Alberta Budget 2016: Tax Changes

by in Canadian Government News and Updates
Alberta Budget 2016:  Tax Changes

Alberta’s 2016 Budget provides a number of tax measures to support the economy during this downturn. 

Investor and Investment Tax Credits: 

The Alberta Investor Tax Credit worth $90 million over 2 years will benefit investors who invest in eligible small and medium-sized enterprises in Alberta.
The Capital Investment Tax Credit worth $75 million over 2 years will benefit corporation that make investments in eligible capital assets.

Small Business Rate Deduction: the small business corporate income tax rate will be reduced from 3% to 2%.

Dividend Tax Rate: The dividend tax credit rate for dividends paid out of income taxed at the small business rate (other than eligible dividends) will be adjusted downwards as a result of lowering the small business rate to 2%, effective January 1, 2017.

Carbon Levy:  Fuels, such as natural gas, transportation fuels and other fuels, will be subject to a new carbon levy when consumed for combustion purposes.  The carbon levy will be introduced January 1, 2017 and will reflect a price of $20 per tonne of carbon dioxide – equivalent emissions, rising to $30 per tonne on January 1, 2018.

The carbon levy will apply to purchases of all fossil fuels that produce GHG emissions when combusted. This includes fuels used for transportation purposes and fuels used for heating, such as natural gas and propane. The levy will not apply directly to consumer purchases of electricity.

Climate Leadership Adjustment Rebate:  The Climate Leadership Adjustment Rebate was introduced to protect lower and middle income Albertans from the higher costs resulting from the carbon levy.

The rebate will begin in January 2017 and will provide up to $200 for an adult, $100 for a spouse and $30 for each child under 18 in the household (to a maximum of 4).  In 2018, when the carbon price rises to $30 per tonne, the rebates will be adjusted accordingly, rising to $300 for an adult, $150 for a spouse and $45 for each child.  The rebate will begin to phase out at $47,500 in net family income for singles and $95,000 for couples and families.  The payments will be made as frequently as quarterly.

Alberta Child Benefit: The ACB will provide $195 million in annual assistance to lower income families. The ACB is paid quarterly and provides annual benefits of up to $1,100 for one child, and an additional benefit of up to $550 for each of the next three children. Families with net income of up to $25,500 will receive the maximum benefit under this program. Benefits begin to phase out above this income level and are fully phased out once family net income reaches $41,220.

Alberta Family Employment Tax Credit:  The AFETC will be enhanced further for lower and middle-income family beginning in July 2016. The rate at which benefits are phased in will be increased from 8% to 11%, and the phaseout threshold will be increased from $36,778 to $41,250.


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