019
| Maximum Amount | Alberta Tax Credit | Maximum Amount | Alberta Tax Credit | |
| Basic personal amount | $18,915 | $1,892 | $1,892 | 1,937 |
| Spousal amount | 18,915 | 1,892 | 19,369 | 1,937 |
| Eligible dependent amount | 18,915 | 1,892 | 19,369 | 1.937 |
| Eligible dependent | 5,271 | 527 | 5,397 | 540 |
| Infirm dependent amount | 10,949 | 1,095 | 11,212 | 1,121 |
| CPP Contributions | 2,594 | 259 | 2,749 | 275 |
| EI Contributions | 858 | 86 | 860 | 86 |
| Pension income amount | 1,456 | 146 | 1,491 | 149 |
| Disability amount | 14,590 | 1,459 | 14,940 | 1,494 |
| Disability supplement | 10,949 | 1,095 | 11,212 | 1,121 |
| Tuition and education amounts | Variable | Variable | Variable | Variable |
| Adoption expenses | 12,939 | 1,294 | 13,247 | 1,325 |
| Medical expenses | Variable | Variable | Variable | Variable |
| Medical expenses (other dependents) | Variable | Variable | Variable | Variable |
| Caregiver amount | 10,949 | 1,095 | 11,212 | 1,121 |
| Interest on student loans | Variable | Variable | Variable | Variable |
The province will pause indexation
The province announced it will pause the indexation of non-refundable tax credits and tax bracket thresholds, with the 2019 amounts carried forward for the 2020 and future tax years.
That means the personal amount is no longer rising with inflation.
The province says they will resume indexation once economic and fiscal conditions can support it.
Education and tuition tax credits eliminated
Alberta will be eliminating its education and tuition tax credits beginning with the 2020 tax year.
Alberta students will still be able to claim any credits earned prior to 2020.
Dividend tax credit
The province announced the dividend tax credit rate for eligible dividends will be adjusted on January 1, 2021 and on January 1, 2022 to correspond with the legislated reductions to the tax rate on general corporations.
Alberta child and family benefit
Beginning in July 2020, Alberta will introduce the Alberta Child and Family Benefit (ACFB), which will focus on families with lower incomes.
The ACFB will replace the existing Alberta Family Employment Tax Credit and the Alberta Child Benefit.
The ACFB includes both a base component and a working component.
All families eligible for the ACFB will receive the base component.
The base component will begin to be phased out once family net income exceeds $24,467 and will be fully phased out when family net income exceeds $41,000.
Families with employment income exceeding $2,760 annually will be eligible for the working component.
The working component will begin to be phased out once family net income exceeds $41,000 and will be fully phased out when family net income exceeds $61,000.
Corporate tax rates
No changes are proposed to the corporate tax rates or the $500,000 small business limit.
Alberta’s corporate income tax rates remain as follows:
Alberta Combined Federal & Alberta
| 2019 | 2020 | 2019 | 2020 | ||
| General*** | 11.50% | 10% | 26.50% | 25% | |
| Small business*,** | 2% | 2% | 11% | 11% |
The small business rate and general corporate rate are based on a December 31 year end.
*On first $500,000 of active business income.
** The federal small business rate was reduced from 10.00% to 9.00% effective 1 January 2019.
*** Alberta is gradually reducing the province’s general corporate income tax rate from 12% to 8% by 2022. The general corporate tax rate is reduced to 11% effective July 1, 2019 and will continue to decrease by 1% every January until 2022.
Enhanced Capital Cost Allowance
The province will implement an enhanced capital cost allowance (CCA) to permit corporations to depreciate new capital assets more quickly for tax purposes.
Corporations will be able to immediately claim the full cost of manufacturing and processing equipment and clean energy generation equipment.
Corporations will also be eligible to claim up to three times the normal first-year CCA rate related to other capital investments.
The resource sector will be able to claim a first-year deduction of 1 ½ the amount of qualifying development expenses.
These measures begin to phase out in 2023 and will be completely eliminated by 2027.
Eliminated tax credits
The province eliminated 5 tax credits, including:
-
Scientific Research and Experimental Development Tax Credit (SR&ED)
-
The Alberta Investor Tax Credit (AITC)
-
Community Economic Development Corporation Tax Credit (CEDTC)
-
Capital Investment Tax Credit
-
Interactive Digital Media Tax Credit
The SR&ED credit will be eliminated starting in 2020, with expenses incurred after Dec. 31, 2019 being no longer eligible.
For the other targeted credits above, no new approvals will be granted after Oct. 24, 2019.
Businesses already approved under the AITC or the CEDTC have until Dec. 31, 2019 to raise capital for these credits.
Corporations and individuals will still be able to claim any unused credits, where applicable.
Disclaimer: The material above is provided for educational and informational purposes only. Always consult a tax professional like FBC regarding your specific tax situation.