Alberta Budget Report 2018 | FBC, Canada's Farm & Small Business Tax Specialist

Alberta Budget Report 2018

Alberta Budget Report 2018

Alberta Budget Report 2018

On March 22, 2017, the Honourable Joe Ceci, President of Treasury Board and Minister of Finance, presented his fourth budget and the fourth budget of Alberta’s NDP government.

The budget contained no new taxes, and no new tax increases or decreases that had not previously been announced.

Highlights

  • Deficit of $8.8 Billion predicted for 2018-19
  • Projects deficits of $7.9 billion in 2019-20 and $7 billion in 2020-21
  • $4.3 billion deficit projected in 2021-22, and $1.4 billion in 2022-23
  • Surplus of $0.7 billion is projected for 2023-24.
  • No changes to personal or corporate tax

Alberta faces 5 more years of deficit and billions of dollars in mounting debt before it sees a balance sheet back in the black. 

It tells a story of an economy still recovering from a lingering oil price shock and struggling with the market access problems with its crude.

While there was no budget commitment to support a Calgary Winter Olympic bid, the province did say money is earmarked for that purpose.

Some big ticket items to note:

  • Health budget hits a record $22.1 Billion.
  • Increase in Health spending by 2.9%
  • Education increase by 2.4% to $8.35 billion
  • Community and social services by 4.5% to $3.66 billion.

There is no introduction of a provincial sales tax in Alberta.

Personal Tax Measures

Personal income tax rates – No change

It was confirmed today that personal tax rates for 2018 will be indexed by 1.2%.  The rate brackets will continue to be subject to inflation indexing.  As a result, Alberta’s personal income tax rates are:

Alberta Tax Rates

2017 Taxable Income

2018

10.0%

$0 to $126,625

$0 to $128,145

12.0%

$126,625 to $151,950

$128,146 to $153,773

13.0%

$151,950 to $202,600

$153,774 to $205,031

14.0%

$202,600 to $303,900

$205,032 to $307,547

15.0%

$303,900 and over

$307,548 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

 

2017

2018

Interest and regular income

48.0%

48.0%

Capital gains

24.0%

24.0%

Eligible dividends

31.7%

31.7%

Non-eligible dividends

41.2%

41.6%

Combined federal and Alberta Personal Tax Rates 2018

Bracket

Ordinary Income*

Eligible
dividends **

Non-eligible
dividends **

$205,032 to $205,842

43%

24.81%

35.84%

$205,843 to $307,547

47%

30.33%

40.84%

Above $307,547

48%

31.71%

41.64%

 * 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 today that personal tax credits for 2018 will be indexed by 1.2%.

The maximum tax credits amounts and actual Alberta tax credits for 2017 and 2018 are set out below.

Alberta Non-Refundable Tax Credits

 

2017

2018

Maximum
Amount

Alberta
Tax Credit

Maximum
Amount

Alberta
Tax Credit

Basic Personal Amount

$18,690

$1,869

$18,915

$1,892

Spousal Amount

18,690

1,869

18,915

1,892

Eligible dependent amount

18,690

1,869

18,915

1,892

Age amount

5,208

521

5,271

527

Infirm dependent amount

10,820

1,082

10,949

1,095

CPP Contributions

2,564

256

2,594

259

EI Contributions

836

84

858

86

Pension income amount

1,439

144

1,456

146

Disability amount

14,417

1,442

14,590

1,459

Disability supplement

10,819

1,082

10,949

1,095

Tuition and education amounts

Variable

Variable

Variable

Variable

Adoption expenses

12,783

1,278

12,939

1,294

Medical expenses

Variable

Variable

Variable

Variable

Medical expenses (other dependents)

Variable

Variable

Variable

Variable

Caregiver amount

10,819

1,082

10,949

1,095

Interest on student loans

Variable

Variable

Variable

Variable

Donations & Gifts
-first $200
- over $200


200
75% of income


20
Variable


200
75% of income


20
Variable

In general, credits are multiplied by 10% to arrive at the deduction from Alberta Tax.  In the case of donations and gifts over $200, the credit is 21%

Corporate Tax Measures

Corporate Tax Rates

No changes to corporate taxes were announced.

As a result, Alberta’s corporate income tax rates remain as follows:

Corporate Income Tax Rates

 

Alberta

Combined Federal
& Alberta

 

2018

2019

2018

2019

General

12%

12%

27%

27%

Small business*, **

2%

2%

12%

11%

*On first $500,000 of active business income
** On 24 October 2017, the federal government tabled a notice of ways and means motion to implement reductions in the small-business corporate income tax rate which were announced on 16 October 2017. The federal small-business rate is reduced from 10.5% to 10.0% effective 1 January 2018 and will be further reduced to 9.0% effective 1 January 2019.

Note: As announced in Budget 2016, Alberta’s small-business corporate income tax rate was reduced from 3% to 2% effective 1 January 2017. The small-business limit remains at $500,000.

Interactive Digital Media Tax Credit

This credit reimburses eligible interactive digital media companies up to 25% of their eligible labour costs.

The credit will be available for expenses incurred after 1 April 2018.

An additional credit of up to 5% will be available to eligible interactive digital media companies hiring under-represented groups.

Further details will be available once regulations have been released.

Alberta Investor Tax Credit (AITC)

The Alberta Investor Tax Credit provides a 30% tax credit for investors who make equity investments in eligible Alberta businesses that undertake research, development or commercialization of new technology, products or processes, as well as for businesses engaged in interactive digital media development, video post-production, digital animation or tourism.

The AITC was originally planned to operate for 3 years; however, in order to continue supporting investment in non-traditional sectors, the AITC will be extended until 2021-22.

Investors will be eligible to receive an additional 5% credit if they invest in eligible business corporations that meet diversity and inclusion criteria.

The new diversity and inclusion criteria requirements will be provided when the corresponding regulations are introduced.

Capital Investment Tax Credit (CITC)

The Capital Investment Tax Credit provides a 10% non-refundable tax credit of up to $5 million for a corporation’s eligible capital expenditures on manufacturing, processing and tourism infrastructure.

The CITC was intended to operate for 2 years, but to continue to encourage investment in Alberta, the CITC will be extended until 2021-22.

Other Measures

(Not related to income tax)

Carbon Tax Levy

No changes have been proposed to the carbon tax levy.

Cannabis

The budget confirmed that the sale of cannabis in Alberta will be taxed by the federal government under a federal excise tax.  

The tax will apply when sold by licensed producers as follows:

  • $1 per gram or 10% of the producer’s price, whichever is greater (with Alberta receiving 75% of the amount collected), and
  • An additional amount equivalent to 10% of the estimated retail price (with Alberta receiving the entire amount collected).

(Source: Alberta Government)

"It is time for us to stand and cheer for the doer, the achiever, the one who recognizes the challenge and does something about it." — Vince Lombardi