Canada: Alberta 2019 Budget Summary

On October 24, 2019, Alberta Finance Minister, Travis Toews, announced the 2019 Alberta Budget. Below is a summary of some of the tax and other measures that were included in the Budget.

Personal Income Taxes and Benefits

Pausing Indexation of Personal Tax Credits

Alberta will pause the indexation of non refundable tax credits and tax bracket thresholds at the 2019 amounts for 2020 and future tax years. Alberta's basic personal and spousal tax credit amounts are $19,369 in 2019.

The Budget includes no changes to the personal tax brackets and rates.

Alberta Child and Family Benefit

Beginning in July of 2020, the new Alberta Child and Family Benefit ("ACFB") will replace the Alberta Family Employment Tax Credit and the Alberta Child Benefit with a single program that provides more benefits to lower-income families while reducing administrative costs. The ACFB may provide eligible families with up to $5,120 annually and will maintain incentives to enter the workforce as some of the benefits will be phased-in based on employment income.

Education and Tuition Tax Credits

Alberta will eliminate its education and tuition tax credits beginning with the 2020 tax year.  However, Alberta students will still be able to claim credit amounts earned prior to 2020.

Corporate Income Taxes

Corporate Income Tax Rates

Earlier in 2019, the Government announced its plan to reduce the general tax rate gradually over the next four years. As of July 1, 2019, Alberta's corporate income tax rates are as follows:

*On the first $500,000 of active business income

The general rate is scheduled to be further reduced during the years 2020 through 2022 as follows:

There will also be adjustments to the eligible dividend tax credit rates on January 1, 2021, and on January 1, 2022, to correspond with the reductions to the general corporate income tax rate.

Enhanced Capital Cost Allowances

The Government has matched federal tax measures to enhance the capital cost allowance ("CCA") regime, which should allow corporations to claim tax deductions on the cost of new capital assets more quickly. Corporations will be able to immediately claim the full costs of manufacturing and processing equipment and clean energy generation equipment and will be eligible to claim up to three times the normal first-year CCA deduction on certain other capital investments.

The resource sector will be able to claim a first-year deduction of one-and-a-half times the amount of qualifying development expenses they would otherwise be able to claim. These measures begin to phase out in 2023 and will be completely phased out by 2027.

Elimination of Corporate Tax Credits

In conjunction with the Province's corporate tax rate reductions and enhanced CCA, the Budget proposes to eliminate the following existing tax credits that benefit certain corporations:

• Alberta Investor Tax Credit
• Community Economic Development Corporation Tax Credit
• Capital Investment Tax Credit
• Interactive Digital Media Tax Credit
• Scientific Research and Experimental Development Tax Credit

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.