Tax highlights from the 2020 Alberta budget

Mar 3, 2020
Alberta

Finance Minister Travis Toews tabled the 2020 Alberta provincial budget on February 27, 2020.

The budget projects a deficit of $6.8 billion for the 2020-2021 fiscal year and a balanced budget by the 2022-23 fiscal year. The forecast deficit for the almost-completed 2019–2020 fiscal year now stands at $7.5 billion compared to the 2019 budget projection of $8.7 billion.

Budget 2020 revealed no changes to personal tax rates for 2020. However, indexing of provincial personal tax credits and brackets is suspended for the time being. The legislated Job Creation Tax Cut introduced in the 2019 budget will further reduce general corporate tax rates by 3% over the next three years.

Following is a summary of the changes announced in the budget. Please note that these changes are still proposals until passed into law by the provincial government.

Personal Tax Matters

Personal income tax rates and tax brackets

The table below shows Alberta tax rates and brackets for 2020.

Taxable Income Range 2020 Tax Rates
First $131,220 10%
Over $131,220 up to $157,464 12%
Over $157,464 up to $209,952 13%
Over $209,952 up to $314,928 14%
Over $314,928 15%

The table below shows the 2020 combined federal and provincial highest marginal tax rates for various types of income.

Type of Income 2020 Tax Rates
Regular income 48%
Capital gains 24%
Eligible dividends 31.71%
Non-eligible dividends 42.31%

Provincial child benefits

As announced in the 2019 budget, the new Alberta Child and Family Benefit (ACFB) will begin on July 1, 2020. The new ACFB will have a base component and a working component with a maximum combined annual benefit of $5,120.

The maximum base component will range from $1,330 to $3,325, depending on the number of children in the family. The base component will begin to phase out once family net income exceeds $24,467 and will be eliminated when family net income exceeds about $41,000.

The working component will range from $681 to $1,795, depending on the number of children in the family. It will phase in at a rate of 15% once family employment income exceeds $2,760. The working component will begin to phase out when family net income exceeds $41,000 and will be eliminated once family net income reaches about $61,000.

The ACFB is projected to deliver more benefits to low income families. Those with two children may receive up to $593 more per year and those with four children, up to $889 more per year.

Corporate Tax Matters

Corporate income tax rates

The Job Creation Tax Cut introduced in the 2019 budget reduces corporate tax rates from 12% to 8% over a four-year period. The table below shows the scheduled rate reductions to the general corporate tax rate for the remaining three years.

Scheduled reductions to Albert's general corporate income tax rate
January 1, 2020 10%
January 1, 2021 9%
January 1, 2022 8%

Corresponding with the legislated reductions to general corporate income tax rates shown above, the dividend tax credit on dividends paid out of income taxed at general corporate rates (eligible dividends) will be adjusted on January 1, 2021 and again on January 1, 2022. This will help ensure the combined corporate and personal income tax paid on dividend income approximates individual personal tax rates.

The table below shows corporate income tax rates on various types of income and the threshold up to which the small business rate applies. 

Category 2020 Tax Rates 2021 Tax Rates
General rate 19% 9%
Manufacturing and processing rate 10% 9%
Investment income rate 10% 9%
Small business rate 2%
Small business limit $500,000

The table below shows the 2020 combined federal and provincial corporate income tax rates for various types of income earned by a Canadian Controlled Private Corporation (CCPC).

Type of Income 2020 Combined Tax Rates
Small business income 11%
Active income over $500,000 25%
Manufacturing and processing income 25%
Investment income 48.67%

Other Proposals

Tourism levy and short-term rentals

Alberta’s 4% tourism levy will be extended to short-term rental accommodations listed with online marketplaces such as Airbnb, HomeAway and vacation rentals by owner. These changes are expected to take effect in summer 2020, with legislation implementing these changes introduced in spring 2020.

A new exemption will be introduced for properties that are not listed on any online marketplace, where the purchase price of the rental is less than $30 per day or $210 per week, or the operator has annual gross revenue from the rental of temporary accommodation in Alberta of less than $5,000.

Vaping product tax

Alberta will introduce a 20% tax on the retail sale price of vaping products. The tax will apply to all vaping liquids, including cannabis liquids, as well as all vaping devices. Online sales to Albertans from other jurisdictions will be subject to this tax. The date of implementation for the tax, as well as other details, will be announced with the introduction of the legislation and associated regulations in spring 2020.

How We Can Help

Your Assante advisor can help you assess the impact of these proposals on your personal finances or business affairs, and show you ways to take advantage of their benefits or ease their impact. The resources available to you and your advisor include Assante Private Client’s Wealth Planning Group, a multi-disciplinary team of accountants, lawyers and financial planners.

This communication is published by Assante Wealth Management (Canada) Ltd. (“AWM”) as a general source of information only. It should not be construed as providing specific tax, accounting, legal or investment advice, and should not be relied upon as such. Professional advisors should be consulted prior to acting on the basis of any information provided herein. AWM and its affiliates will not be responsible in any manner for direct, indirect, special or consequential damages, howsoever caused, arising out of the use of this communication.

Facts and data provided herein are believed to be reliable as at the date of publication, however AWM cannot guarantee that they are accurate or complete or that they will remain current at all times. 

Locate an advisor near you