** Provided by Mackenzie Investments

Business Tax Measures

 

1) Alberta Investor Tax Credit
The Alberta Investor Tax Credit, worth $90 million over two years, will benefit investors who invest in eligible small and medium sized enterprises in Alberta.

2) Alberta Capital Investment Tax Credit
The Capital Investment Tax Credit, worth $75 million over two years, will benefit corporations that make investments in eligible capital assets.

Further details will be announced later in the year.

Reduction in Small Business Corporate Income Tax Rate

Effective January 1, 2017, the small business corporate income tax rate will be reduced from 3% to 2%. Alberta will be tied for the second lowest provincial small business rate in Canada. Therefore the combined Provincial and Federal rates will be:

 

	2016 Rate	2017 Rate
Small Business Rate	13.5% (10.5% Fed + 3.0% AB)	12.5% (10.5% Fed + 2.0% AB)
Corporate Investment Tax Rate	50.67% (38.67% Fed + 12% AB)

 

 

Personal Tax Measures

Alberta’s progressive personal income tax rate is now fully effective as of January 1, 2016.

Taxable Income	Tax Rate
$0 – $125,000	10%
$125,000 – $150,000	12%
$150,000 – $200,000	13%
$200,000 – $300,000	14%
Over $300,000	15%

 

Basic Personal Amount
The budget provides for the rise of the basic personal and spousal amounts from $18,214 to $18,451.

 

Dividend Tax Credit
The dividend tax credit rate for dividends paid out of income taxed at the small business rate (other than eligible dividends) will be adjusted downwards as a result of lowering the small business rate to 2%, effective January 1, 2017.

The budget maintains the dividend tax credit rate at 10% for dividends paid out of income taxed at the general corporate tax rate.

 

Other Measures

Introduction of a new Carbon Levy
In order to pay for a more diversified economy, and starting in January 1, 2017, the NDP government has introduced a new Carbon Levy which will be included in the price of all fuels that produce green house gas (“GHG”) emissions when combusted. The levy will be $20/tonne for 2017 and $30/tonne for 2018.
There are exemptions for farmers, fuel sold for export, fuels used for industrial processes but not combusted, heating fuels on site, fuels purchased by eligible First Nations individuals and bands for personal use.

 

Introduction of a new Climate Leadership Adjustment Rebate

As a result of the Carbon Levy, and starting January, 1 2017, the government will introduce rebate to assist lower and middle class Albertans adjust to the higher cost in certain fuels.

Carbon rebate recipients must be Alberta residents, file a 2015 income tax return and meet the income requirements of $47,500 for individuals and $95,000 for couples and families.

For 2017, the rebate provides up to $200 for an adult, $100 for a spouse (or equivalent to spouse), and $30 for each child under 18 in the household (maximum 4 children). For 2018, the rebate provides up to $300 for an adult, $150 for a spouse or equivalent to spouse), and $45 for each child under 18 in the household (maximum 4 children).

Carbon Levy Rate – Major Fuels
Type of Fuel	January 1, 2017 Rate ($20/tonne)	January 1, 2018 Rate ($30/tonne)
Diesel	5.35 cents/L	8.03 cents/L
Gasoline	4.49 cents/L	6.73 cents/L
Natural Gas	1.011 $/GJ	1.517 $/GJ
Propane	3.08 cents/L	4.62 cents/L

Source: Alberta Treasury Board and Finance

 

Enhanced Family Assistance and Support

Beginning July 1, 2016, the Albert Child Benefit (“ACB”) and the Alberta Family Employment Tax Credit (“AFETC”) have been enhanced to provide more benefit to Albertans.

• Alberta Child Benefit
  The ACB provides direct financial assistance to lower income families with children under 18 who have a family net income of less than $41,220 per year. While the AFETC helps low and middle income working families provide for their children, and provides incentive for parents to continue working.

In order to benefit from the ACB, the taxpayer must be a parent of one or more children under 18, be a resident of Alberta for at least one month prior to receiving the credit, have a family net income of $41,220 per year and must have filed a tax return.

The maximum annual benefit for families with one child is $1,100, and $2,760 for families with four or more children. The benefits are fully phased out once the family net income reaches $41,220.

• Alberta Family Employment Tax Credit
  Alberta Family Employment Tax Credit (AFETC) is a refundable tax credit which helps low and middle income working families provide for their children, and provides incentive for parents to continue working.

In order to benefit from the AFETC, the taxpayer must be a parent of one or more children under 18, earn a family income of more than $2,760, be a resident of Alberta, earn a family income of less than $60,325 for a family with one child, $77,675 for a family with two children, $88,075 for a family with three children and $91,550 for a family with four children; and must have filed a tax return.

The phase-out threshold of this benefit will be increased from $36,778 to $41,250.

Number of children	ACB (max.)	AFETC (max.)	Total benefits (max.)
1 child	$1,100	$763	$1,863
2 children	$1,650	$1,457	$3,107
3 children	$2,200	$1,873	$4,073
4 or more children	$2,750	$2,012	$4,762

 

Education Property Tax – Residential/Farmland Property Tax Rate
The 2016 residential/farmland rate will fall from $2.50 to $2.48 per $1,000 of equalized assessment. The nonresidential rate will fall from $3.67 to $3.64 per $1,000 of equalized assessment.