2020 Alberta budget: tax and benefit highlights
By ATB Financial 28 February 2020 2 min read
President of the Treasury Board and Minister of Finance, Travis Toews, presented the 2020-2021 Alberta provincial budget on February 27, just four months following the release of the previous budget on October 24.
Job Creation Tax Cut
The current budget once again highlighted the government’s commitment to reducing the general corporate tax rate. As of January 1, 2020, the Alberta general corporate tax rate is 10% (for a combined federal and provincial general corporate rate of 25%). The budget confirmed the previously announced rate reduction schedule with the provincial rate to decrease to 9% on January 1, 2021 and again to 8% on January 1, 2022.
To account for the corporate tax reduction, the previous budget also announced that adjustments to the eligible dividend tax credit will occur on January 1, 2021 and January 1, 2022, increasing the effective personal tax rate for eligible dividends at those times.
Other previously announced tax measures
New vaping products tax
The previous budget announced the government’s intention to implement a new tax on vaping products. The current budget confirms that a 20% tax will be introduced. The date of implementation is still to be announced in spring 2020.
Currently, the 4% tourism levy applied on most temporary accommodation rentals (such as hotels) does not apply to online providers like Airbnb and VRBO. The previous budget signalled the government’s intention to apply the levy to such providers going forward. The current budget indicates that this change is anticipated to occur in summer 2020.
Seniors Drug Program
As previously announced, family members younger than 65 years of age will no longer be eligible for the Coverage for Seniors program effective March 1, 2020. The current budget also announced the intention to introduce income tested deductibles for higher income seniors later this year.
Alberta Seniors Benefit
The Alberta Seniors Benefit provides assistance to low-income individuals. While seniors currently receiving this benefit will not be impacted, the budget announced that benefit eligibility will change for new applicants beginning in 2021.
Alberta Child and Family Benefit
Beginning on July 1, 2020, the new Alberta Child and Family Benefit (“ACFB”) will provide a non-taxable benefit to families with lower income levels, as announced in the previous budget. The amount of the benefit is dependent on a family’s employment income, net income and number of children in the family. The maximum benefit available will range from $2,011 for a family with one child to $5,120 for a family with four children. The ACFB will replace the existing Alberta Family Employment Tax Credit and the Alberta Child Benefit.
The Fair Deal Panel
In November 2019, the government established the Fair Deal Panel to explore a number of ideas including the possibility of establishing a provincial revenue agency to collect provincial taxes directly and creating an Alberta Pension Plan. While the budget highlights the work of the Fair Deal Panel, the panel will not report its findings to the government until the end of March, so no new announcements regarding these items were included in the budget.
Please refer to the government of Alberta budget webpage for further details regarding these and other budget initiatives.
This document has been prepared by ATB Wealth. ATB Investment Management Inc., ATB Securities Inc. (Member Investment Industry Regulatory Organization of Canada and Canadian Investor Protection Fund) and ATB Insurance Advisors Inc. are wholly owned subsidiaries of ATB Financial and operate under the trade name ATB Wealth. 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. (Member Investment Industry Regulatory Organization of Canada and Canadian Investor Protection Fund), 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.