What Alberta's new budget means for your taxes
Posted on: March 20, 2017 | Author: Michelle Seymour, ATB Investor Services
The Minister of Finance, Joe Ceci, presented the 2017-2018 Alberta budget on Thursday, March 16. The budget projects a deficit of $10.3 billion for 2017, including a risk adjustment factor of $0.5 billion. Economic growth is estimated to be 2.6 per cent for the year and employment growth of 0.9 per cent is projected in 2017.
From a tax perspective, the budget did not include the announcement of any new taxes, rate increases, rate reductions or new tax credits, but rather, reiterated tax measures announced in the previous budget. These include:
- The small business corporate income tax rate decreased from three per cent to two per cent, effective January 1, 2017
- The carbon levy of $20 per tonne, effective January 1, 2017 (increasing to $30 per tonne in 2018), and the associated Alberta Carbon Leadership Adjustment Rebate (ACLAR)
- The Alberta Child Benefit (ACB) and Alberta Family Employment Tax Credit (AFETC), both of which came into effect in July 2016
- Introduction of the Alberta Investor Tax Credit (AITC) and Capital Investment Tax Credit (CITC), both of which can be claimed starting in 2017
The 2017-2018 budget announced minor changes to two existing personal income tax credits:
Political Contributions Tax Credit
This credit is currently available to individual taxpayers who contribute to registered candidates, constituency associations and political parties. The budget proposes to expand the credit to include contributions to party leadership elections and candidate nomination races for contributions made on or after January 1, 2017. The existing method of calculating the credit remains unchanged: 75 per cent on the first $200, 50 per cent on the next $900, and 33.33 per cent on the next $1,200, for a maximum credit of $1,000. As such, the maximum tax credit available to individuals remains the same, but the eligibility for types of political contributions has been expanded.
Alberta Dividend Tax Credit
The rate for the Alberta dividend tax credit will be revised for 2017 and subsequent years. The intent of the rate change is to account for amendments to the federal legislation. Details of the change are not outlined in the budget except to indicate that income earned in a corporation that is eligible for the small business deduction and is distributed to shareholders will continue to be taxed at a combined rate of at least 10 per cent.
In addition to the personal income tax changes outlined above, the 2017-2018 budget also announced a freeze in educational property taxes for the coming year and confirmed the government’s intention to reduce school fees:
Education Property Tax
Education property tax rates will be frozen for 2017-2018 at the current rates of $2.48 per $1,000 of assessed value for residential/farmland properties and $3.64 per $1,000 of assessed value for non-residential properties.
Reductions in School Fees
As previously announced on March 2, the government proposes to reduce school fees, specifically related to instructional supplies and materials, and fees for eligible students taking the bus to their designated school. The reductions are intended to be in place for the coming school year.
For further details regarding these and other budget initiatives, please refer to the Alberta Treasury Board and Finance 2017 budget documents.
We'll be watching as the Federal Budget comes down on March 22. Keep an eye out for our breakdown of what it will mean to you.
The information provided in this article is a simplified general summary and is not intended to replace or serve as a substitute for professional advice. Professional tax advice should always be obtained when dealing with taxation issues as each individual’s situation is different. This information has been obtained from sources believed to be reliable but no representation or warranty, expressed or implied, is made as to their accuracy or completeness. This information is subject to change and ATB Securities Inc., ATB Investment Management Inc. and ATB Insurance Advisors Inc. reserves the right to change the information without prior notice, and does not undertake to provide updated information should a change occur. ATB Financial, ATB Investment Management Inc., ATB Securities Inc. and ATB Insurance Advisors Inc. do not accept any liability whatsoever for any losses arising from the use of this document or its contents.